In Part One, and Part Two of this series of linked postings, we shared the first three of five predictions for 2010.  In this posting, we outline our fourth prediction.

Prediction Four:  Supply chain technology deployment will remain tactically focused, with continued leveraging power favoring buyers.  The year will also feature more adoption of “cloud” computing.

A highly constrained recessionary driven budget environment impacted the pattern of supply chain technology investment throughout 2009.  My prediction is that this market shift that actually began occurring in 2008 will extend through the bulk of the coming year. 

Severely constrained budgets have limited supply chain technology investments.  Technology investments have been highly tactical or operational focused, fixing problems that absolutely have to get fixed, or investing in technology that is essential to significantly save costs or improve productivity. When the dust finally settles, software industry analysts will cite investments in procurement spend and supplier analysis, contract management, multi-echelon inventory optimization or supply chain performance among others, as areas of most interest in 2009.  I anticipate this tactically-focused investment trend will continue well into 2010.  In the coming year, forward-thinking companies, noting that the bottom has been reached in their industry sector, will make some exceptions by beginning to position themselves for global supply chain competitiveness and growth through selective technology investments, but the landscape of choice remains permanently altered in favor of more buyer choice.

Senior IT and financial executives first preference is that supply chain teams work with existing in-house applications, whether ERP or supply chain in-nature, to address needs.  If that is proven to not be feasible, teams are compelled to do a thorough analysis of investment options. Technology buyers continue to discover that more buying options exist, including software-as-a-service (SaaS) or hosted platform applications.  I believe the popularity of selecting these self-contained applications vs. behind-the-firewall licensed version will increase even more, and hosted technology vendors will benefit more in 2010 by these trends.  Since more and more organizations are increasing their confidence levels in leveraging “cloud computing” options, the move toward business process optimization (BPO) or complete outsourcing of select supply chain processes will become a more attractive option.

It is definitely a buyers market, and technology vendors need to assume that long sales and approval cycles will continue in 2010. Technology vendor references will continue to be scrupulously checked to ascertain what measurable values were received from the technology.  With the latest trends in consolidation among the industry analyst community who specialize in supply chain business process and technology, I believe evaluation teams will turn even more to the Web or to specific social networking groups to directly contact other users, seek external opinion or advice regarding deployment of technology.

In 2010, business process enablement will remain confined to important tactical or operational capability areas:

  • A more robust sales and operations planning framework
  • Optimizing inventory investment across all tiers of the supply chain
  • Enhancing planning to accommodate more forward-looking business intelligence, event or scenario-driven capabilities
  • Analysis of supply chain networks for cost and carbon saving opportunities
  • Enhancing global transportation, trade and logistics capability

I anticipate that select technology investments in identifying, controlling or mitigating supply chain risk will also pickup sometime in 2010.

Stay connected for the Fifth and final prediction.

 Bob Ferrari