Oracle SCM Cloud Solutions

Transcription

1 ARC BRIEF MARCH 28, 2016 Oracle SCM Cloud Solutions Offer Great Advantages for Growing Businesses By Steve Banker Vision, Experience, Answers for Industry

2 Summary This article is focused on the advantages of Oracle s new SCM Cloud solutions. Cloud solutions have a number of advantages, but those advantages are particularly applicable to small and mid-sized businesses (SMBs). This paper was written by ARC Advisory Group on behalf of Oracle. The opinions and observations stated are those of ARC Advisory Group. For further information or to provide feedback on this paper, please contact the author at sbanker@arcweb.com. ARC Briefs are published and copyrighted by ARC Advisory Group. The information is proprietary to ARC and no part of it may be reproduced without prior permission from ARC Advisory Group ARC 3 Allied Drive Dedham, MA USA ARCweb.com 2

3 The Total Cost of Ownership Advantage The most important reason to go with a true cloud solution is that is has a better total cost of ownership (TCO). These savings are driven by faster implementations, easier upgrades, better system longevity, and lower IT costs. In Oracle s case, initial users also report very favorable Software-as-a- Service pricing. The Oracle SCM Cloud solutions are true commercialoff-the-shelf (COTS) solutions. Over the years many on premise solutions The most important reason to go with a true cloud solution is that is has a better total cost of ownership. These savings are driven by faster implementations, easier upgrades, better system longevity, and lower IT costs. have claimed to be COTS. But historically, even companies that have implemented vanilla versions of the off-the-shelf software will talk about only having 10 or 12 or 15 customizations. With cloud none are necessary. Oracle s SCM Cloud is designed to be implemented without any customization. Over the years ARC has talked to many logistics or IT executives who thought their operations were unique, and therefore they needed some degree of customization. Other companies felt that they should customize the software to fit the way they conducted business rather than changing processes to fit the configuration workflow. Both are mistakes. When implementations have dragged on and on, were buggy, and delivered less than the promised results, customization Oracle s initial SCM Cloud users report very favorable Software-as-a-Service pricing arrangements. was often a core contributor. Even companies that have had fairly successful implementations, when they finally get around to doing the first upgrade, admit that many of those customizations were a mistake. They subsequently spent time and money to eliminate customizations they initially thought their company just had to have. In other cases, companies have chosen not to upgrade because of the long and costly upgrade process that would result from their customizations. The warehouse management system (WMS) market provides a perfect example of this. Historically, companies who had customized their WMS software would support the software for some years, even as newer versions of the software with better functionality was introduced. Eventually, the companies decided it was too painful to support the legacy software anymore. When they looked at the price of an upgrade, they discovered it would cost as much as a new software license and implementation. At this point, most companies ended up looking at WMS solutions from all the leading suppliers, and often selected a solution from a supplier they had not done business with before. Because Oracle Cloud upgrades are so much easier, it is likely companies will retain their existing cloud solutions for longer than they would with traditional solutions. That means users will also continue to have access to new features and functions. As companies continue on Oracle s SCM Cloud, upgrades are part of the ongoing process of software enhancement. However, Oracle s upgrade process does allow for a reasonable degree of flexibility to postpone or implement new functionality over a period of time. Users report that many security patches and bug fixes are invisible, a mini-upgrade occurs that users never notice. Larger upgrades occur once or twice a year. This does require some planning and effort, but much less than would be the case for traditional on premise software. In short, a true cloud solution forces companies to do what is inherently good for themselves. The lack of customization does not mean that the cloud solution can t be tailored to a particular company s operations. They can. Modern enterprise software configuration engines are a marvel. It is even possible to have one instance of modern software manage operations at different facilities, divisions, and regions, with quite different processes. Personalized configuration allows you to tailor the software to operate your business in a fashion that meets your particular operating needs ARC 3 Allied Drive Dedham, MA USA ARCweb.com 3

