Executive Briefings

SaaS & On-Demand Systems: Will SaaS Save the Supply Chain?

Analyst Insight: Last year's economic pressures were among the most severe ever exerted on the modern supply chain. In response, many organizations are searching for ways to cut costs from their operations, either by reevaluating their IT infrastructure or by reengineering their business processes.

As of 2007, the software as a service (SaaS)/on-demand model has begun to be embraced by large and medium-sized  organizations, due to the lower up-front investment in licensing, lack of IT infrastructure cost, and minimal IT operations requirements. Indeed, SaaS has started to obtain much more traction, as many large and medium companies are striving to get the most out of their IT budgets with minimal time investment. With the SaaS model, organizations are looking not simply for a quick fix, but for long-term operational efficiencies driven by rapid deployment of up-to-date functionality.

With the demand volatility that accompanies uncertain economic conditions, it is essential for organizations  to ensure end-to-end supply chain visibility. With SaaS applications, visibility into demand trends and changes in business needs are available more quickly, with a low impact on IT resource requirements. SaaS also enables data to be shared between trading partners over the Web in real time, gathering everyone on the same page, regardless of respectively unique business processes.

Other key reasons organizations are shifting to the SaaS model for supply chain management improvements:

• the ability to integrate real-time data with existing applications, be they enterprise resource planning or SCM applications
• real-time inventory information (within the warehouse or in transit) that can be rapidly communicated to customers and decision makers 
• reduction in communication time between trading partners when supply chain errors occur improved external visibility into business processes
• reduction in data center energy consumption

The Outlook

SaaS has transformed many supply chain areas, including transportation management, demand management, and warehouse management. The focus now shifts to production scheduling and planning, in order to complete the cycle of procure, build and deliver. SaaS has already gained traction  with organizations that perceive it as a safer, cheaper alternative to on-premise deployment; many organizations will now examine SaaS as a way of enhancing their current ERP and SCM applications.

As of 2007, the software as a service (SaaS)/on-demand model has begun to be embraced by large and medium-sized  organizations, due to the lower up-front investment in licensing, lack of IT infrastructure cost, and minimal IT operations requirements. Indeed, SaaS has started to obtain much more traction, as many large and medium companies are striving to get the most out of their IT budgets with minimal time investment. With the SaaS model, organizations are looking not simply for a quick fix, but for long-term operational efficiencies driven by rapid deployment of up-to-date functionality.

With the demand volatility that accompanies uncertain economic conditions, it is essential for organizations  to ensure end-to-end supply chain visibility. With SaaS applications, visibility into demand trends and changes in business needs are available more quickly, with a low impact on IT resource requirements. SaaS also enables data to be shared between trading partners over the Web in real time, gathering everyone on the same page, regardless of respectively unique business processes.

Other key reasons organizations are shifting to the SaaS model for supply chain management improvements:

• the ability to integrate real-time data with existing applications, be they enterprise resource planning or SCM applications
• real-time inventory information (within the warehouse or in transit) that can be rapidly communicated to customers and decision makers 
• reduction in communication time between trading partners when supply chain errors occur improved external visibility into business processes
• reduction in data center energy consumption

The Outlook

SaaS has transformed many supply chain areas, including transportation management, demand management, and warehouse management. The focus now shifts to production scheduling and planning, in order to complete the cycle of procure, build and deliver. SaaS has already gained traction  with organizations that perceive it as a safer, cheaper alternative to on-premise deployment; many organizations will now examine SaaS as a way of enhancing their current ERP and SCM applications.