Wednesday, September 18, 2013

SCM software: a small story and a big problem

This summer I was visiting home (Russia) for three weeks and was lucky to meet my classmate who is working in the SCM software sector (logistics, inventory, demand forecasting software). In this blog post I would love to share with you what I got to know from him and why he was not happy with the current situation at the SCM software market of Russia.

First of all, just for a reference here is a couple of technologies my friend is working with: AnyLogic (simulation software, has Enterprise library designed especially for logistics and inventory) and AutoBox (sophisticated demand forecaster). These are very powerful products for supporting the SCM environment, especially its forecasting and modeling sides. According to the words of my friend who is expert in this area now, these tools produce very reliable results and cost considerably less than their famous competitors from the corporate world, such as, for example, SAP and Oracle. Even more, these tools perform faster and offer more sophisticated analysis options than SAP. But hrere comes the reason why my friend was sad at the moment of our conversation.

Here is his story. He had a big project within a mid-size retail company. The company wanted to organize the software support for the SCM processes. My friend using his broad knowledge of tools prepared a software portfolio of $150000 that was able to make the company's SCM support especially productive and reliable. SCM professionals of the company working with him were content with the portfolio and did not have any serious objections. However, at the same time sales people of SAP came to the company's CEO and when they got to know about the project of my friend they started to push CEO to change the plans in favor of SAP SCM solution. That solution was more than a $500000 in cost and had less capabilities and weaker performance. I guess now you understand why my friend was sad - CEO chose more expensive SAP and cancelled the project of my friend!

What was the reason of such a strange decision of CEO? According to my friend, the sales people of SAP were much more professional than sales people of my friend's consulting company. Also, SAP is a brand, so that CEO who heard the sound name from his friends before and decided to go further with something familiar. However, when it comes to company's performance, do such reasons make sense? Definitely not. This is a problem that I want to put to your attention in this blog post.

Nowadays the market for SCM software offers broad opportunities for the quality and adequately priced support of the core SCM functions. However, in many cases companies do not want to make the initial research and go for costly but more famous systems. Do they want better service? Maybe. But there are many consulting companies that can perform service for the portfolio of software created from different tools. Are they afraid of user adaptation problems? Maybe. But learning is always needed for the more effective results, and SAP even with proper adoptation can not give the same level of quality.

I have here to note that such a problem is more relevant to Russian market than to US one. According to my friend again, in US the products he is trying to use are very popular within small- and mid-size companies, so that they are often chosen instead of SAP and Oracle. But even in US there are still CEOs that prefer SAP to less famous solutions only due to the brand, which is not the right approach in corporate world (you can choose shoes according to brand, but software solution for SCM support needs more research).

Do you think that the problem that I have tried to set here is relevant one? Should companies pay more attention to more advanced and cheaper but diverse SCM tools or they should still stick with more famous expensive unified tools from large vendors?


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