Category Archives: SaaS

Are Open-Source Data Interchange Standards for SaaS the Key to Radically Simple Supply Chains?

A couple of years ago, the Harvard Business Review ran an article on “Radically Simple IT” that noted that the fundamental problem with enterprise IT projects, which continue to be a headache for business leaders, is that these systems are constructed using a cathedral approach. Like the great cathedrals erected in Europe in the middle ages, enterprise IT projects are costly, take a great deal of time, and deliver value only when the project is completed. Furthermore, they yield systems that are inflexible and cement companies into functioning the way their businesses worked several years ago, when the project started.

What’s needed are systems that can be improved — rapidly and continuously — well after they’ve gone live. The systems should be built on a “path-based” approach that provides a path for the system to be developed over time. After all, it’s difficult and costly to map out all requirements before a project starts because people often cannot specify everything they’ll need beforehand.

Given the rapid escalation of supply chain systems, designs, regulation, and security requirements, it’s pretty much impossible to map out all of the requirements of a supply chain systems project before it starts. And even if it could be done, they’d just change tomorrow anyway! A new approach is definitely needed for developing and implementing systems that serve the supply chain, and I think we’re reaching the point where they will be born of necessity.

You see, even though there are now a number of big players out there that offer very broad solution suites, these suites are, still, for the most part restricted to sourcing and procurement, logistics and inventory management, or global trade and data exchange. While the footprints of each type of system is rapidly expanding within their respective domains, most systems are still not expanding beyond the comfort domains of the vendors providing the systems.

And to be honest, most vendors with expertise in sourcing and procurement, have little in logistics, inventory, or shop floor operations and most with expertise in logistics, inventory, or shop floor operations have little in global trade regulations and security requirements. The key is going to be the development of modular SaaS platforms that can interoperate using a common data language that is open and not owned by any single vendor. (Single vendor standards just build a single vendor eco-system, or a bigger Ariba Supply Network.) Just like the web was built on true open standards, next generation supply chains need to be as well. The question is, who will lead the effort and when will the major players buy in?

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SaaS Is Green … But It’s Greener If You Go Thin Client

This summer, MessageLabs (now part of Symantec) released a white-paper on “The Greening of SaaS” which I found very disappointing because one key point that many vendors overlook when selling SaaS is how it can considerably green your operations if implemented and utilized properly.

The paper indicates that with no hardware to purchase or software to run, the energy required to power that hardware and execute that software is eliminated or significantly reduced, depending on client-side consumption. While it is true that the client does not need to buy, maintain, and then dispose of (as much) energy consuming software if they go SaaS, as they won’t need a server farm in a data centre, this does not make SaaS green. If the “SaaS” vendor is actually an ASP-in-disguise vendor maintaining a separate instance of the application on separate hardware for each client, the same amount of energy will be utilized and the same amount of carbon produced. The only difference is that it shows up on the provider’s carbon footprint and not the client’s. That’s not green at all. It’s only green, on the server side, if the vendor is using a shared multi-tenant model and dynamically managing the modern high-density low-power virtualized server farm so that only the processors and storage devices currently being utilized are powered up and the utilization of active processors is at least 70% (to meet the EU PEU guidelines for green).

Furthermore, it then says that the three key local ingredients for best customer results are:

    • desktop and notebook PCs configured to spin down, suspend, or turn off when not in use,
    • utilization of usage-based power consumption devices (with idle ports suspended and inactive ports disabled) on the LAN, and
    • utilization of WAN optimization devices to minimize equipment needs, data transfer, and power consumption

.

And while all of this is a good start, it makes absolutely no mention of thin client. If all your applications are over the web, why can’t you use a SunRay II or a CP20 instead of an energy hogging desktop? Even a modern desktop will still consume an average of 100 watts of power to the 4 watts for a SunRay II or the 25 watts for the CP20 if you need to replace high-end developer workstations. Furthermore, there’s no mention that you should be replacing your old energy hog CRTs with low-energy LCD monitors if you really want to be power efficient. (Now, it is true that you’ll need one or more servers and SANS with your virtual machine instances to support your thin clients, but when you can easily run 128 virtual machine instances off of a modern, high-density, low-power 32-core diskless server, which can all be stored with terabytes of room to spare on your standard 4U 48 TB SAN, you’re still saving oodles of energy and fistfuls of dollars because the cost of 128 SunRays, 1 server, and 1 SAN is significantly less than 128 desktops which need to be replaced at least twice as often as the thin clients, which have twice the lifespan.)

