According to Gartner, the adoption of supply chain software continues to accelerate. That has confirmed my gut feeling and spurred me to put some thoughts on paper. There is indeed a lot happening in the world of S&OP/IBP software; functionalities are rapidly improving and companies are afraid of getting left behind. So you decide you need to purchase a software tool… but which one? And how should you go about it? And who can you turn to for help? These and other questions have no doubt caused some sleepless nights over the recent hot summer. As always, it is important to keep a cool head and to stay focused on the basics (the processes), and to enlist help wherever you lack in-house expertise.
On the supply side: S&OP/IBP software offering
There are several reasons why so much is changing on the supply side. Firstly, tools are advancing at a tremendous pace. The positive spin-off of technological developments is that functionalities improve significantly too. Many of today’s tools are indeed much better and can do much more than just a few years ago, and this is unlikely to change in the foreseeable future. Secondly there are IT-related reasons for reassessing existing tools or thinking about new ones. After all, software is moving to the cloud (see Gartner again), going mobile and even becoming SaaS…
On the demand side: what companies need
From the perspective of companies themselves, we are also seeing a number of developments that are putting them under greater pressure to make a choice. The economy is strong, for one thing. Thankfully, businesses can afford to spend on investments and upgrades again. And as companies get busier the planning pressure increase, creating a need for tools to help them. A second – very positive – reason is that many companies are making progress in terms of S&OP/IBP maturity. Whereas you can get away with existing solutions or Excel files in the early phases of maturity, there comes a point when a more systematic tool solution is required – and that point is now rapidly approaching for many companies.
Hypes and opportunities
Besides the supply-related and demand-related reasons, there are several other factors driving the growing commotion around software. Firstly there are all the buzz words: big data / artificial intelligence / analytics / Internet of Things / platforms / multi-enterprise tools / blockchain / etc. Are they just hypes, or are they truly relevant? Needless to say, a large number of developments are very relevant. But in the software world, all these buzz words are being leveraged if they will boost the potential customer’s uncertainty and/or willingness to buy. You don’t want to get left behind so, in your bid to become future-proof, buying anything can seem better than buying nothing… The second aspect is related to the software market itself. When a strong and dominant industry player has to change, it creates a window of opportunity for competitors. Right now, this is happening with SAP (end of APO, introduction of HANA/IBP). Almost all other players can smell blood and are keen to fill the (potential) gap.
In other words, there are plenty of reasons why companies may decide to purchase or replace an S&OP/IBP software tool. But how should you go about it? And how can you gain an overview and insight? Should you do everything yourselves or enlist specialist help? In this context, we’ve seen that the pressure from the software side has resulted in several of our peers joining forces with software vendors. That’s fine if you want to buy software from that specific vendor, but less so if you’re looking for objective help with your decision-making – and especially if you don’t realize that the specialist will only ever recommend one software vendor to you. A typical case of Hobson’s choice….
Wrong decisions can be disastrous
Just as with so many other choices, retrospective repairs or regrets can be a very high price to pay for a wrong decision. One recent example is Lidl’s disastrous ERP implementation which was finally abandoned after seven years of setbacks. Was the software no good? That’s not the reason; the tools are almost always in good working order. The problem is usually due to choosing an unsuitable tool and/or implementation approach. Another thing we often see is that tools are used sub-optimally or even incorrectly. One problem we frequently come across is that the medium/long-term planning is done at a level of detail that merely creates work rather than generating information. The result: frustration all round and missed targets. In fact, the implementation of a new tool sometimes only seems to widen the gap between Supply Chain and Sales.
So what’s the recipe for success?
‘Look before you leap’, as the saying goes. Companies can have very good reasons for putting the purchase of an S&OP/IBP tool high on their agenda. So you should ask yourselves: “Do we have a clear objective? And are we all (and not just the Supply Chain department) convinced that we need to take this step?” Treat this just like any other major investment: with a professional project-based approach. It shouldn’t be just a side project for someone. Think carefully about where the right knowledge already exists internally and which knowledge you want to build. Make choices; time and energy are valuable resources. Many Supply Chain enthusiasts are excited to explore loads of different software solutions and invite numerous vendors to come and pitch. All too often, we hear that our clients have already met with vendors who turned out to be a waste of effort for their specific business – and we could’ve told them so beforehand, if they’d asked us.
Choose your battles; your own people can add value by providing insight into your own company culture, processes, reporting, improvements, organizational structure, etc. Allow an independent expert to support you by explaining the possibilities on the software side. They have market knowledge. They know the history of software solutions and vendors – what has/hasn’t been successful, and why. The sooner you can turn a relevant longlist into a concrete shortlist, the more time you will be able to spend on joint decision-making (together with the expert and your own people) and preparing for the implementation. Remember: these are not merely technical projects but major changes. We are often involved in such change-management projects ourselves, and we work closely with our customers to ensure they actually achieve the desired improvements. Does that mean we sleep soundly at night? No, but that’s because we’re so excited about implementing the next improvements…