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Article
Cloud Strategies Coming from the Supply Chain Market

Now that the end-user market seems to be accepting the cloud option, the major players are stepping up their game.


Full Article Below -
Untitled Document

Introduction

JDA began their version of the cloud journey several years ago, which initially targeted infrastructure challenges and helped to reduce IT operations costs. Recently, JDA announced expansions to their existing cloud service—JDA Cloud Optimize—which has several new components. Cloud Optimization is a service JDA has been evolving since launching the cloud business (see JDA Focus 2012: Cloud Strategy). Logility also just announced their cloud approach, Logility Cloud Services. These cloud strategies vary, so it is worth taking the time to explain some of the alternatives. Figure 1 shows the cloud approach of some of the major providers of supply chain applications.

Logility and JDA are ultra-important players in the supply chain market. And their path is different than many. We spent some time talking in-depth to both these companies about their approach and their path forward.

Logility’s Cloud Offering

Logility has been offering the SaaS option for transportation and Demand Collaboration for some time, but these services are expanding. Previously, Logility saw the cloud option requested by customers on their RFI,1 but customers did not follow through on purchasing that option. Now they are.  

These customers, due to the sensitivity of their market and planning data, tend to select the single-tenant/hosting option. Demand planning, in general, unlike transportation management has leaned toward the single instance environment. And interestingly, we do hear that for large number-crunching applications in analytics, merchandising, pricing, and large SKU-based forecasting applications, that some multi-tenants have some performance challenges.

So Logility’s approach does make sense for their larger customer base. Logility has over 1,200 customers, of all company sizes, from the very largest to mid-size players. So far, the largest enterprises have not selected multi-tenant for the corporate applications. Karin Bursa, Vice President of Marketing at Logility, told us, “Our customers are really sensitive about having their corporate planning data in shared environments with others.”

Demand collaboration,2 de facto, implies a shared platform between multiple trading partners. However, in a large company they run this as their portal, so they control access and the data.

Figure 1: Some Cloud Offerings/Options from Supply Chain Providers

In comparison, for transportation management most other supply chain providers either were cloud/multi-tenant from day one (GT Nexus, MercuryGate), offered portal and exchanges (Descartes), or now provide a variety of options for their customers. 

JDA’s Cloud Offerings

In contrast to most other cloud software providers, JDA cloud services are not multi-tenant single instance architecture. JDA’s cloud offering is essentially hosting services with traditional perpetual license terms, on top of which they provide some optional, potentially very valuable managed services. They market these four levels of cloud services as: Launch, Perform, Optimize, and Evolve.

Hosting: Cloud Launch

So, let’s cover the easy stuff first. JDA’s Cloud Launch is a rapid implementation service for JDA’s hosted service for licensed, enterprise-specific instances of JDA customer installations. JDA provides the data center, the hardware (servers, networks, and capacity elasticity), operating system, middleware, JDA applications, application monitoring, and upgrades.

  • Cloud Launch Services—Here, JDA’s goal is to get the customer up and running fast and reduce go-live risks. This service includes:
    • Pre-packed solutions—JDA will start with and support standard versions of JDA software modules such as TMS, Collaboration, Supply Chain Planning and Optimization solutions, etc. Think about this as an on-demand type of service, not an upfront cash and subscription usage. This is not multi-tenant single instance, though, just to be clear. However, using a standard ‘pre-pack’ does allow for economy, so that a mid-size business that is looking for their instance can get the value of on-demand. These pre-packs will, as JDA put it, “generally be lower cost.”
    • i-Lab—a complete preloaded stack of hardware and software to create the initial go-live. Once the customer is live, i-Lab can continue to be used as a test and modification ‘lab’ before the customer rolls-over to a new upgrade.

Managed ServicesCloud Perform

This sits on top of the hosting; customers can take advantage of JDA Cloud Perform which will fully administer their JDA environment. It also includes the performance management, security, and tuning that you would expect from your own in-house IT staff.

JDA has stated that customers are saving money (and headaches) by doing this. Obviously, the scalability of a common environment can be an enormous benefit. But more important is the application-specific knowledge required to monitor and tune these applications. If you do merchandising and pricing, for example, you have some big number-crunching applications. Planning for and having the right amount of hardware for them is not trivial. So having the application provider manage this can be a big benefit in the ups and downs of seasonal or event-driven analytics.

