Logistics Viewpoints

A complete analysis of logistics trends, technologies, and services

Is Oracle’s Acquisition of Logfire a Cloud-WMS Inflection Point?

Cloud/Software-as-a-Service | By •

picture3Oracle recently announced a definitive agreement to acquire Logfire, a Cloud WMS provider. Last year I explained that Cloud WMS deployments still remain limited compared to Cloud adoption of other supply chain software (I am using the term “Cloud” to represent single instance, multi-tenant solutions). And with good reason. WMS is a real-time application that requires quick response times to function properly. In addition, a WMS solution supports processes often confined to a single facility. In contrast, TMS and GTM solutions deliver much of their value by facilitating communications across organizations – a proceed well-suited for Cloud solutions. In full disclosure, I do consider myself to be one of the more hesitant analysts to jump on the “cloud” bandwagon. But I also believe that Cloud deployments will continue to displace the traditional on-premise, perpetual license model. I just think that hype has gotten far ahead of the value proposition in many instances. However, ARC’s research does show that Cloud deployments recently accelerated within the supply chain planning software market.  And our research also shows that the WMS market is a bit of a final frontier for Cloud deployments. But Oracle’s recently announced acquisition of Logfire may signal an inflection point in the adoption of WMS in the Cloud. Here is why.

Large established enterprise software companies need growth, and smaller Cloud companies need economies of scale. It may be an obvious message, but it has never been truer. Cloud companies are growing rapidly, but off a small base. Meanwhile, large ERP vendors such as Oracle have been experiencing pricing pressure and slow organic growth rates. In the past it was sensible for Cloud solutions to exist and grow as separate entities from traditional software vendors. The scale of their operations was negligible compared to the established software business and start-ups don’t flourish in that type of environment. But the market has matured and the tide has shifted. Oracle, and other large ERP vendors such as Infor, are now committed to their Cloud offerings. They see the Cloud as a natural transition from their traditional perpetual licensing and maintenance business model. These companies also have economies of scale, large installed bases of customers, and a broad suite of solutions. All of these  organizational characteristics can facilitate rapid adoption of a new product such as a Cloud offering.

From a WMS feature and functionality perspective, users have been slow to adopt WMS in the cloud due to internet latency concerns, scalability, breadth of functionality, and desire to have control over the solution. Although Logfire is a small company, its WMS is a functionally-rich multi-tenant solution that has been adopted by a number of large companies with complex requirements. The company claims to have tackled latency concerns and can support its position with customers that are integrating the solution with real-time warehouse automation. Finally, the Logfire solution is being added to Oracle’s SCM Cloud offering that has been a high profile project for Oracle. Therefore, the integration and ongoing development of Logfire’s applications will likely be an investment priority for Oracle going forward.

Final Word
WMS remains the final frontier for Cloud adoption of SCM software solutions. However, Oracle’s commitment to the Cloud and Logfire’s product design may just be the right combination to accelerate Oracle customers’ adoption of WMS in the Cloud and subsequently stimulate other WMS providers and their customers to follow suit.

The Myths and Realities of Implementing a TMS

Guest Commentary | By •

As a company grows and expands its geographic footprint by procuring and selling goods around the globe, its supply chain naturally becomes more complex. As a result, a savvy supply chain manager will often look to deploy a transportation management system [TMS] to plan and run the company’s transport operations.

Unfortunately there are some lingering myths about implementing a TMS that have kept many businesses from transitioning away from outdated legacy systems. Here are the three biggest misperceptions about using a TMS to streamline your supply chain.

Myth #1: A Software-as-a-Service [Saas] solution doesn’t add value when it comes to logistics.
Reality: SaaS is a deployment strategy, not simply a procurement model. If you think about transportation and supply chain networks, the backbone to any successful approach is connectivity and effective trading partner collaboration. With a SaaS solution, the ability to easily connect with partners is inherent within the subscription vehicle and the cost is part of the proposition. In other words, much of the connectivity is built-in and there are fewer hurdles or unknowns with a SaaS solution compared with traditional software, which requires a huge IT investment to build out that network. Opting for a SaaS model allows users to easily scale and deploy systems globally, which is invaluable, especially during business expansion or an acquisition.

