Monday, February 25, 2013

The looming cloud of supply chains

In May 2013, SAP acquired Ariba, a  provider of cloud based supply chain management technology provider. The NY times article by Ashlee Vance discusses the ups and downs of Ariba’s network.  In 1999, the prevalent option for large companies was the traditional Electronic Data Interchange (EDI) when Ariba pioneered digital marketplaces. A business to business platform like Ariba eliminated the process overhead of onboarding of new suppliers one at a time through lengthy EDI certification processes.

A cloud environment that offers many-to-many communications where buyers and suppliers can collaborate on issue resolution at the same time. This speeds the supply chain’s time to market.
Supply Chain Managers were initially reluctant to understand the value of a multi-tenant communications network. Traditionally ERP systems were viewed as a software to run the entire business. Cloud comes in from the opposite direction with its focus on collaboration and creating standardization between trading entities. Today, supply chains are fairly mature in how they interact with cloud platforms to service hundreds of their partners through a single e-commerce hub.

The next logical step as the article by Cath Jenning concludes is a platform can combine the capabilities of a conventional ERP and a reliable cloud based trading hub such as Ariba, e2Open or GXS. Is this the direction in which ERP giants - SAP and Oracle (following the corresponding acquisitions of cloud-based BPM companies - Ariba and Vitrue) seem to be headed?


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