The last two years have brought an explosion of Cloud, or Software as a Service (SaaS), provided in long-term subscription or On-Demand models.  Both new app players and traditional enterprise software license providers have offered new versions of their software and services to ensure a market presence in these sectors of the technology market (though there are a few hold-outs that only sell on-premise licenses).

But let's back up and define a few things. ChainLink's definitions below are based on the architecture of the technology and the economics - i.e., the method by which the technology is developed/supported and priced.

Multi-tenant single instance - one codebase (single instance) for all customers (tenants) vs. unique/customized code for each customer supported from the cloud.

Multi-tenant - many customer instances (unique custom codebase per customer) but cloud subscription.

Hosted - the customer owns the license, but it is managed by an off-site third party (can be the software company or a hosting company).

On Demand - the ability to "sign-up" and go live with cloud applications, while eschewing contractually obligatory relationships, which may accompany the first three mentioned above.

On premise - licensed software. Customer is accountable for software and hardware and support.

There are plenty of ways to vary and alter these services, of course, but these form the core of the architectural approach of the software and how it might be supported by the provider.

Along with this change we have witnessed new models in pricing strategies. We have begun research to compare costs of upgrading (this can be highly disruptive to the organization) vs. the "silent" or quiet upgrades that evolve the user to the new innovative options provided by their "software" as they become available.  The problem is that it is very hard to compare pricing, not just between the competitors, but also for same-company cloud vs. on-premise options.

These solutions help further the supply chain vision by enabling inter-enterprise community. Network variants of cloud provide peer-to-peer environment for trade, communications and collaboration.

Of special note, on-demand variants have changed the balance of power in the relationships between the technology provider and the customer. Customers feel like customers with flexible "easy to do business with" sales models, along with the expectation that the provider company continues to add value and support - or customers will go elsewhere. Certain SaaS offerings still have strong opt-out language or minimum contract periods, but on-demand is just that. Customer, make your choice!

                                      The Outlook

During the last four years the enterprise sales of these solutions - supply chain, ERP, collaboration, etc., have taken off. The actual rate of adoption grew over 50 percent in 2012.  2013 will continue to see explosive growth rates. In fact, in sectors like transportation solutions, the acquisition or migration to SaaS/On-Demand approaches will rapidly render on-premise type approaches obsolete.


Keywords: supply chain management IT, supply chain solutions, supply chain systems, enterprise solutions in the cloud, cloud computing