Myth #2: Systems delivered via the Cloud are too costly to implement for mid-size businesses.
Reality: Historically, return-on-investment [ROI] studies regarding TMS systems have examined large companies that work with enormous volumes and scores of trading partners, making implementation costs appear high. Truth be told, the total cost of ownership depicted by these studies simply isn’t germane to most businesses, especially mid-size companies. These organizations don’t have as many partners or customers to consider and the initial configuration is much more straightforward, so the costs of implementing and maintaining a TMS are much lower than what a larger company would incur. In addition, mid-size companies can use a TMS to automate processes they now handle manually, such as load tendering, which can free up staff to pursue value-add activities that can lead to further savings – something that’s rarely considered in an ROI analysis.

Myth #3: If you want to go global with a TMS solution, you have to move everything in-house. Outsourcing is no longer an option.
Reality: This is probably the biggest myth and one of the main reasons companies have been reluctant to undertake a global TMS strategy – and it’s simply not true. Businesses can still use outside vendors with a TMS. If you are using a 3PL in your supply chain, all you need is to have its operational data fed through your TMS, which shouldn’t be a challenge as the supply chain industry becomes increasingly digital. It’s no different than the way shippers connect their TMS with their carriers. You don’t need to take 3PL operations – or any other service provided by an outside vendor – in-house just because your business operates a global TMS. A SaaS-based solution makes it easy to connect to all your trading partners and third-party providers.

The Bottom Line
Running a TMS has become a competitive differentiator across virtually every industry, both for the way it can streamline transport operations and for the crucial data analytics and intel it can provide a business. It’s time to throw out all of the outdated myths and misconceptions you may have heard and consider the bigger picture: a TMS is a strategic investment that any shrewd logistics manager will consider in order to thrive and grow in today’s volatile market.

As Vice President, Multimodal Transportation Solutions at Kewill, Walt Heil brings over 20 years of experience in supply chain and transportation management operations, sales and sales leadership. Prior to Kewill, Walter led the worldwide commercial efforts for the IBM Sterling TMS solution, providing strategy and executive leadership for IBM’s global supply chain execution portfolio. Walt has managed several sales organizations and led Sterling’s supply chain execution strategy for the North American manufacturing market. Walter holds a Bachelor of Arts degree from Michigan State University and attended The Detroit College of Law.

Resolve to Make 2016 the Year of the TMS for Your Business

Cloud/Software-as-a-Service | By •

Walt HeilIf you’re like most, you’re probably toying with the idea of making some New Year’s resolutions for 2016 – to exercise more often, cut down on the Big Macs, stop cursing, whatever. But you don’t need to limit those resolutions to your personal life. How about resolving to improve your company’s transportation management next year?

You might think it’s too late for such an ambitious undertaking at this late date. But you’d be wrong. With a cloud-based transportation management system [TMS], you could be up and running in a matter of months and realizing a return by Easter. Let me lay it out for you.

The secret lies in the Cloud, which has become the great equalizer in supply chain software thanks to its speed, simplicity and savings. It used to be only deep pocketed corporate leviathans could afford sophisticated logistics tools to help them streamline their supply chains. That’s no longer the case with the Cloud now providing small- and medium-sized companies the opportunity to get in the game.

The Cloud has taken the traditional software buying process and turned it upside down. The move away from complicated, on-premise systems to hosted, SaaS-based solutions has made everything from procurement to implementation much more straightforward thanks to:

  • Cost – No longer do you need to sell your bosses on the kind of big capital outlay that comes with on-premise solutions. Cloud software is subscription-based and can be funded through operating expenses with little upfront cost.
  • Complexity – Cloud-based solutions are largely plug-and-play and hosted off-site. So they don’t require deep involvement from your IT department. In addition, the best solutions are template-based, which makes it easier for employees to learn the ropes and get started.
  • Speed/ROI – For the reasons outlined above, implementation times are reduced to just a couple of months. And we all know that the quicker you’re up and running, the sooner you’re saving money. While your competitors grapple with byzantine RFPs for complex on-premise solutions, you can be banking those savings for your next round of supply chain improvements.

