This is the second posting outlining each of the Supply Chain Matters ten predictions for global chains in 2011. Part one can be reviewed at the following link.
In this posting, we comment on predictions four through seven.
Prediction Four: Supply chain technology deployment will remain tactically focused and buyers will remain in a favored position for negotiating technology acquisitionsSimilarly as in 2010, cost and profitability pressures will cause any investments in supply chain technology to continue to be tactically focused and highly scrutinized. Technology vendors should anticipate continued elongated sales cycles, touch points and reference checks.
We believe that the business process and technology enablement priorities in 2011 will be in needs of deeper and broader supply chain visibility / intelligence and more rapid planning and synchronization of supply chain fulfillment processes. We anticipate popular investment areas to be in improving inventory management, a more responsive and more extended sales and operations planning process, and adaptability to sensing and responding to changes in product demand.
Manufacturing and service firms located in the emerging economic regions of China, Korea, India, greater Asia and Latin America will continue to open the purse strings for investments in supply chain operational, quality management and fulfillment synchronization processes.
We anticipate some slowdown in technology acquisition for sourcing and P2P procurement because of shifting technology enablement priorities towards the more operational sides of the supply chain process needs. We believe that 2011 will bring a renewed emphasis on quality oversight and process improvement needs, coupled with improved asset management. We further predict that technology directed at supply chain risk mitigation will gain more attention and uptick, especially technology related to the tracking and identification of products throughout the extended supply chain.
Prediction Five: The year will bring a new wave of turmoil, acquisition and market consolidation in certain supply chain and enterprise technology areas.
The year 2010 brought a wave of consolidation and acquisition in the supply chain technology area and we expect that trend to continue in 2011. Acquisitions were motivated by acquirer needs to tap emerging growth markets, adjust strategic focus in market coverage, add geographic presence or take advantage of available opportunities. Some headlines in 2010 included:
B2B and Industry Procurement Processes
The Ariba acquisition of Quadrem
Reardon Commerce acquisition of Ketera
Accenture acquisition of Ariba’s direct sourcing services group
IBM acquisition of Sterling Commerce
High Jump acquisition of TrueCommerce
Growth by Acquisition
RedPrairie acquisition of SmartTurn (SaaS based warehouse and inventory management)
Logility acquisition of Optiant (multi-echelon inventory optimization)
As noted, this trend should continue in 2011, and we predict more concentrated activity among procurement technology providers and specialized best-of-breed providers with interesting cloud computing offerings. I also echo the Logistics Viewpoint prediction that more technology providers will embrace the importance of B2B process connectivity and look to acquisitions to augment end-to-end process enablement capabilities.
We anticipate some ERP and specialty vendor turmoil as customers continue to push-back on annual maintenance fee burdens, which may impact revenue streams in 2011. Enterprise software, B2B process, database and IT infrastructure vendors are all converging on cloud platforms as the new strategic wave, and we would not be very surprised if there were some major acquisition plays in cloud computing in 2011 as major players such as IBM, HP, Google, Microsoft, Oracle and others jockey for strategic advantage.
Going again out on a limb, we would also not be surprised to observe some major acquisition announcements concerning SAP in 2011. These announcements may either be those concerning select SAP acquisitions or dare we whisper, an acquisition attempt of SAP by another global high tech provider.
Prediction Six: Cloud computing options directed at supply chain business process enhancement will explode in popularity and adoption.
Supply chain process areas are often on the leading edge of new technology adoption and application, and the area of cloud computing is no exception. A wave of cloud computing options directed at tactical supply chain process needs occurred these past two years and we have commented on a number of interesting areas and vendor capabilities in this blog. We have also touched upon specific process areas of global trade, warehouse management, direct ship and supply-chain wide synchronization fulfillment and demand forecasting in the blog. Smaller vendor with innovative offerings are making their presence.
The adoption wave of cloud computing will most likely continue into 2011, and the largest benefactors will be small and medium sized businesses. They have the opportunity to garner some rather sophisticated technology capabilities for reasonable, non-capitalized investment. The largest interest area appears to be supply chain visibility and business intelligence, but areas of planning and S&OP process support should fare well in 2011. Larger companies will also benefit from cloud adoption in 2011.
Like others, we also predict mixed buying signals relative to options for deploying private vs. public clouds. We believe that private clouds will be favored by larger companies with sensitivities to unique process needs or data security, while SME’s will be inclined toward public clouds. We do not anticipate a rationalization of forces within 2011.
Prediction Seven: Wider scale leverage and adoption of in-memory computing, coupled with broader application of information discovery platforms could be game changing influences on supply chain wide business analytics.
In our 2010 report card, we noted the just-in-time consumer reflected in today’s B2C sector, and the more demanding and last-minute just-in-time order customer within B2B supply chain environments. These customer traits will continue to drive sensitivity toward more forward-oriented, response based planning that will need to be grounded in deeper and broader supply chain predictive capabilities. Two important technology developments stand to have greater impact on predictive analytical capabilities in 2011. The first is incorporation of newer in-memory technology hardware appliances within analytical applications that will significantly enhance scenario analysis. The second is the wider adoption of Google-like information discovery tools that can mine hidden data. If technology providers are agile enough in 2011 to incorporate these technologies not as tool sets, but rather incorporated into turnkey supply chain planning and analysis application appliances, we could see some dramatic uptake in customer interest levels in the second half of the year. If however vendors drag their feet, a market opportunity may be delayed.
Within the tactical areas of procurement, production process controls, logistics and distribution, technology buyers will also seek broader analytical and process intelligence capabilities.
In our upcoming Part Three posting, we will comment on the remaining predictions eight through ten.
Please feel free to comment on any of these predictions, as well as offering any that we may have neglected to mention. Readers are also welcomed to participate in our polling question (placed in the lower right-hand panel) regarding the key business priorities for your organization in 2011.
The Supply Chain Matters Team