So yes, SaaS is a very green solution … if it’s done right. It’s not just about aggregating traffic to minimize data transfer needs and, thus, equipment needs to support the data transfer, it’s about being smart with resource and energy utilization every step of the way, from the end user all the way back to the provider’s data centre.

For more on greening your data center and greening your desktops, see the linked posts.

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e-Leaders Speak: Chris Newton of Ketera on “e-Sourcing: Access for all”

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Today’s guest post is from Chris Newton of Ketera.

At Ketera, we think of sourcing as the activity of getting suppliers together, letting them know what you need, and then having them provide you with the best possible solution (product or service or a combination of both) at a price that is competitive in the market. Everybody does this, right?

Sometimes, yes. But sourcing as an organized activity, built around applications and formal processes, has been typically limited to relatively few large companies. There are many other organizations out there (mid-market and large) that have yet to benefit from such solutions. In conversations with customers and prospects, we hear time and again of the same two blocking concerns. This first often boils down to inertia and fear of the unknown, while the second usually comes back to the cost to get started. Most companies find it easy to continue with their manual (primarily email centric) process of collating supplier responses and bids before arriving at supplier contracts, and many have been scared off by historically prohibitive costs to acquire new technology systems. We believe that more and more companies will start using sourcing solutions to manage their purchases more efficiently as sourcing solutions become broadly accessible – in terms of both initial investment and ease of use.

Why do we believe this will happen? We look at Google AdWords – when it started out, very few people knew how to use it. So, few companies invested in it, and even fewer did well. It seemed too technical and too complex to understand the demand for search words, then apply pricing and figure out what was working and what was not. And it looked expensive as an entirely new marketing budget line item with questionable benefits. When the results achieved by best practice early adopters became widely known, however, and new sources of information on search words, pricing, geographical information became broadly available, the use of Google AdWords exploded. Today, it’s becoming hard to find a company that doesn’t participate. By making such relevant information available, Google has taken the mystique out of the technology and made it friendlier and less scary for marketing folks to try these technologies.

We believe sourcing will follow a similar path of adoption once sourcing applications are viewed as having less to do with technology and more to do with helping a sourcing manager do their job efficiently and effectively. We think this will be driven by solutions which are available like any other instant online purchase – immediately, easy to use without any fear of complex technology or requiring intensive training. They will be fully integrated with a complete suite of spend management applications and based on a strong member community of buyers and suppliers. They will be truly affordable to companies of any size. And they will allow a continuum of behaviour, ranging from simple “strategic shopping” actions, through structured “RFx” interactions, to advanced “Auctions” and optimizations.

So why do so many folks think sourcing is complex and solutions are expensive? Because the enterprise software industry has trained them to think that. To successfully sign big contracts for software licenses and consulting services with large enterprises, it’s critical to provide examples and demonstrations that make sourcing appear very complex to justify the expense. Some companies have done this so well, that it’s easy to overlook the fact that only a small percentage of actual sourcing activities occur in such situations. Greater benefits are available to those that apply sourcing solutions and best practice processes more often, rather than in only the most sophisticated scenarios. This requires pushing these capabilities further out into the organization, which in turn drives the need for affordability and ease of use.

Real usability means no training required. Should you need training to do things online that you already do manually? Did you get trained on Amazon before you bought a book? Once unnecessary layers of complexity have been removed (and useful complexities have been set aside for power users), the objective of widespread usage becomes realistic. Step-by-step “wizards” that walk new or infrequent users through familiar processes can be just as effective an on-the-job trainer. (An example sourcing wizard.) New buttons in procurement applications that generate sourcing events in a single click mean that buyers no longer feel they must be locked into published prices or offerings. Use of familiar terminology and abundant online tips makes the browser interface comfortable. So comfortable, in fact, that we believe that many new companies trying out these solutions to run a few test events will find them so easy to use that organizational adoption goes viral. Usage mandates aren’t required when technology really make someone’s job easier and makes them look good at the same time. (With this adoption path, vendors will be well served to offer free trials of their solutions – a welcome alternative to countless sales presentations and follow-up phone calls for folks on both sides of the transaction.)