One additional benefit of Cloud Perform is that JDA can keep track of and manage updates and upgrades to your software, a thorny issue to coordinate with IT, who usually has many other priorities. Of course users still have their job to do, but they have a bit more freedom, I think, when working with a third party, to determine the schedule and manage these changes.

Co-Managed Processes—Cloud Optimize

Taking a broader approach, more deeply interwoven into the customers’ enterprise processes, is their Cloud Optimize, an integrated set of services for both mid-size and large customers. Here JDA leverages their Supply Chain expertise to help the users—not just IT services—to enhance the enterprise supply chain team’s productivity.

One concept for Cloud Optimize customers to review—unique to JDA—is PODs. These are globally deployed, horizontal or solution/expertise-focused teams of JDA support people (see Figure 2) who can deliver expertise to help customers, not just in the traditional get-started approach most software companies provide, but with on-going advice—from education to advice on how to use your software better (what reports (or not), what algorithms might be best). In addition, they help their customers monitor usage, and use this information to help improve processes and system effectivenss.

There are Solution Pods—knowledge about the applications—manufacturing versus retail for example, and customers’ specific processes; and Horizontal Pods—a regionally deployed helpdesk with expertise on workflow, hardware, etc.

This is not a consulting approach, which consists of one or more meetings and materials-based projects. Rather these are ongoing, embedded services where each multi-disciplinary POD (see Figure 2) is dedicated to a group of customers with an SLA,3 for support over time. They are not taking over your planning processes, but acting as an extension of your team, giving an assist on maximizing the value of your software investment. It makes a lot of sense. JDA has built up a tremendous body of very specific expertise over time, which is hard to find in the broader labor pool. Having access to that expertise can thus be very valuable to a JDA customer.

ChainLink wrote a few years ago about the Emergence of Managed/Co-Managed services. In this research, most of the companies we talked to wanted this type of service and more, but software companies were not providing it. When we interviewed some of the software companies, they made comments like, “that is low margin stuff,” or “profit on that kind of stuff is pennies on the dollar, not right for the software industry.” So it looks like JDA is closing the gap between what many customers want and someone who will actually provide it.

Figure 2: JDA example PODs

While talking with Joe King, the VP who is responsible for JDA’s cloud business, he said the goal is that “JDA’s value to the customer should never wane.” Obviously, being a shared-service, hosted application, albeit with apps expertise was not enough. We agree.

Optimize is pretty exciting stuff, because it does take that step many companies wanted. Supply chain management is very complex. Understanding your own business and how to maximize its performance is a delicate endeavor requiring many skills. Having a third party assume some of the technical load has not cut jobs, but has made end-users generally more productive and able to work as business people on the many challenges they have to confront in this dynamic world.4

JDA has about twenty five customers to date using Optimize and this is growing, but of course it is not for everyone. 


Figure 3: JDA’s POD Teams - Source JDA

Cloud Multi-Enterprise

Another area of JDA’s cloud is their TMS, an evolution of Trade Matrix, i2’s transportation network. Besides having a viable application software, having the connections between trading partners is fundamental to value, since in transportation the amount and complexity of shared information, transactions, and notifications is astounding. Many companies join multiple TMS cloud networks since they have to be connected to their customers’ preferred solution. 

Beyond the Plateau—Getting Long-term Value Out of the Solution

Joe went on to say, “In reality, Cloud Optimize has very little to do with the cloud, but more to do with the long-term value we provide to customers.” JDA has put in place about 200 people to support this area, a significant investment, and more services will surely grow out of it once the PODs really scale.

Part of JDA’s goal (and often, also customers’) is to keep customers more up to date on current—or at least recent—software versions. Old software is like stale food. You can use it, but it does not satisfy and has diminished nutritional value. But it is a challenge to stay current.5 It looks like JDA has found one way to help customers to keep the value they get from their software investments ‘fresh’ and competitive.

References:

Logility's cloud announcement

JDA’s cloud site  

Cloud collection

_______________________________

1 Requests for Information, Request for Quote, Request for Proposal -- Return to article text above

2 Logility launched this in the late 1990s -- Return to article text above

3 Service-level agreement -- Return to article text above

4 We pointed out some of these observations in the report as well as in a recent cloud article about Plex and Plex customers. -- Return to article text above

5 Read ERP’s Dilemma, in which the topic of upgrading is discussed. Of course, upgrading large, complex installations applies to many software sectors: Supply Chain, CRM, ERP, and many more.


To view other articles from this issue of the brief, click here.




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