From a historical perspective most disruptive technologies are adopted by those who cannot afford the current mainstream offering. Expensive mainframe computers were largely displaced by Mini-Computers which were displaced by lower cost Personal Computers. More recently we have seen PBX offerings give way to Voice over the Internet (VoIP) solutions. These technological shifts occur due to huge underserved markets requiring more affordable and less complex solutions. These underserved markets have spoken again…introducing Software as a Service.
SaaS, Cloud Computing, Hosted Solutions. There are plenty of buzzwords and marketing spin out there. So, let’s try to break it down. Software as a Service provides sophisticated capabilities for the masses.
What are the Characteristics of SaaS:
- Services are offered in a Subscription model – No high startup cost and no long term commitments
- Scalability is possible due to Multi-Tenancy which allows for shared resources and shared infrastructure
- Upgrades and support are included in your subscription fee – No maintenance or support contracts
- Accessible from anywhere with a browser and an Internet connection -No special hardware or software required
- Allows for Customization even when running in a multi-tenant environment
- Integrates with other applications (on-premise and cloud) through open Application Programming Interfaces (API’s)
So what makes SaaS the right fit for supply chain organizations?
When Electronic Data Interchange (EDI) was introduced it showed promise of enabling the supply chain to more effectively communicate and operate. Large organizations reaped the benefits of EDI but for small to medium businesses it is still a promise unfulfilled. The Order Fulfillment side has not been able to leverage the benefits of EDI. Yet these very same businesses have been forced to adopt EDI because their customers mandated compliance… a cost of doing business. The dirty little secret is that large populations of small to medium businesses are simply going to EDI translator sites and printing Purchase Order messages and manually typing them into Order Entry, Shipping and Finance systems. This is a prime example of new technology not reaching the entire supply chain.
The Procurement side also benefits in SaaS models. When a SaaS application has the proper architecture it enables EDI adoption through straightforward web-service connections. The order fulfillment side of the business can quickly utilize EDI as it was originally intended and mitigate risks in the Supply Chain.
Perhaps the most significant benefit of SaaS in the Supply Chain would be the ability to collaborate and communicate more effectively. Today the most prevalent forms of communication between procurement and fulfillment organizations are email, phone and fax. All manual processes. Only the largest firms can afford to build highly complex exchange models making it impossible for all members of the supply chain to participate.
So what if you could friend a supplier? -A FACEBOOK for supplier relationship management.
SaaS creates The Social Enterprise for Supplier Collaboration. Imagine if your company had its own secure collaboration space, a Collaboration Cloud if you will. All stakeholders could participate, share content, garner status and subscribe to relevant feeds. SaaS applications make it easy for suppliers to work together with procurement organizations regarding purchase commitment dates, progress steps, issues and concerns. Collaboration would fuel better and faster business decisions.
The disruptive technologies that power true SaaS applications surpass the existing exclusionary exchange models allowing everyone to utilize the internet for the democratization of information and accessibility. All stakeholders can easily contribute and consume relevant information in a ubiquitous environment where everyone is more productive. Access from anywhere can make any company a true global economic power. A true SaaS application levels the playing field.
Need another reason? Panorama Consulting Group conducted a survey for their 2010 ERP Report . They surveyed 1,600 organizations that have implemented a new ERP solution in the past four years and compared on-premise deployment implementations side-by-side with SaaS deployments. One of the results they found was on-premise implementations take an average of 6.8 months longer.
Technologies will continue developing to support innovative solutions and companies will develop new disruptive solutions. Each time the adopting underserved community that desires more capabilities will flourish based on the fact that there is a less complex, more affordable solution. Who buys the new disruptive technologies? A market that can’t afford the current technology and history repeats itself… Thoughts?