We are living through exciting times in information technology. A wave of information explosion and the corresponding need to process it efficiently and effectively is placing relentless demands on IT. At the same time, in complete contrast to exacting computing needs, Moore's Law1 is reaching its limit with transistors reaching atomic sizes leading to multi-core processors. The pressure to innovate and ceaselessly transform IT with far-reaching ideas has never been greater. These fundamental requirements have had a tremendous impact on the traditional way of computing -- no more is it merely tying a piece of software to a piece of hardware and binding them together to a specific computing need. Today's trend is to sandbox the software and host it independent of the underlying hardware and/or the operating system. The result is dynamic environments that grow and shrink according to the computational demands. Such an environment helps in utilizing servers efficiently without affecting the throughput of the applications running on it. Moreover, this pay-for-what-you-use environment reduces CAPEX because it requires fewer servers, and yields huge OPEX savings.

Companies like Amazon and Google are the pioneers in hosting such next generation commercial infrastructure called the "cloud." It is perhaps the first step toward J. C. R. Licklider's vision of an Intergalactic Computer2. Computing on the cloud (as illustrated in Figure 1), involves assembling numerous processors and storage devices to create a simple leasable unit called the machine instance3.

This is achieved through a layer of abstraction through services that mask the heterogeneity of the hardware underneath and provide a unified view that can be rented on an hourly basis. This article provides a way for service providers4 to employ the Cloud Computing model to develop cheaper, easy-to-use and leasable groups of SCM functions. IT providers can use the in-house best-of-breed package implementation expertise to create such logical groups of functions; for example, order management functions coupled with warehouse management functions for retailers. This idea can be extended to any aspect of an enterprise to create a cloud of end-to-end ERP functions at a much lower cost compared to hundreds of millions of dollars today for an end-to-end ERP implementation.

What is an SCM Cloud?

The SCM cloud is a set of services that provide SCM functions to any cloud user in an efficient, scalable, reliable and secure way. It abstracts the inherent details of package implementation and the challenges associated with integrating these packages with the other enterprise applications. This enables the user to get a simplified view of SCM functions (rather than SCM applications) like order management, warehouse management, demand forecasting etc. A user merely signs up on the cloud, subscribes to the necessary SCM functions, and starts using it. It is that simple. Figure 2 provides an illustration of the layer of abstraction provided by the SCM functions that leverage machine instances from the infrastructure cloud.

The success of all of the features mentioned in the SCM cloud definition depends on the underlying infrastructure cloud. However, the SCM cloud built on the machine instances must enhance the following features:

• Scalability: SCM functions should spawn with an increase in the number of user subscriptions. The task of setting up multi-tiered environments based on the SLA signed by the users must be transparent to them.

• Reliability: Users should be provided with a reliable way to access the SCM functions with a clear visibility to the adaptation of the environment to the business load based on the SLA. 

• Security: Security is very critical in a cloud space since the cloud offers a common platform for users from different enterprises to subscribe and use SCM functions. It must be enough if users provide their credentials only once -- at the time of logging into the cloud. These credentials need to enable the users to access SCM functions and inherently cascade down to the infrastructure cloud.

SCM applications are multi-tiered in nature and are comprised of the following four fundamental tiers: 

• Application Tier consists of a variety of vendor-packaged software that can be customized to meet business needs. For example: Sterling 8.0 for order capture, order fulfillment and order management contained in Websphere application server 6.1 on a IBM P-series server running AIX 5.3. 

• Database Tier is used as a persistence layer for all current and historical business transactions. For example, Oracle 10G instance using RAID 5 SAN disks for storage.

• Integration Tier provides a channel for real-time synchronous/asynchronous communication with other applications. For example, IBM MQ 6.1 serving as the enterprise application integration bus.

• Infrastructure Tier supports aforementioned tiers with the necessary computing devices. 

Figure 3 presents a detailed view of various tiers of SCM applications consisting of a variety of associated vendor-specific hardware and software components. Traditionally, retailers must go through a laborious and time-consuming exercise to find a suitable application that can place, manage and fulfill orders. They need to choose a product after evaluating many of the best-of-breed solutions and accommodate technology constraints that come with it. They must then configure the product to meet business logic, integrate the application with other applications, test, procure the hardware to host the application stack, and finally, go live. After this comes the additional challenge of post-production maintenance.

This is an onerous process considering the fact that most retailers are only asking for a simple mechanism to capture, manage and fulfill orders. Only retailers with mature IT departments and big budgets can sustain the long process of software implementation. However, with the advent of cloud computing, a layer of abstraction can be built to mask the inherent details to have an order management system offering in a more economical way. With SCM cloud, Figure 3 gets transformed to Figure 4 - a simple SCM function instance for order management.

This model also works well for small businesses which lack dedicated IT departments and cannot afford a data center. An SCM cloud enables small businesses to have a dedicated Sterling 8.0 instance for order management even when they neither have an IT department nor can lease a space in a data center in Colorado. The cloud also provides these abstractions in a scalable, reliable and secure way which aligns the solution in line with the business growth pattern. With good economic conditions and expansion of business, a single Websphere Application Server (WAS) instance Sterling DOM 8.0 hosted on two machine instances can be very easily upgraded to two clustered WAS instances hosted on 8 machine instances. In sluggish economic conditions, downsizing the environment also becomes equally easy. 

Implementing an SCM Cloud

Although the enormous benefits of an SCM cloud are obvious, ranging from scalability and cost control and requirement-based expansion and reduction in capacity, much still needs to be done in terms of streamlining the process. The following are some key factors that must fall in place for SCM cloud implementation to succeed.

A Last Word - SCM Cloud is a Cold that Everyone Ought to Catch

The SCM Cloud can provide a win-win situation for all participants - infrastructure vendors, SCM product vendors, service providers, and users. In the reverse order, users benefit because of reduced CAPEX and huge OPEX savings, service providers benefit because they are the builders of such logical groups of functions, SCM product vendors and infrastructure vendors gain because the SCM cloud opens up the gates to a legion of users who would have otherwise resorted to age-old ledgering and suffered growth.

Further, it is possible for developers to come up with their own ideas and host them as a service on the cloud and get paid when users sign up and use their services. A good example is a rule-based engine for demand forecasting. Users can prepare the inputs for a forecasting function and use it only once every quarter to generate the demand forecast and unplug from the forecasting function. If Vendor A's forecasting service does not work well, user can easily switch over to Vendor B the next time. In essence, there is a lot of potential in Cloud Computing for everyone including IT service providers. It is therefore imperative to adapt to the change in the way IT applications are packaged, configured, hosted and used and accept the challenges this notion has to offer and strategically work towards solving them. Sooner or later this is a cold that everyone ought to catch and when they do, they will want the luxury of proactive and reactive environments for their applications but at a cheaper price. Pioneers will surely prosper.

References:

1. Moore's Law - http://en.wikipedia.org/wiki/Moore's_law

2. Intergalactic Computer - http://en.wikipedia.org/wiki/Intergalactic_Computer_Network

3. Amazon Machine Instance - http://aws.amazon.com/ec2

4. "Cloud Computing: A boon for Users, but a Challenge for Service Providers" by Chris Fletcher and Phil Fersht, June 2009 - http://www.amrresearch.com/Content/View.aspx?compURI=tcm:7-43833

5. IBM on EC2 - http://aws.amazon.com/solutions/global-solution-providers/ibm

Source: Infosys Technologies