Software-as-a-service has been long been billed as an easy and cost-effective IT solution for smaller companies – but not any more. Increasingly, it seems larger businesses are biting the bullet and switching to SaaS, particularly if the likes of Cadbury, Nestlé and Dell are anything to go by.
“SaaS is definitely here to stay,” says Kelly Thomas, senior vice president of manufacturing at JDA. “Furthermore, it is not just mid-market or small companies that are looking for such solutions as there is just as much, if not or more, interest from large companies. On-demand solutions are a natural evolution of the software delivery model, and we will see a general trend towards more and more sophisticated applications moving to the cloud in the future.”
Denis O’Sullivan, managing director of Deltion, agrees: “It is counter-intuitive, but the uptake [of SaaS]has been from major companies.”
However, while it might be easy to jump to the conclusion that the trend was sparked by the recession – thanks to the low level of upfront investment and pay-as-you-go model – that is not necessarily the case, suggests O’Sullivan.
“If the reason had been for short-term financial savings we would have expected far more interest from smaller organisations. Small fleet operators are still unaware of the web and do not necessarily follow the technology which would make them aware of developments in web technology and cloud computing. Large companies with IT departments who monitor developments…see a greater long-term benefit.”
Conversely, AEB International’s general manager Mark Brannan reckons the recession has in fact contributed to the boost in interest of SaaS. “Although the economic downturn has slowed growth in software investment generally, SaaS is more resistant to budget constraints. This is because the financial resources to pay for SaaS are normally derived from operating budgets rather than capital expenditure.”
Brannan predicts that as economic conditions begin to improve the demand for SaaS will “probably continue to grow but at a slower rate than previously. Ultimately, the attraction of these solutions in reducing total cost of ownership, and speeding up ROI will ensure that they remain a popular choice.”
David Grosvenor, managing director at Wesupply, says the big grocery retailers are also tapping into SaaS, particularly because of the efficiencies that can be gained through harmonising the exchange of data with suppliers.
“Web-based platforms present a homogeneous and organised way of sending orders using, in effect, a ‘single pipe’ for outbound orders. However, what is particularly important for the retailer is that that they can be confident that orders arriving with suppliers will not have to be re-keyed, lowering error rates dramatically and increasing the chances of receiving the correct product and order quantities at the right time.”
Last year Sainsbury’s consolidated electronic trading with 4,000 of its suppliers through the Wesupply platform to boost visibility in its supply chain.
A recent survey by CTS Retail revealed that around 30 per cent of respondents were considering moving to cloud-based retail software packages in the next two to three years, primarily as it means only paying for what is needed.
Over half of those surveyed thought SaaS would be one of the biggest growth areas in retail IT during the next decade, although it also discovered that a “surprising” number admitted to not really understanding the notion of cloud computing. Despite this, CTS Retail predicts that over the next five to ten years “all software will be delivered on a demand basis”.
However, while SaaS might be good for greenfield software spend, Kewill’s Rob Smith believes it doesn’t necessarily assist companies that have already made large investments into systems – predominantly larger companies with complex operations.
Furthermore, while he thinks SaaS is here to stay and will continue to grow in adoption, he doesn’t reckon it will necessarily be the big companies that continue the trend. “The more traditional approaches to delivering software are also here to stay – especially for larger companies looking to use a unique deployment of software to deliver differentiation and thus a potential competitive advantage in the market place.”
Bryan Richter, UK country manager of Mamut Software, which provides business software for SMEs, reckons that most businesses realise SaaS is only a partial solution to making IT more effective. “Leading edge companies, however, are becoming aware that the most exciting developments are hybrid offerings which use services from ‘the cloud’ and mix them with desktop applications. One such approach is Software + Services (S+S), a powerful hybrid model. The same model has been in use by consumers for years in the form of the iTunes product.”
He points out that S+S incorporates the strengths of SaaS delivery but with the stability of a traditional desktop system, to ensure the application remains operational even in the event of internet issues or service failures on the part of the vendor.
“I believe enterprises will compare the stability of the S+S model favourably against pure play cloud models. The S+S model is proven in the mass market, offers ease of use and is one which people will feel comfortable using in a corporate environment. If consumers can benefit from a flexible hybrid model then why shouldn’t enterprise users too?”
Dell on cloud nine
Dell has deployed Inovis’ outsourcing software on a cloud computing platform to help it deal with increased demand on its supply chain communications infrastructure.
