19 August 2010 | Angeline Albert
Forty per cent of supply chain software will be set up online or done through business process outsourcing (BPO) by 2012, according to Gartner’s 2010 supply chain survey.
The report said that because of this trajectory supply chain leaders must understand the different software delivery models to make smarter decisions about how their applications integrate with supply chain processes.
There are four main types: on-premises software, hosted/managed software, software as a service (SAAS) which is online, and BPO.
The Gartner report said it is essential to involve the IT organisation when considering supply chain software delivered via the internet because problems such as enterprise integration and data integrity must not be overlooked.
Michael Dominy, author of the report and a Gartner research director, said: “Knowing the right questions to ask will help supply chain leaders cut through the marketing hype of providers.”
On-premises delivery is the traditional licence and implementation model familiar to most supply chain and virtually all IT leaders. Alternative delivery models for supply chain solutions can, however, provide new or improved capabilities to all users several months or even years sooner than the traditional, on-premises licence and on-site implementation delivery model.
Because SAAS is priced by user or transaction, small and medium-sized businesses can access capabilities previously available only to larger enterprises that could afford multimillion-dollar on-premises licences and implementations.
The benefits of SAAS include the service provider delivering patches, bug fixes and upgrades, without the company using the system having to invest in new hardware, software or infrastructure, Gartner said.
However, alternative delivery models may pose different security and business continuity issues that should be balanced with the speed, ease of use and pricing model associated with supply chain cloud systems, where business applications can be hosted on remote servers and accessed via the internet.