[Expert Chronicle] SaaS and Supply Chain : The Five untrue Beliefs about SaaS and Supply

SaaS came to being at the end of the ‘90s in fields like customer relations (SalesForce), business travel management (Concur) and videoconferencing (WebEx). Recently, most office automation tools have enriched their distribution model offerings with collaborative feature add-ons.

To define SaaS, we could describe it as a « turnkey » service model based on recurring billing. Subscribers pay a monthly fee based on usage and which of the solution functionalities they use.

Supply Chain Management is not to be outdone, since by 2021 SaaS deployments are expected to account for more than 35% of solution expenditures, while on-premises solutions spending is expected to fall below 20%. (1)

SaaS solutions represent a fundamental trend for the future of the Supply Chain and bring forth a greatly anticipated transformation for CIOs. Like any change of this magnitude, there are misconceptions and beliefs that come along with it. We suggest you pay special attention to the five most significant ones in this article.

#1: I need a tailor-made solution built just for my Supply Chain

The Supply Chain industry has entered a period of intense and radical transformation. All areas of the logistics business including distribution, warehouse and transport to the last mile are impacted by industry updates.

The Supply Chain must now accommodate the changes surfacing due to digital, quality and traceability requirements.  That’s not the end of it! Traditional retailers must continuously adapt to the arrival of pure players on traditional distribution networks such as the omnichannel, 3D printing and the Internet of Things (IoT). Relying on custom developed tools is less effective than you’d think during this period of transformation. This causes retailers to consider the following: Is it possible to design and develop a tailored solution in a short timeframe and within budget? If the availability of new functionalities is subject to latency, can’t a retailer’s Information System be a step behind consumers’ current needs?

Nevertheless, a true project mode must built in close collaboration between the technical and business stakeholders in order for the system to connect and address issues between all processes. This is especially true for Supply Chain solutions that must interact between different systems such as e-shop, suppliers, warehouses and stores.

By relying on SAAS solutions that are highly customizable and designed by Supply Chain experts, these issues can be addressed and are likely to be integrated and deployed quickly

#2: The cloud isn’t secure

First of all, keep in mind that « The main security hole is the human » (2). To further that point, there is no additional risk in outsourcing part of your data to specialists who have established a real security strategy than to maintain private hosting for your mission-critical data.

With regards to data integrity and confidentiality, we find ourselves in a time when multiple cloud providers are subject to the Patriot Act (3). The choice of cloud provider is very important and the different alternatives to consider include:

  • Hosting in an international public cloud with encryption options
  • Hosting in a sovereign cloud or local host
  • Mixed & Hybrid cloud & Mixed solutions

The Hybrid cloud option is a mix of different clouds that allows you to choose the most appropriate hosting for a given technology, data criticality and subscriber requirements. This mix can rely on different providers of public cloud and/or private cloud (see sovereign cloud). Therefore, this option combines flexibility and security, while also responding to the critical data storage issues and security challenges posed by a Supply Chain Management solution.

In summary, SaaS offers adaptable solutions to data criticality issues and technologies. These solutions have already been integrated into SaaS offers in other critical areas such as CRM for several years now.

#3: SaaS costs more than a license purchase

For this third notion, it’s necessary to reason in terms of full cost rather than direct up-front cost. If we compare the price of a license to the cost of a monthly SaaS service in SaaS mode, we can easily get to this shortcut, there are additional hidden costs associated the license purchase such as:

  • Setup and maintenance costs
  • Training and skills maintenance costs
  • Operating costs
  • Costs related to application updates

One study has shown that an SaaS subscription covers about 70% of the total costs associated with software implementation, while the license covers only 10%. (4)

In the specific case of the Supply Chain, by selecting a more efficient inventory management solution, it is easier to see a return on investment (ROI) by improving the management of storage costs.

In addition, SaaS solutions offer modular functionalities that can be activated or not, depending on your needs. Invoicing is also often proportional to your actual usage.  With the same publisher, we start a subscription on downstream procurement, then add a module to manage the upstream procurement and communicate transparently on both.

In short, SaaS subscription solutions enable « turnkey » functionalities, are quickly deployable, have a low-cost control and can easily measure ROI.

#4: SaaS is much slower

There is no room for delay in the Supply Chain and it is inconceivable to risk an extended calculation and transfer time.

The new technologies designed for SaaS allow for more available, efficient and scalable solutions. This is particularly the case for data storage with distributed technologies such as Cassandra. This solution, implemented in another domain, allows actors like Spotify to handle 40,000 queries per second while ensuring data security across 500 nodes (5).

This type of technology also makes it possible to address the volumetric issues related to the new generation Supply Chain, it is possible to store sales there by adding exogenous data such as the weather or social networks and any other data allowing forecasting on distant horizons.

These new technologies, combined with a predictive approach of the volumes to be processed, allow the best use of operational resources to ensure maximum availability.

In daily application in Supply Chain Management, we consider an almost immediate adjustment in infrastructure after new store and warehouse openings, or promotional periods with accelerated logistical flows.

The SaaS provides high-performance service levels through scalability and flexibility of technical platforms.

#5: I’m already prepared for the future of Supply Chain

It’s important to analyse how the Supply Chain is undergoing radical transformation period and in a few years’ time, computerisation will be how nearly all business will be conducted.

In the near future, fully automated logistic chains will communicate with each other and robots will process logistic flows by automatically triggering supplies and connecting containers to directly customer delivery routes via autonomous vehicles or drones. All of these autonomous machines, equipped with sensors, will track real time data to the Supply Chain to trace and track orders.

To process these volumes of data, Big Data management, data analysis, NoSQL and distributed computing are vital processes to be mastered. Solutions will need to evolve rapidly to quickly integrate new functionalities.

With the SaaS offer, CIO can respond to the Supply Chain challenges and provide a range of highly scalable applications to quickly adapt to the needs of users and market requirements.

The stake held by IT in Supply Chain is gaining and companies must be responsive to the services provided to end-users and consumers. The CIO must transform and be more agile to meet the expectations of their business and consumers.

The implementation of SaaS solutions make it possible to quickly deliver services with controlled risk and commitment.

The modules and capacity to gradually deploy solutions are provided by the Try&Buy commercial offer. This allows you to monitor solution performance in your individual conditions so you can make confident and informed step towards the future.

Find also this article (in french) on Silicon.fr.