The problem arose after the company integrated original design manufacturers and expanded the number of global retail partners it deals with.
Instead of sending orders, updates, inventory data and tracking information back and forth to a few internal manufacturing units, Dell needed to share information with dozens of external manufacturers around the world, many of which use different hardware, software and business processes.
By expanding the number of retailers, the hardware and software at its data centre also had to aggregate, process and cross reference millions more transactions with retailers daily.
Dell was already supporting more than 20 different supply chain software platforms running on 200 servers, which were processing some five million transactions daily involving 300 transaction types.
The company’s IT team estimated that over time the new additions would more than double the transaction volume, which would require large staffing additions.
Michael Amend, director of enterprise architecture at Dell, says: “The sheer volume of new retail partners, multiplied by time zones, languages, customs and standards was daunting. Staffing up internally was not the best option because we would have to downsize quickly when the onboarding work was done.”
Dell decided a cloud computing model would best suit its needs as it would simplify the IT infrastructure and allow it to focus on its core business without having to add or remove resources.
In addition, Amend points out that the company “wouldn’t have to purchase hardware or software that might become idle when the demand changed. We’d be able to access resources over the internet and pay only for what we actually used.”
Inovis has consolidated Dell’s platforms into a global service centre, onboarding and supporting more than 1,900 trading partners over five years and managing the day-to-day aspects of its supply chain communications with manufacturers and retailers.
Inovis also provides analytics to help Dell manage trading partner performance and a service portfolio management SaaS application for it to manage the governance of serviceorientated requests to the IT group.
As a result Dell has greatly simplified its IT operations.
Amend says: “So far we have eliminated three legacy supply chain platforms and decommissioned more than 200 servers, 20 data centre racks, 20 private network circuits, ten databases and six terabytes of storage that we no longer need for internal supply chain processing.”
Additionally, the company can now bring a new trading partner into the system in a few days. “Previously, the process could take months.”
Quick return for Huhtamaki
Huhtamaki, the global speciality and consumer packaging company, has created £80,000 of savings in the first year after deploying Snapfulfil’s WMS at ts three southern area UK warehouses.
Efficiency gains were a key driver for the company, with the warehousing and distribution operations spearheading the initiative.
UK warehouse and distribution manager Gary Owen outlined that the company wanted Tier 1 functionality but without the headaches typically associated with WMS implementations.
He also demanded that all three warehouses went live simultaneously, with no capex, no traditional finance model and a 12 month ROI.
The Snapfulfil system was chosen and since going live productivity within the warehouse environment has increased and KPIs have grown to their highest levels. Additionally, product receiving, put away and retrieval have benefited and warehouse operative efficiency has risen.
Huhtamaki now has the ability to view inventory across the business, as well as in transit, which it says has been made easier by the low IT resource requirements both in terms of hardware and personnel.
Owen carried out a review once the system had been live for six months which highlighted a reduction in headcount, that stock items were no longer “lost”, overtime was reduced, error rates were slashed, stock obsolescence was removed, hardware repairs were abolished, and paperwork and administration were virtually eliminated.
The company now plans to employ the Snapfulfil system within other areas of the operation to deliver complete inventory control and visibility across the entire business.
Customer is king
Focus is shifting from cost reduction to customer service improvement to increase revenue and reduce total cost across the extended supply chain, according to Mark Parkhurst of One Network. An approach which he says requires improved collaboration across.
At Del Monte (USA) the IT and supply chain teams joined forces to help enable retail customers to operate at greater than 99 per cent accuracy and to run the supply chain with negative working capital.
Dave Allen, SVP supply chain at Del Monte (USA) reckons 90 per cent of supply chain value comes from efficient execution. He says: “The plan is always going to change. We needed capabilities that would enable us to respond to any deviation from our demand plans at the point of sale.” In order to achieve this it chose a SaaS system from One Network, which generates demand signals from daily POS data and combines them with existing forecasts to create inventory replenishment transactions.
Del Monte uses the system to plan transport orders and schedule delivery appointments, plus its customer teams use the tool to monitor and anticipate out of stock events and collaborate with retail customer replenishment teams to jointly resolve issues before they arise.
Del Monte is now working to extend the demanddriven operating model to its network of suppliers and co-packers.
Good things come in small packages
Nestlé reckons it can trade with small customers as efficiently as it does with major supermarket groups after implementing OmPrompt’s Intelligent Message Management service.
