The adoption ofcloud computing servicesin a supply
chain context will mirror the former uptake patterns of
on-premiseenterprise resource planning (ERP)software. This means that such offerings are unlikely to be
used to support non-commodity, core business processes for at least
another three years.
Initially, lower-level cloud-based services such as accessing
raw compute power or storage capacity over the internet
(infrastructure-as-a-service) and exploiting web-based development
environments (platform-as-a-service) will be of most appeal for use
in tactical situations. Employment of the cloud delivery model will
also be more readily embraced for standardised application areas
such as finance and human resources (software-as-a-service) that do
not provide organisations with competitive advantage.
But says Sergio Nogueira, senior executive of Accenture's supply
chain systems integration and technology practice, "It has taken
the best part of 10 years for companies to embrace enterprise
resource planning (ERP) and become confident enough to use it in
their core processes and, while it will not take that long for
cloud computing because timescales are being compressed, it will be
at least two or three years."
Patchwork approach
In the same way that ERP applications have not been employed to
automate 100% of enterprises' business processes, it is unlikely
cloud computing will be adopted as a wholesale replacement for
on-premise systems. Instead organisations are likely to use a more
hybrid patchwork of on-premise, "public" cloud and "private" cloud
services where appropriate.
The concept of "private" cloud computing involves companies
deploying key enabling technologies such as virtualisation and
multi-tenant applications to create their own "private cloud"
datacentres. Individual business units (or partners) then pay the
IT department for using industrialised or standardised services in
line with agreed charge-back mechanisms. For many enterprises this
approach is less threatening than a wholesale move to the public
cloud, but should make it easier to hand individual services over
to a third-party provider in future.
But a particular area of the supply chain in which the public
cloud is believed to have much potential, particularly in a
globalised world, is that of boosting visibility in those processes
where collaboration with and between third-parties such as
suppliers and partners is key.
For example, in the case of inventory, it can be difficult for
manufacturers to ascertain what is happening with various stock
items at any given moment in order to take action should it become
necessary. This is because partners across the supply chain often
do not provide each other with timely enough information, and
process steps tend not to be joined up as seamlessly as they might
be.
Russ Daniels, Hewlett-Packard's vice-president of cloud
strategy, however, has cited a potential scenario where businesses
could ask each of its suppliers to file reports into the cloud
about the components that they ship, including their current
status. The company would then analyse the aggregated data and
tackle any specific issues or problems that were unearthed.
But although Nogueira believes that such a view of the future is
"feasible and an objective that many organisations have around
cloud", he also says that "it will take some time before
enterprises are willing to embrace that vision in the supply chain
context".
Tim Payne, research director of supply chain management at
Gartner, says such a scenario is unlikely to become a reality for
"five-years-plus". Sectors such as a high tech and electronics,
which use high levels of contract manufacturing, or retail segments
using many offshore providers, are likely to move first as the
business case will be stronger, but "you need quite visionary
actors in the supply chain to really make it happen", Payne
says.
Cultural change
And such vision is necessary because the key reservations about
using cloud computing for collaborative processes tend to be mainly
cultural rather than technological.
Ian Finley, vice-president of research at AMR Research, says,
"It revolves around political issues that require a change of
mindset. People have to think of themselves as part of a supply
network rather than as individuals, and it is a difficult
shift."
Although such a shift is similar in nature to that required when
moving to ERP systems in the past, it is actually a bigger one. The
former scenario had, for the first time, required business unit
managers to think of the greater good of the whole organisation
rather than simply of the benefits to their own power base.
But says Finley, "To move to common processes across the supply
chain is going to require a similar transfer of power - only this
time, there is not a CEO to say 'do it this way or you will not
have a job'. So it will require members of the supply chain getting
together and deciding the best thing for the community."
One of the challenges, however, relates to trust - trust around
how much information is shared and how early; trust that such
information will not be passed on to rivals and trust on the part
of community members that it will not be used against them. This
means that, at the very least, agreements need to be set up to
ensure organisations are encouraged to work together fully with
others.
Because of this all-important trust issue, it seems likely that
despite the probable emergence of new players, business-to-business
trading hubs such as e2Open and GXS - which provide a basic form of
cloud service already - will have a strong part to play in the
future should they decide to either build out their own cloud
service offerings further or partner with third-parties.
As Finley concludes, "If you are a company the size of Wal-Mart,
you can say that 'if you want to deal with us, you have to do it
our way'. But if there is a trusted third-party that you can hand
things off to in the cloud, I think it is the route most
organisations will prefer."