Category Archives: Technology

Rampant M&A Does Not Indicate the Demise of Best-of-Breed

On the contrary, it symbolizes the emergence.

But let’s back up. A few months ago, Supply Chain Digest, with a piece on the Consumer Goods Supply Chain Landscape asked if Best of Breed [is] a Dying Breed. Noting an increasingly accelerated accelerated spate of mergers and acquisitions among leading supply chain best-of-breed solution providers, they called into question the long-term efficacy of some of these solutions, as well as the viability of these software companies themselves on the premise that there would soon be no best-of-breed vendors left for a consumer goods manufacturer to choose from.

If there were only N vendors, and the rate of M&A kept increasing, then, yes, we would reach an end-state where there were no best-of-breed vendors left. But this reasoning ignores one very important reality — most startups chase the biggest opportunity, which is typically where they perceive the most action to be. If the most action is in the M&A of best-of-breed, then new companies will see the most value in being best-of-breed and, as a result, we will soon see the emergence of a whole new slate of best-of-breed vendors. And while it’s true some won’t be sufficiently capitalized while others won’t hit upon the right technology, leading to their untimely demise, the reality is that a fair number will make it and that some of these, by the law of large numbers, will be even stronger than the remaining best-of-breed players today.

So, while the choices may be limited for the next year or two, the reality is that the number of options available to your average CPG manufacturer will soon explode. As for the other concerns, they’re not too worrisome either. Let’s take ’em one-by-one:

  • vendor future uncertainty
    Manugistics and i2 were considered market leaders and potential acquirers, not acquirees but were still acquired. The reality is that even a billion dollar enterprise can be swallowed up by a larger company, or, as a few spectacular acquisitions have evidenced, go from market leader to an almost forgotten business unit (like Netscape and Lucent) so this is not a concern restricted to best-of-breed.
  • ongoing support
    As most best-of-breed players have moved to (multi-tenant) SaaS or update subscriptions, which keep a customer on the current version, support is not the issue it once was. Plus, most will agree to code escrow, so, even if the vendor went away, the product could still be supported. Plus, once a best-of-breed vendor reaches a certain size, a number of consultancies acquire a competency and while resources might be expensive, support resources are not unattainable.
  • risks
    No solution is without risk. And a small best-of-breed vendor can be more financially stable than a large aggregator leveraged to the max and highly dependent on aggressive sales targets to meet payroll.

So don’t lament the recent M&A binge of best-of-breed players. It only means that new ones will arise and that more innovation is, eventually, on the way.

Supply Chain Realtime Adaptive Priority Solutions — Where Are They?

In these uncertain times, what the supply chain really needs is Supply Chain Realtime Adaptive Priority Solutions, SCRAPS. Reading article after article that reiterates the age-old need to reduce risk, conserve cash, and target the most-fruitful opportunities first while simultaneously reading article after article about the same-old technology, with no innovation in sight, I am starting to look for the SCRAPS.

After asking who is going to upset the market in 2011, and seeing nothing but solution renovation from a few vendors in 2011, I’m not only wondering where the innovation is, but why for the most part (outside of a few vendors who have been improving their existing platform offerings greatly), there have been no (fundamentally) new technologies for a couple of years now. (Even though I know the answer in a lot of cases, and it’s NDA.)

We need something, even if it is only SCRAPS. And, to be honest, SCRAPS might be just what we need. Given the growing plethora of technology platforms, suppliers, geographies, internal customers, and market segments that we need to manage with very limited resources, we need a better way to stay on top of what is most important — TODAY, tomorrow, and the day after. And it’s no longer as simple as simply tracking promised award dates, contract expiry dates, order dates, shipment dates, delivery dates, promotion dates, and other dates of interest.

If a print media campaign has been delayed because a product has been delayed, how important is it to make an award today? If the contract expiring is for plant watering, is it really urgent? Especially when you could just hire a high school kid to come in once a week. But if you need seven days lead time to get those all-beef patties and you’re supporting restaurant operations where all-beef patties are 40% of orders, unless your cube is on fire, you better get that order in. Similarly, if you’re in the apparel industry and a ship date has been missed, given the lifetime of fashion, you better be ready to jump on a plane if necessary to find out what happened. And if a shipment you need tomorrow gets held in customs, you need to know about that right now, not in two days when the product doesn’t show up as expected. And you better be cognizant of when marketing decides to hold its promotions and be prepared to shift your priorities appropriately. If demand doubles, the last thing you want to do is stock out.

