Businesses and their associated supply chain management teams appear to be much more inclined toward investing in Cloud-based software and technology support. Such trends are evident not only in stand-alone best-of-breed applications but in the current adoption paths for Cloud ERP applications suites.
This blog is a supplement to our previous commentary highlighting Prediction Seven of our ten 2019 Predictions for Industry and Global Supply Chains. In the prediction, we addressed what we believe will be the prioritization placed by businesses on enterprise and supply chain management applications investments in the coming year.
A significant adoption trend in 2018 was that of Cloud based application support across many supply chain management focused areas. During the year, Supply Chain Matters had the opportunity to observe evidence of such added attraction in our interviews and discussions with industry executives and our participation and attendance at many technology provider industry conferences held this year. An overall theme among business executives has been a learning that highly customized businesses processes and associated applications support has added too much complexity and cost burdens for the business. On the IT management side, constant pressures to reduce existing hardware, data center and applications support costs have made the business case for wider Cloud adoption more meaningful.
More Emphasis on Cloud Applications Experiences
Many Cloud-based technology providers have placed a higher emphasis on simplifying and modernizing overall user interfaces and interaction with applications, making them more intuitive and easier to understand and utilize. A lot of this effort has been driven by the realities of a new, younger and more systems-savvy workforce that has grown-up in the era of Amazon, Facebook, Google, Linked-In and other highly popular Internet applications that place the prime emphasis on user empowerment.
By adding supplemental interactive tools such as voice-enabled interaction by machine-learning, Google-like information inquiry capabilities and more powerful, easier to use advanced analytics, application users become far more comfortable in shorter periods of time.
Almost all of the tech vendor customer conferences we attended or reviewed this past year had a particular emphasis on communicating and visually demonstrating added developments in user interaction and simplification. We continue to hear more and more senior business, functional and IT leaders indicating that their emphasis for digital transformation is more focused on individual employee technology adoption learning curves than with the technology alone.
Businesses and functional teams now better understand that Cloud adoption can be less disruptive to ongoing business support needs, avoiding risks for a big-bang technology bet that can overly consume team resources and risk a major business disruption. Rather than a singular one-time injection of newer, more-enhanced technology, Cloud adoption allows for more frequent introduction cycles, based on business needs and objectives.
We expect the adoption trend to continue into the new year, especially in the area of upgrading to Cloud ERP suite applications that support the broad areas of supply chain management. This is because businesses now more fully understand that broader Cloud technology adoption does provide opportunities to drive business transformation in the context of streamlining existing processes, leveraging opportunities for increased productivity of processes, and the ability to leverage advanced technologies at a more moderate and cost-effect pace. As an example, a Cloud based ERP upgrade to today’s prevalent advances in enterprise level financial planning and budgeting opens the door to take better advantage of newer, Cloud-based applications focused specifically on enhancing sales and operations planning (S&OP) processes and decision-making. That includes increased leveraging of artificial intelligence and machine-learning technologies to uncover abnormal trending or identify new and emerging customer or market opportunities much sooner.
Some Specific Evidence
In mid-December, Oracle reported its Fiscal Q2 financial performance to investors.
A theme reported by senior executives was that growth rates associated with Fusion ERP reached an all-time high of 44 percent in the past quarter. Co-CEO Mark Hurd indicated to analysts that this growth represented the largest movement of existing ERP applications customers to Oracle Cloud ERP, specifically upwards of 200 customers in the quarter.
Supply Chain Matters highlighted similar trends in our coverage of the 2018 Oracle OpenWorld conference, namely that Cloud ERP customers are demonstrating an adoption strategy that begins with initial targeting business processes to transform, and later extends to other business process support areas in manageable adoption intervals. Some customers begin with financial backbone processes, move-on to Cloud based human resources or procurement support needs, and then on the broader areas of supply chain management process areas. Oracle now claims over 2500 SCM Cloud customers, up 50 percent, a good percentage from extended migration from Cloud ERP adoption.
Along the way, users gain the opportunity to interact with technology-enabled by machine-learning, higher levels of predictive analytics and more responsive decision-making tools. Essentially, user and team-based confidence levels draws in broader adoption curves among other application areas. Businesses themselves reap the benefits of reduced legacy IT hardware infrastructure and applications software maintenance costs while converting overall technology adoption to an annualized and more predictive cost line.
Other ERP technology providers have also reinforced increased Cloud platform adoption.
In its reporting of Q3-2018 financial performance, SAP SE reported Cloud bookings up 37 percent and associated revues surging by 41 percent in the latest quarter.
The recent Fiscal Q2 finance performance of privately-held ERP provider Infor indicated a 21.5 percent increase in Software-as-a-Service (SaaS) revenues while perpetual license revenues had declined by 4.7 percent.
Evidence indeed points to businesses and supply chain management teams being much more inclined toward investing in Cloud-based software and technology support in 2019 and beyond. Such trends are evident not only in stand-alone best-of-breed applications but in adoption paths for Cloud ERP applications suites. The business case has become more compelling in terms of overall user level learning curve adoption and use, in avoidance of major overall business disruption and in the ability to take advantage of newer advanced technology beyond just a one-time interval.
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