4 There are also savings from a cloud solution in the IT department. Companies don t have to spend money on new servers, Customization has long been the bane of the enterprise software industry. Fortunately, supply chain and IT professionals increasingly understand that customization should be avoided at all costs. or spend money on IT professionals to manage them. Customization has long been the bane of the enterprise software industry. Fortunately, supply chain and IT professionals increasingly understand that customization should be avoided at all costs. These truly off-the-shelf systems are becoming available at the perfect time, they are arriving just as the market is demanding them. Finally, the advantage of cloud solutions are particularly applicable to small and medium-sized businesses. Larger companies are apt to have existing investments in on premise supply chain applications. As they seek to expand their cloud footprint, they need to look at more complex hybrid arrangements where some applications remain on premise, some are in the cloud, and a multi-year transition path may need to be created to fully leverage the advantages of cloud solutions. Smaller companies have the advantage of not having made these legacy investments. Written from the Ground Up to Run on the Cloud At the Oracle Modern Supply Chain Experience conference that took place at the end of January, Oracle s two top supply chain product development executives spoke to a group of industry analysts. One of those executives mentioned that Oracle had rewritten 70 million lines of software code to create brand new solutions from scratch. Because these solutions were built for the cloud, the solutions were built to scale, to fully leverage web services which makes them easier to integrate to, and had enhanced configuration capabilities. The creation of a new solution built from scratch provides broader advantages. This new platform gave Oracle the ability to rewrite the solution for new supply chain problems, like omni-channel fulfillment, that were barely discussed a few years ago. Anytime any solution is rebuilt from scratch, major opportunities exist for process and usability enhancements. Oracle has taken advantage of those opportunities. But What about Security? Our firm, ARC Advisory Group, has a subject matter expert that researches, writes, and consults on security issues. Our security expert admitted to being quite impressed with Oracle s encryption and security features, and said that a key benefit of Oracle Cloud is that it enables users to gain this level of security faster and easier. Oracle is one of the most technologically sophisticated companies in the world. And their focus on driving SaaS cloud revenues means that security has to be a core competence. It is certainly true that most firms under invest in IT security. This is particularly true of small and medium-sized businesses. Further, when companies think about security, they should think not only about protecting themselves from hackers, or IT savvy competitors, but also from governments. In the wake of the Edward Snowden revelations, companies want to make sure governments can t get access to their data as well. At this year s OpenWorld, Mark Hurd the CEO of Oracle stated, If the government says give us your data, we d say No. If they got a subpoena, we would say OK, but we would give the government encrypted data. The government would not be able to make sense of the data. Companies own their own encryption keys, the data in the cloud databases is encrypted at the same time it is entered into the system, and Oracle does not have the key to unlock that data ARC 3 Allied Drive Dedham, MA USA ARCweb.com 4

5 the business s needs. They decided they wanted to get a TMS up and running without burdening their IT group. Cloud was also more cost effective, Mr. Erb said. There was absolutely no customization, that is great. From a resource perspective, Mr. Erb, an IT analyst, and a transportation analyst were the primary internal resources that worked on this project. A Case Study Many of the points made in this article have been made by early implementers of Oracle s SCM Cloud solutions. For example, ARC talked to Fred Erb, the Director of Transportation at SPSCI. SPSCI, a midsized company, is a distributor and value added processor of steel products. Their company recently went through an Oracle Transportation Management (OTM) Cloud implementation. SPSCI began their journey to a transportation management system (TMS) implementation in One of their divisions had a dedicated fleet and was performing satisfactorily, but the other divisions were struggling with managing their carrier networks. There was a driver shortage and flatbed capacity was tight, especially during produce season when they competed with agribusiness for trucks. Mr. Erb was tasked by the President on how to better manage transportation and make deliveries in a timely manner. SPSCI looked at several software vendors. The company examined the possibility of a managed transportation service arrangement in which their dedicated carrier would manage all their transportation planning and execution processes. This third party logistics firm used an on premise version of OTM. SPSCI particularly liked the OTM user interface. Ultimately it came down to whether transportation should be a core competence, Mr. Erb said. As a distributor, we decided it should be. Once they decided to implement Oracle Transportation Management, they needed to decide how to implement it. Would they go cloud or on premise? As a midsized company, their IT resources are tight. The IT group encouraged them to first look for the best solution, but was also completely supportive of a cloud based service if it fully met Despite the fact that the different divisions were using the same instance of the software, the software was configured to meet each division s distinctive needs. According to Mr. Erb, One division groups orders together so we configured it to bring in the grouping information so the transportation person could create the shipments off of the order groupings. Another division runs more like a manufacturing facility and needed the ability to create shipments off of orders that were not produced at the time they needed to arrange transportation, so we gave them the ability to assign several orders to a shipment, exceeding shipping weights, but then updating the shipments when we produced actuals in our ERP system. OTM was very flexible in adapting to our business requirements. Also, having one instance (of the software) is nice. The company s ERP system is utilized differently across each division, so information is reported differently. By having one platform for TMS, one division s data is the same as another division s data. From a reporting perspective, Mr. Erb reports, that is a real advantage. If cloud was not an option, I m not sure this project would have happened. It would have been difficult to free up the necessary internal resources, and the business case would have been a much tougher sale. Oracle s cloud solution was perfect timing. Conclusion Architecturally, a true cloud solution requires absolutely no customization. There are real advantages to this. The absence of any customization drives faster implementations, easier upgrades, the ability of companies to continuously use the latest features and functions, and the likelihood that they will be able to grow with their solution and use it for a much longer period of time. If anything, the advantages of cloud are even greater for small and medium-sized businesses. In fact, as the case study demonstrates, there are SMBs that would never be able to justify a new SCM solution if not for the fact that it was a cloud solution ARC 3 Allied Drive Dedham, MA USA ARCweb.com 5

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