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Shifting IT landscape

18 May 2018

Your IT landscape strategy will be crucial in supporting the digitalization of your logistics operations. Several factors influence your IT landscape, make sure you identify them and make the right decisions.

Customer expectations

The monolithic and generally linear supply chain models of the past are no longer fit for purpose. Those that stick to the logistics models of the past will find themselves straining at the demands placed upon them by the millennial consumer. Supply Chain is becoming part of the product experience, not an invisible ‘support’ function.

Companies understand that they need to innovate their supply chain in order to meet those customer expectations. This translates into a digitally enabled supply ecosystem which enables:

  • Transparency
    Complete view of the supply chain
  • Communication
    Information available to all supply chain members simultaneously
  • Collaboration

Natural development of collaboration depth to capture intrinsic supply chain value

  • Flexibility
    End customer demand changes are rapidly assessed
  • Responsiveness
    Real-time response on planning and execution level

Innovation and technology play a vital role in migrating from a classic supply chain towards this digitally enabled supply ecosystem. The customer expectations doesn’t only impact ‘last mile’ deliveries, it’s impacting the whole supply chain, where you are part of.

“Innovation isn’t coming from the big guys”

Some weeks ago I was talking to one of our integration partners. During the conversation he said “well, innovation isn’t coming from the big guys - they only innovate in powerpoint …’.

I don’t fully agree on what he said - but there is some truth in the fact that large companies have more difficulties in innovating compared to younger companies. The same applies for large ERP suppliers - their innovation is typically aimed at ‘doing the same but in a different way’. Innovation in the world of ERP’s for example is offering a native cloud ERP solution. This is not innovating on a functional level (as SaaS isn’t something new) but it is innovating because of the scale and complexity.

A recent survey by Rimini confirms this, Vinnie Mirchandani, author of SAP Nation, said: “The SAP Business Suite is remarkably robust and feature-rich, but SAP’s ability to successfully innovate outside core ERP has not kept up, so a two-speed approach makes sense. Stick with the proven core, but continue to innovate around the edges with many modern solutions that are available from some very nimble companies.”

Your ERP is your backbone - the IT foundation of the company. The question you could also ask yourself is: do you want your backbone to be flexible, innovating, and changing every year? Or would you prefer to have a solid, reliable and maybe not so innovating backbone, complemented by other applications that innovate and offer specialisation.

It’s a balance between customizing your ERP and complementing it.

Best of breed - or monolithic

In the last decades we’ve seen several IT strategies. We’ve seen the ‘best of breed’ and the monolithic ERP strategies - each with their pro’s and con’s.

Best of breed definition from Gartner:

Enterprises often purchase software from different vendors to obtain the best-of-breed offering for each application area. For example, enterprises may purchase a human-resource package from one vendor and an accounting package from another. Although enterprise resource planning (ERP) vendors offer numerous enterprise applications and claim that their integrated system is a superior solution, all modules in an ERP system are rarely best-of-breed.

According to Flexis, innovative supply chain leaders are adopting a new approach to ERP, one that goes far beyond "best of breed." This postmodern ERP fosters strategic collaboration between business and IT leaders and sets organizations on the path to thriving in the Industry 4.0 environment.

Flexis calls it the “Postmodern ERP”

“Postmodern ERP is like "best of both." This model uses a core ERP solution, bringing operation efficiency and business standardization. The core ERP is supplemented and complemented by specialized solutions, which are usually accessed either through the cloud or via business process outsourcers that can add value through innovation, differentiation and user-centered design.“

Postmodern ERP offers several key benefits that impact not only supply chain leaders but the organization as a whole (you can find more details here):  

  • Synergy among business and IT leaders
  • Ability to plan for the full life-cycle
  • Improved usability and adoption
  • More robust data integration:
  • Elimination of shadow IT
  • Greater overall flexibility and agility
  • Potential to extend beyond the enterprise

Impact of millennials

The number of advertised procurement and supply chain roles is up 22% year-on-year, and with Millennials set to make up more than half of the workforce by 2020, employers are looking to Millennials as the future business leaders in this profession.

For Millennials, the expectations surrounding technology standards in a business are very high and any business that is not tech savvy is at risk of losing these skilled professionals.

This makes Businesses are speeding up their technology adoption phases to ensure they attract Millennials possessing these skills

Millennials will influence what your IT landscape will look like in the future. Make sure that yours matches.

Conclusion

Your IT strategy will be key in transforming your supply chain in a digital enables supply eco-system. If you want build a competitive, customer-centric supply chain, make sure you take into account the different factors that influence it.

Keep in mind - the supply chain of the future needs to be aimed at pleasing millennials, and will be operated by millennials.