When a retailer sends in an order the application automates a message translation process so no matter what format it has been sent in OmPrompt will convert it into the format Nestlé requires.
OmPrompt chief executive John Wakeman says the problem of how to make electronic ordering and trading possible for all supply chain partners has long been an issue, particularly as he reckons small retailers cannot afford the sophisticated exchange systems used by large companies.
Wakeman explains: “Because this is a SaaS application using the latest cloud computing technology, the order is automatically forwarded to OmPrompt and within 15 minutes is received by Nestlé in the same way an order from the biggest supermarkets would be.”
During the implementation, Nestlé ran a series of parallel acceptance tests and compared the results against existing manual order entry processes. David Walker, customer services manager for
Nestlé Business Services UK and Ireland, says: “The output from OmPrompt was highly accurate and error-free, identifying manual data entry errors we didn’t even know we had. As a result, Nestlé has vastly improved the accuracy of outbound order fulfilment process, increased customer satisfaction and consequently reduced the cost of reverse logistics.”
Home Depot delivery improvement
The Home Depot, one of the world’s largest home improvement retailers with more than 1,600 stores, has rolled out Descartes’ software-as-aservice fleet management package to allow stores to better manage delivery of goods.
The US-based company uses 15 different carriers with 50 dispatch locations and needed to be able to share information quickly and more efficiently with all parties.
Descartes’ on-demand fleet management and tracking system is designed to plan, optimise, dispatch, track and monitor delivery fleets in real-time via the web.
The service also provides dispatchers, managers and customer service personnel with a real-time, global view of driver movement and delivery status across the entire operation and is available on a pay-as-you-go basis to eliminate up front costs.
“A lot of people say SaaS is not beneficial for bigger companies, but that’s not always the case,” explains Chris Jones, EVP solutions and systems at Descartes.
Orders are now taken in-store at The Home Depot and are inputted into the system before being shared electronically among all relevant parties, removing the need for time consuming fax forms, and improving the order detail to dispatch process.
The retailer has also benefitted from a systematic, uniform approach to order management and route optimisation, corporate controlled pricing parameters and systemgenerated manifests and weekly bills.
As well as automating the order to delivery process, part of the focus was on improving customer experience. The Home Depot is now able to see if deliveries are on time and if customers
are happy with the service as delivery visibility has been increased through access to real-time delivery status and on-demand historical information. Previously it was unable to do this.
The system was rolled out in four months and is now used by 5,000 people on a daily basis.
Jones says one of the key reasons the roll-out was so successful was down to proper training. “The Home Depot got it exactly right. They put a lot of effort into training and documentation which enabled the system to run smoothly from the beginning. And we focused on making sure it was understandable in terms of how to use it.” Uptime is now close to 100 per cent.
Thinking outside the box
Cadbury has saved £145,000 since introducing Deltion’s web-based transport management system, CarrierNet, to its operation last year.
The confectioner was keen to boost supply chain efficiency and customer service by improving collaboration and visibility. It realised this would only be possible if all relevant systems were joined up and everyone involved, from company managers to key partners across the extended supply chain, were able to manage supply chain events in real-time.
Cadbury has seen a £45,000 reduction in transport costs due to the elimination of incorrectly addressed loads, and no loads have been delivered to the wrong address since implementation.
Additionally, as the company is able to monitor and “talk-in” any potentially failed deliveries caused by customer challenges, it has reduced the number of returned loads, saving £50,000.
Both these improvements have resulted in an increase in customer service levels, which are reportedly at the highest point since records began.
Furthermore, Cadbury has taken 40,000 miles off the roads and saved £50,000 by reducing staff through better planning.
Law of the road
Graylaw Freight Group has seen greatly improved visibility and fleet efficiency since deploying Isotrak’s vehicle telematics solution which links to CANbus.
“The main benefit for us is that we now have live awareness of our fleet. It gives us accurate positional data and tells us what drivers are doing and when,” says Nick Green, managing director of the distribution company. “By reducing idle time and improving driving style we have saved in the region of 400 litres of diesel a week.”
The results are displayed in a league table which has also inspired drivers to want to do better. “It’s become a mini competition between drivers because no-one wants to be at the bottom.”
Green reckons the company has probably removed the need for an additional driver by using Isotrak as it is now saving 30 to 40 hours a week in driving time.
Previously Graylaw was using tachographs and verbal de-briefs. “We still do de-briefs but they are much more useful now. They are quicker and more factual as we can address problems then and there,” adds Green.