Supply Chain Digest is predicting that “WMS in the Cloud will Go Mainstream in 2017.” After years of cloud applications failing to proliferate throughout the supply chain, this is the year the scales tip in favor of cloud-first software deployments.
Research from Zebra Technologies finds that 75% of Warehouse Management System users plan on migrating to a cloud WMS by 2020. With only a small percentage of WMS users in the cloud today, analysts from organizations like Grand View Research predict a massive global migration to WMS cloud systems, resulting in dramatic reductions in roll-out time.
Why Was the Supply Chain Industry Slow to Embrace the Cloud?
Adoption of cloud applications throughout the supply chain has lagged behind due to the complexity of the industry and its multitude of moving parts. From the onset, performance responsiveness and achieving sub-second response times was an issue.
Security too played a significant role in the minds of CIOs that rejected a move to the cloud. Such fears about cloud data security have since proved to be obsolete as most cloud buyers believe that their cloud applications are more secure than their legacy systems.
End users were also unable to migrate to the cloud because legacy system vendors were slow to develop true cloud systems with the full functionality of an enterprise WMS. Instead many offered scaled-back versions of their existing systems. Some providers even offered “fake cloud” solutions that were just single-tenant solutions hosted individually yet accessible via an internet browser.
To truly embrace the cloud, solutions like irms|360, a tier-1 WMS system, had to be rebuilt from the ground up specifically for the cloud.
Why will 2017 be the Year the Supply Chain Finally Embraces the Cloud?
A Gartner study reports that IT spending worldwide, while growing slowly at just 2.7%, will be driven primarily by cloud expenditures, especially by industry leaders. “Aggressive build-out of cloud computing platforms by companies such as Microsoft, Google and Amazon are pushing the global [cloud] server forecast to reach 5.6 percent growth in 2017.”
While everyone agrees that supply chains will jump to the cloud this year, there are many reasons why. Here are a few of the top reasons analysts are forecasting 2017 as the year that supply chain turns to the cloud.
1) Large Corporations are Doubling-Down on their Cloud Investment: While the supply chain industry may have lagged in adoption, many other sectors are operating mainly in the cloud. According to the Wall Street Journal, “Consulting giant Accenture runs more than 60% of the business in the cloud and plans to continue the transition next year. Big companies from General Electric to Coca-Cola have also laid out plans to push further into the cloud.”
With such brand name enterprises fully transitioning to the cloud as a part of their corporate IT strategy, software providers will focus their efforts and direct more prospective buyers to cloud applications. The inevitability of a cloud-dominated marketplace will extend through all industries, including the supply chain.
2) Keeping Up With the Competition: Driven by giants like Amazon, organizations are using cloud applications to become leaner, more flexible and more scalable. This situation is driving growth in market share thereby forcing the hand of their competitors to increase IT spending.
“Increasing enterprise IT spending is mission-critical for success when you are competing with not just retailers but a great technology company” reports Phil Goldstein in Biz Tech’s NRF’s Big Show 2017 recap. “To compete with the online retail behemoth, retailers must invest in technology at higher rates and transform their IT environments, retail analysts say.”
3) Strengthening Supply Chain Partnerships: The supply chain industry is complex. Thousands of partners are intertwined with each other in delivering success. CIO Insight suggests that moving to the cloud is necessary for supply chain partners to work together and benefit from one another in the digital economy.
As Samuel Greengard writes, “There's a need for unfettered communication, cooperation and collaboration within an enterprise—including across the boundary that too often separates IT and lines of business. It's necessary to create an environment where there are no walls, boundaries or borders.”
4) Smaller IT Budgets: In their State of Supply Chain Trends series, our friends at Cerasis state that many organizations will be enticed by the financial benefits of the cloud as they face fiscal constraints. Due to the smaller upfront investment and long-term reductions in IT costs, the cloud maximizes a tight budget.
“More IT departments are being forced to work within smaller annual budgets, and most IT departments only account for 11 percent expenditures on new applications. Consequently, the need for a low-cost, high-return system is becoming more prevalent, and cloud technology can answer this call.”
5) Bigger, Big Data: The big data trend is only getting bigger as organizations drive higher performance from their initial foray into advanced analytics. In the food supply chain, for instance, partners are using global data to make smarter decisions with analytics that improve product quality while speeding-up supply chain performance.
Food Engineering reports “the good news is that many cloud-based vendors are now tapping into their own pools of aggregated data across the customer bases and industries…assessing their quality and, therefore, usefulness to aid in supply chain management.”
6) Risk Reduction: Concerns over system performance in the cloud have largely disappeared. State-of-the-art technology stacks and open-source platforms have created higher performing, more reliable cloud systems over their on-premise counterparts. Our cloud system, irms|360 Enterprise, has experienced 100% up-time and offers sub-second response times.
RigZone reports that the “cloud can speed up value realization and offer more agile, quicker-to-deploy solutions. Companies that survive the downturn are the ones that know how to leverage enabling technologies like cloud and mobility, to help automate and optimize processes and apply analytics to improve operations out.”
Whatever the reason, it seems like the cloud and supply chains are finally coming together in 2017. We expect this growing investment in cloud technology to propel complementary trends like predictive analytics, artificial intelligence, and augmented reality as organizations become more digitally capable.
Learn More about Running a Successful Supply Chain
We’ve long called technology and transparency two of the five keys to every successful supply chain. Learn more about how you can reduce costs by exploring some of our other blog posts and contacting our experts to talk about how your organization can run a more profitable supply chain.
- 5 Key Traits of Every Successful Supply Chain
- 6 Threats That Can Destroy Your Supply Chain's Revenue
- 10 Things Supply Chain Leaders Should Do Before 2015
- How Your Supply Chain Can Make You More Profitable
- Why Your WMS is Essential to Your Annual Report
- 35 Supply Chain Solutions You Can Learn from TED Talks