Thursday 16th Aug 2018 - Logistics Manager Magazine

What is stopping you from innovating?

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Are you innovating in your supply chain or is all your effort focused on just keeping the lights on?

The question is prompted by a new study from Rimini Street which found that seven out of ten companies in distribution say they are spending too much keeping the lights on for their existing IT systems.

The study conducted by Vanson Bourne, found that 95 per cent of distribution respondents say their industry should be spending more on innovation. Even so that is less than manufacturing where the equivalent number is 98 per cent.

And four out of five respondents in distribution are worried about where the money will come from to fund innovation.

Malory Davies, Editor.

A major challenge is dealing with legacy systems: 43 per cent of those from distribution (the highest proportion among all industries) say complex legacy infrastructures making innovation difficult is a top three blocker. Not only that – 84 per cent say they are dependent on IT customisations.

And 30 per cent of distribution respondents, more than any other industry aside from the public sector, said existing vendor relationships hamstringing their ability to innovate.

Of course, there are also external issues political uncertainties loom large in people’s minds. For example, 41 per cent of distribution respondents said they were worried about the impact of Brexit.

Distribution is just one sector covered by the survey which takes 9j 900 decision makers from organisations with more than 1,000 employees across Europe, the Americas and Asia-Pacific. And some issues were common right across the group. For example 90 per cent said budgets for IT innovation must increase by ten per cent in the coming years to cope with the rapid introduction of competitive IT platforms, while 70 per cent said that current contracts with service providers do not accommodate innovation.

Why is Rimini Street interested in this? Well it offers support services that replace the maintenance contracts from companies like Oracle and SAP, and it reckons that the savings from going down this route can be used to drive innovation.

What is very clear is that the pressure to digitalise supply chains is becoming more intense and organisations need to develop strategies to meet that challenge. Just keeping the lights on is simply not good enough.