Thus, we need technology solutions that can re-organize and re-prioritize tasks and issues that need your attention based upon what’s the most important today, taking into account risk and opportunity (with immediate risks and short-term opportunities getting the highest priority), and not based upon traditional project timelines. And, more importantly, we need solutions that can take the different tasks and risks being captured by your sourcing (spend analysis, RFX, eAuction, optimization, contract management), procurement (requisition management, invoice management, P2P, etc.), transportation and trade (document management, 3PL & transportation management, regulatory compliance management), and risk management solutions and integrate them into a cohesive picture of what is important now, short term, and long term and that can “calendar” them into daily, weekly, and monthly priorities so that you can focus on what’s important, ignore what’s not, and find time for long term strategic planning (by only focussing on real fires and not prank smoke bombs).

Thoughts? Do we need a few SCRAPS?

The Basics of Information Technology Cost Management

It’s a simple five-step process:

  1. Get a handle on the TCO of IT to the business
    How many units have IT support staff? How much are you paying in maintenance and software licenses each year? How much are you paying in hardware leases and upgrades? What about consultants and outsourced support? The data center(s)? Hosting? And don’t forget the “device propagation” that results every time a new application is added to the data center or a CXO gets a new toy (like an iPad).
  2. Focus on the Cost Drivers
    Energy? Hardware? Software? Projects? Where’s the money going, and why? Treat the IT organization like it is a business and balance the supply and demand.
  3. Be relentless in Valuing IT services
    Examine the cost structure through the eyes of your customers and segregate functions and services into value-add and commodity categories and drive the associated costs accordingly.
  4. Be creative in meeting demand and sourcing work
    Examine the people, process, and technology infrastructure carefully to determine if there is a more cost effective way to deliver the necessary services.
  5. Bring in an expert to re-source the hardware, software, and support you need
    Don’t negotiate multi-million dollar deals on your own if you’re not an expert in IT systems and the current state of the market. If you try, chances are that you’ll overpay by a lot more than 10%!

High Tech Needs Next Generation Supply Management

As chronicled in this recent commentary by Bob Ferrari over on Supply Chain Matters, not only do accelerating dynamics reshaping high tech supply chain networks bring implications, but there is continuing turbulence among and across high tech and consumer electronics value-chains. This means that now more than ever, firms in these segments need to continually re-visit their strategic sourcing and supply plans for long-term implications and, in SI’s view, they need to start by adopting next level supply management strategies when they revisit their plans.

And, as Bob suggests, it is imperative that senior management is continually educated to developments and that strategic strategy sessions and interchange be more than just a periodic occurrence. As clearly indicated in this morning’s post, Next Level Supply Management requires Collaboration, Stakeholder Partnership, Leadership, Early Involvement, and Alignment. Not only does Supply Management need to speak as one voice, but the entire company needs to speak as one voice in this sector. The storm is too violent to ride out if everyone is rowing in different directions.

Thank You Brian! Building Apps IS Wrong!

In a recent post over on Software & Services Safari, Mr. Brian Sommer tells us that Building Apps is Wrong! and, as far as the doctor is concerned, he couldn’t be more right!

According to Brian:

      Software application development has been going on for decades. In the old world of software, applications took a (usually accounting) business event and then validated, stored and reported it. These were internal usage utilities that dealt with internal data. That’s the wrong perspective to have today. Businesses don’t want apps – they need ‘capabilities’. Moreover, they need capabilities that serve different kinds of information to different kinds of smart devices to mobile, interconnected workers.

And, as Brian points out, not only do interconnected workers that want to access information whenever and wherever they are, they want one user interface no matter how many solutions are serving up information on their device.

This means that a Desktop App, an iOS App, an Android App, a Windows App, each customized to the browser or platform, is not the way to go. When you customize to the platform, you tend to drift away from the current UI to the new UI until you have a hodge-podge of interfaces across a dozen platforms. Unless you want to develop your own extensions to the default development libraries on each platform, and alter your UI to be observant of the limitations of each library, you need to focus on a platform-independent delivery method (such as mobile-compatible HTML 5) and focus on what the user really wants — a slick, information-rich, user experience, and not a solution exclusively oriented around the data and the capabilities of the platform.

After all, as Brian points out, what the user really wants is:

  • Context to enrich and complete transactions, customer interactions, etc.
  • Information served up at point of need
  • Information designed to answer the worker’s or customer’s needs
  • Information beyond transactional data
  • A solution that makes the most of data, voice and video

and not flash. If they want HD graphics, they’ll fire up a HD game.