A cloud-based TMS solution is inherently scalable, so there’s no reason to worry about outgrowing your system. It easily grows alongside your business.

If you’re serious about buying a transportation management system, it’s imperative you look beyond just features and functionality. While those are certainly important, the heart of a strong TMS solution is its ability to connect with your carriers. With some vendors you’ll have to manually build out your carrier network, which can be difficult and time consuming if you work with more than a handful of carriers. Other vendors offer built-in carrier networks that are already dialed into hundreds, if not thousands, of carriers – with more being added all the time.

So now you can see that a cloud-based TMS is something you can get up and running quickly for your business. Gone are the days when it took 18 months or more to grind through the purchasing process and actually get the software in place, configured and working properly.

But before you rush out there and take the plunge on a new TMS – or any piece of software, for that matter – here are few tips to keep in mind:

  • Identify the problems you want to solve today and target those – Don’t get distracted by fancy features that address problems you don’t have. There’s nothing worse than a solution that doesn’t deliver much in the way of immediate benefit.
  • Approach the bigger picture incrementally – Find a solution that enables you to make small improvements on a regular basis and build out an overall strategy. You’ll lower your upfront costs and be able to point to your successes when looking to make additional investments.
  • Do your homework – If you take a hard look at what your needs are and do your research before you start shopping, it will make it much easier for vendors to focus on how their solution can work for your business. Better planning will lead to quicker buy-in from management and a faster implementation.
  • Stay away from disruptive technologies – Let the giant companies with their big IT departments roll the dice on the cutting-edge stuff. You don’t want to find yourself stuck with something unproven and ineffective.

So what are you waiting for? 2016 is almost upon us. If you want your company to take that next step, you should resolve to get out there and kick the tires on a TMS solution and learn how it can streamline your supply chain and make your business more efficient.

As Vice President of Multimodal Transportation Solutions at Kewill, Walt Heil brings over 20 years of experience in supply chain and transportation management operations, sales and sales leadership. Prior to Kewill, Walt led the worldwide commercial efforts for the IBM Sterling TMS solution, providing strategy and executive leadership for IBM’s global supply chain execution portfolio. IBM Sterling TMS was born from IBM’s acquisition of Sterling Commerce in 2010, which had previously acquired Nistevo Corporation in 2006. During his tenure in all three organizations, Walt managed several sales organizations and led Sterling’s supply chain execution strategy for the North American manufacturing market. Walter holds a Bachelor of Arts degree from Michigan State University.

5 Bold Predictions from the CEO of Oracle

Cloud/Software-as-a-Service | By •

Mark Hurd, the CEO of Oracle, made some bold predictions for where the enterprise market is going.

Prediction 1: 80% of all applications will run in the Cloud by 2025. Today, he said, 24 percent of enterprise applications are in the cloud.

Prediction 2: By 2025, Two Suite providers will have 80% of the SaaS Applications market. Further, Oracle will be one of the two.

Prediction 3: 100% of New Development Testing will be in the Cloud by 2025.

Prediction 4: Virtually all Enterprise data will be in the Cloud by 2025.

Prediction 5: Enterprise Clouds will be the most secure IT environments.

HurdOpenWorld

Mark Hurd’s Keynote at Oracle OpenWorld on Monday October 26th

These predictions are praiseworthy because they are bold and specific. In 2025, we will be able to look at the Enterprise market and see which of these predictions turned out to be right.

But they are also somewhat self-serving; these predictions appear to be designed to create a Cloud bandwagon effect. And, not surprisingly, the main theme of the conference was that companies should be buying Cloud applications. Companies should do this because, in comparison to on premise solutions, the total cost of ownership (TCO) is better, Cloud solutions are much easier to upgrade, and Cloud data is more secure.

As to the total cost of ownership, it is a bit difficult to gauge right now because these are new solutions. However, one solution that has been sold in the Cloud for a while is Oracle Transportation Management (OTM). I talked to one of Oracle’s main integrators for OTM, and their estimate was that implementations were 40 to 60 percent faster. But I believe they were talking about a “templated” solution that was preconfigured.

