Every week, LogistiekProfs lets a professional talk about his or her expertise. This week: supply chain expert Hans Groen on the deployment of SaaS (Software as a Service). What are the pros and cons of the software? And what steps are needed to make SaaS successful?
With the economic downturn in recent years, companies have become reluctant to make large investments that do not have a clear and quick Return on Investment. Software as a Service (Saas) has the potential to reduce TCO enrealising a high ROI at the same time.
What is SaaS?
SaaS are web-based software applications. The user accesses the standard application via the internet. All activities are outsourced and managed from a single location. Multiplecustomers can use the standard applications, albeit with different datasets. Using API [Application Program Interface], customers can achieve a higher level of integration with their existing processes and supporting software.
Pros and cons
- The customer does not have to buy the software, but only pays for its use
- Software and hardware are not installed at the customer's premises. It is completely web-based.
- The Applications Provider manages the application, such as upgrades, maintenance, backups etc
- No high investments needed
- Lower total cost of ownership
- When using many APIs, there is the risk of vendor lock-in
- Securing sensitive business information can be critical.
- Higher costs for licences.
- Integration with complex local ERP systems can be costly
- SaaS providers only have a limited number of applications. For governments or large global players with numerous applications, this can be a disadvantage. It requires agreements with a large number of suppliers.
Supply Chains challenges.
In order to determine whether SaaS can contribute to your supply chain, an overview of strategies followed is essential.n and developments needed within your supply chain. Can SaaS be included in your strategy and how does it contribute to it?
According to research by Aberdeen Group, companies are working hard to eliminate non-added value and simplify complexity in the supply chain. Followed by looking at opportunities to integrate and collaborate. Becompanies, under pressure from a tight investment market, do not have the luxury of spending a lot of money on complex and lengthy software implementations. Implementations should be quick, easily rolled out with a relatively short payback period.
Supply Chain complexity is increasingly increasing, however, influenced by the ongoing globalisation of global suppliers, global competition and global customers. Traditional ERP systems often lack the required capabilityijabilities of providing quick insight into new developments and they are quite rigid to use once they have been instimplemented. This forces companies to add software solutions to quickly analyse new developments. Often vallen departments then revert to traditional spreadsheet solutions. This reduces the value and significance of the ERP system.
DriversA key condition for the success of SaaS is getting the business units on board to implement SaaS solutions to support. This will mean a change in IT strategy. Most IT departments are in full control of these when it comes to the distribution and maintenance of software applications. SaaS requires a different set-up of IT management. SaaS will enable the IT department to focus more of their attention on IT strategy instead of performing their traditional management role. In fact, on-demand solutions can be seen as a form of outsourcing. But without proper support at board level, the CIO, SaaS solutions can fail.
Steps to success
- Develop a holistic roadmap. Realise a strategic roadmap that describes the steps for further simplification and standardisation of processes and indicates the added value of the possible SaaS solutions. Develop a clear calculation model with upfront and ongoing costs, customer requirements, supplier requirements and expected cash flows and return oninvestment.
- Improve your ability to react quickly to changes in the market. This requires agile and integrated processes within the organisation and between partners within the chain.
- Define and implement multi-enterprise supply chain indicators die provide visibility into the critical processes within your supply chain.
- Keep striving for more flexibility from your own organisation and that of your suppliers. The ability to remain flexible and responsive is the key requirement forr SaaS providers at Best-in-Class companies adopting SaaS.
ConclusionCan SaaS fulfil its promise? It all depends on the willingness and ability of partners within the Supply Chain to break with their traditional way of handling informationmanagement and the exchange of information which is crucial for your supply chain.
Stored in the Cloud, rapid exchange of information is possible using SaaS, which can help simplify processes and reduce costs within the supply chain. Linked to local solutions using API, a closed loop of information management can be achieved. SaaS offers ample opportunity for customisation for business units, avoiding the rigde standards of ERP systems.
But the real success depends on the maturity and readiness of organisations in adapting their processes, their organisational structure and realising the right knowledge and technology. Such ake change will be a major challenge for all partners within the supply chain.
Hans Groen - Advisor Supply Chain and Performance management