The previously cited hurdle around inertia and fear of the unknown also crops up beyond new software user interfaces in the realm of supplier management. Old supplier relationships are easy to rely on, but companies are often best served by extending sourcing events to enable a wider range of responses. Not just to extract a lower price, but also to collect more information about the products and services that you are buying. Researching new suppliers to participate need not be a challenge. We believe in creating a ready community of buyers and suppliers that build operational history, ratings, certifications and relationships over time. This large and growing (daily) network of actively transacting suppliers who work with many other buyers then quickly becomes a valuable resource. The community then becomes the foundation for ongoing business transactions and the integrated technology that supports them within established best practice processes.

We are now seeing many of our beliefs begin to prove out in the market as this example shows: A multi-channel home shopping leader conducted a free Google search for sourcing solutions, found the Ketera site, evaluated and then signed up (themselves … self serve … using a credit card) for our on demand sourcing application. They were able to search our network of 140,000 suppliers and within a few weeks had conducted a reverse auction event for freight services that will save them over one million dollars in the next year or two. All for $500 in annual subscription fees. We think this is just the beginning of the direction this market is headed.

Thanks, Chris.

Survey Says … Many Users Underwhelmed by SaaS

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Many users are underwhelmed by on-premise software too. The sad fact is that when many people buy a new software package, they get caught up in the hype and not the reality. Regardless of the delivery model, it’s still software … and in the business world, it’s software which is designed to help you perform many remedial business tasks that are often pretty underwhelming in themselves, to be blunt. Furthermore, should anyone in their right mind ever claim that the software itself would “wow” you more on-demand than it would served from your own data center? (I hope not!)

As I pointed out in the wiki-paper and in numerous posts here on Sourcing Innovation, SaaS comes with a large number of advantages over traditional installed software, but, by default, “wow” is not one of them. A delivery model alone won’t “wow” you as you don’t see it. Only software can “wow” you, and while there are many great SaaS software packages out there for sourcing, procurement, and supply chain management, most of them aren’t going to “wow” you … because that’s not going to provide you value. Good supply management software increases your visibility, helps you identify cost reduction opportunities, and makes you more efficient. “Wow” eye candy might be nice to look at, but not only does it not provide you any value, it costs you. You pay more for the software (because the provider wasted money building the eye candy) and your people lose productivity, because the “wow” will distract them and just get in the way.

So while Gartner’s recent survey, summarized in a recent S&DC Executive piece, that found underwhelming customer satisfaction scores, hesitation over the true-cost of SaaS solutions, and concerns regarding how successfully SaaS applications can be integrated with other applications does raise some issues that SaaS providers need to address up-front, I’d contend that “wow” is not one of them.

SaaS Integration Is Not a Challenge …

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… provided, as this article on “SaaS Integration” in Intelligent Enterprises astutely notes, it’s a forethought and not an afterthought. As the author notes, SaaS, like any other software delivery model, is still a sub-pattern of enterprise architecture. This means that you have to account for the architectural requirements in your selection of a SaaS solution. Just like it’s hard to fit a square peg in a round hole, it’s hard to fit a SaaS solution that only communicates in XML with an old on-premise application that only communicates in EDI (unless you have a middleware mapping tool and are prepared to hire an expert architect who understands both products and can define the appropriate mappings for you).

Since the ultimate goal of your supply chain organization is to put together a “suite” of applications that allow you to analyze, monitor, and execute the supply chain end-to-end in a seamless fashion, you need to insure all of your applications synch up through a central data store (which could be on the Cloud). Thus, you have to insure that any SaaS product you buy is capable of exporting and importing the required data from your central data store in one of the formats you can support. You also need to insure that the mappings and integration to other modules that the application needs to synch with can be done in a reasonable time frame at a reasonable price. And if you do this work up front, integration will not be a challenge. In fact, since most modern SaaS applications were built with the understanding that they will have to suck data in from internal sources and spit processed data back out again, as long as you select the right SaaS application for your needs, integration won’t be hard at all.