There was also a customer panel where early adopters were invited to talk to industry analysts about their Cloud experience. Most of the companies were not fully implemented, but one of the customers, one of the world’s largest, had implemented financials in Canada. Based on this implementation, that CIO believes that implementations will end up being about 30 to 40 percent faster. This seems like a more reasonable estimate to me.

One reason for faster implementations is that Cloud solutions are off the shelf solutions that are not customized. The early adopter Customer panel was asked about this. Three of the five customers said they were customizing the solution by building customizations using Platform as a Service tools so that their upgrade path could be protected. Nevertheless, the impression I was left with was even those that were customizing the solution were doing so to a far smaller extent than what has historically been the norm.

The final idea, that Cloud data is more secure, is something that probably generates a fair bit of skepticism.

Both Mr. Hurd and Larry Ellison, the Executive Chairman at Oracle, addressed this issue by speaking about how their solutions use encryption to protect data. I am no expert on encryption, but ARC’s IT security analyst – Sid Snitkin – listened to Mr. Ellison’s Tuesday afternoon keynote remotely and was impressed by what he heard.

My opinion is that Oracle will make security a core competence. That is something I believe most companies would admit they won’t do, and probably could not do even if they decided this was a goal.

But, the security issue is more complex than just insuring outside hackers can’t get access to a company’s data. In the wake of the Snowden revelations, companies want to make sure governments can’t get access to their data as well. Mr. Hurd stated, “If the government says give us your data, we’d say ‘No.’” If they got a subpoena, we would say ‘OK,’ but we would give the government encrypted data. The government would not be able to make sense of the data.”

Mr. Ellison made the point that a key question for SaaS providers is whether their internal technicians could decrypt their customer’s data. At Oracle the answer to that question would be “no,” their database administrators would not be able to make sense of the data. Mr. Ellison stated that very few SaaS providers would be able to say the same. For the security conscious, an onsite server could be designated as the site for all encryption keys.

Oracle recognizes that many companies own on premise Oracle applications. They recognize that the transition to Cloud for most existing companies will not be Big Bang but rather one application at the time. They support these kinds of hybrid environments.

 

 

 

Where SaaS Makes Sense

Cloud/Software-as-a-Service | By •

As an ARC Advisory Group enterprise software analyst, I am acutely aware of the promotional activities surrounding the software-as-a-service (SaaS) delivery model. In fact, it sometimes concerns me that the SaaS model is being promoted as the ideal means of application deployment for all customers in all situations. I do not believe it is such a cut and dry argument. Clearly the decision is complex. However, I do believe there are a few key characteristics that determine the suitability of the SaaS model for a given situation and set of requirements.

I have conducted research on a number of enterprise software markets and this process has revealed a wide disparity in SaaS adoption across application types. Possibly the greatest determinant of SaaS adoption is the degree to which the application manages transactions and processes that are internal to an organization, or across organizations. Those applications that support transactions and processes between trading partners have experienced greater SaaS adoption than those applications that serve as an internal corporate platform. For example, SaaS adoption has been robust in the strategic sourcing, transportation management, and global trade management markets. At the same time, SaaS adoption has been limited in the ERP market.

SaaS applications that connect organizations and support trading partner transactions are well positioned to deliver demand-side increasing returns, also known as the “network effect.” Once established, the network increases in value with the number of users. Descartes Systems is one technology provider that is successfully leveraging the combination of network connectivity and SaaS applications to expand its client base and solution footprint.

Descartes’ Global Logistics Network (GLN) has long been the foundation of its technology platform that also includes a broad suite of logistics applications. This messaging network offers capabilities such as connectivity, document exchange services, transformation, and other communication services. More recently, Descartes acquired IES, and incorporated the IES eCellerate product into its expanded vision of a networked community. Descartes eCellerate is a collaborative suite of solutions that enables customers to manage shipments, customs filings, and other disparate transactions on a single web-based platform.

At the 2013 Descartes user conference on November 12-14, they discussed the launch of the Descartes Community and the role of eCellerate in supporting partner collaboration within the community. The Community expands the GLN with improved collaboration tools and a single interface to communications and Descartes applications. It further facilitates multi-party processes, which I believe to be central to the value of a SaaS solution that supports transactions and processes between trading partners. The ability for community members to develop private sub-communities is a feature that I consider to be of great potential. This will allow subsets of Descartes customers to develop their own closed networks with information security levels that promise to encourage greater information sharing among participants. Descartes has also developed a data warehouse of shared and secure Community data on shipment activity that can be accessed and leveraged by participants. The shipment data warehouse also offers graphical display of data for intuitive comparison and analysis.

The Descartes Community further extends the benefits of the Descartes GLN. It offers further value to customers and provides additional tools that can ultimately increase the “network effect” of Descartes solutions. The technology is now in place, with future user adoption now the main determinant of the value that will be realized by customers.

Note: Descartes is a Logistics Viewpoints sponsor.

Guest Commentary: Three Reasons We’re all Moving to the Cloud

Cloud/Software-as-a-Service | By •

Did you buy something with a credit card today? Are you working from a location other than your company’s headquarters? Did you check your bank account online this morning or download a file housed in an online data storage service? These are all examples of how we live our daily personal and professional lives in the cloud, often without even realizing it. Our data is stored in a secure location not physically near us, and the appropriate systems exchange our data seamlessly so that we can move through the day smoothly and efficiently.

The supply chain and logistics worlds are no different. An increasing number of companies are embracing the move to cloud-based versions of software and systems – and the adoption rate is accelerating. Warehouse management systems (WMS) in the cloud are an important part of this shift, and several analysts firms agree that growth in the cloud-based WMS market will continue to accelerate in the next several years. With a cloud-based WMS, the customer gains the functional benefits of a new WMS without the up-front costs or IT drain, plus implementation times are much shorter because there is no lengthy installation process. If the cloud-based WMS’ functionality and R&D investment are focused on the same code base as the vendor’s on-premise tier 1 solution (which they should be), you benefit from the same product enhancements and new features regardless of which deployment model you select.

In addition to the functional benefits, more companies will be moving their WMS to the cloud for three major reasons: Recent leaps in WMS innovation, the ability of a cloud-based system to scale to the needs for a business, and our society’s comfort with communicating sensitive information via remote systems. Let’s look at these reasons in more detail:

WMS innovation: Maybe you don’t need all of the bells and whistles of a full-scale WMS. No problem. The WMS market is more accessible than ever for small and mid-sized businesses (SMB), thanks to versions that provide the key features needed to quickly deliver ROI, including the tracking and visibility of inbound orders, directed put-away, variety of picking methods, shipping, directed replenishment and inventory control. And with a cloud-based service, a company can add more complex capabilities as demands warrant without implementing a new platform or searching for a new WMS.

Scaling the cloud: You may need certain functionality today, but you’ll likely have different needs down the road. Many of today’s cloud-based WMS systems come with adaptability tools, from architecture that allows you to customize the WMS to fit your business to app stores that provide a collection of new workflows that can be easily downloaded and installed, eliminating the time and cost associated with going through a vendor for changes. You can also scale up or down a cloud-based system, allowing you to access more power or less to adjust for seasonal spikes and changes in demand.

Everyone else is doing it: As I noted above, we’ve already moved significant and sensitive areas of our lives to the cloud. Market-leading, certified vendors provide extremely high levels of data security, often surpassing your own internal IT department’s standards. Not to mention being able to forgo the up-front cost and security investment in new servers, storage, and additional software that comes with managing your own deployment. So if your money and your employees don’t have to physically be in the same room with you in order to be successful, why does your WMS?

Today’s WMS is adaptable, scalable and secure. I have no doubt that the speed at which we are seeing our customers adopt a cloud-based WMS will only accelerate and reflect analysts’ predictions that more of our lives will be moving to the cloud.

Chuck Fuerst is the director of product strategy at HighJump Software. He has more than 15 years of experience in the technology market, working for supply chain and ERP software companies to deliver innovative solutions. Chuck is responsible for monitoring supply chain industry and technology trends and identifying ways to enhance the value of products for HighJump’s customers. He holds a bachelor’s degree in marketing management and innovation from Concordia University.

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