SCM2.org Prediction #1: the Death of SCM

This is the first in - more than likely - a series of predictions we’ll be making here on SCM2.org.

Prediction #1: The Death of SCM

At least as we know it today. There are two viable paths forward for SCM: ERPII or SCM2. But a standalone point-solution or a suite of loosely coupled SCM point-solutions are not going to be around ten years from now.

The vendor with a single point-solution is already an artifact from the past. If it hasn’t happened yet, at best it will be gobbled up by a bigger vendor in the foreseeable future, only to have its point-solution become part of a suite of loosely related peers. At worst, it may still be acquired only for its install base, or it will simply go out of business. In either of the worst case scenarios, as a customer you are stuck with an unsupported and stagnant product, or will be required to go through another expensive project. The status quo currently are the vendors that provide a suite of loosely related point-solutions. These vendors do provide a way forward after a first solution has been successfully implemented, and therefore are in general faring much better than the single solution vendors. The exceptions to this broad sweep statement are those vendors that sell a truly unique product. And these vendors will continue to do well until a more encompassing solution hits the market that covers their uniqueness, whether it be an SCM suite or a SCM2 solution. Our prediction is that the suites of SCM point-solutions will disappear over the next ten years just like the single point-solution vendors have over the last ten years, as more and more ERPII and SCM2 solutions hit the market.

The ERPII scenario is most likely for mainstream horizontal solutions for two reasons:

1. The mainstream scenario is much simpler and that makes ERPII a more attainable objective.
2. Many vendors are already on this path.

In this case SCM vendors are likely to be acquired into ERP companies, and their products likely to get a new life in a new form. A number of SCM vendors may do the opposite and instead acquire an ERP product to complement their footprint. A number of vendors exist that already own all the necessary products; sometimes multiple equivalent products. These vendors will simply merge their product lines to provide ERPII. Whether this merging is limited to product marketing only, simple technical integration, or true technological integration, will vary by vendor and time will tell which are which. The reasons the remaining single-point solutions will not survive in their current form are multifold. First and foremost, their smaller revenue make them easy acquisition targets for the huge vendors out there. Second, since they do not provide a clear road map for future implementations in related SCM areas, many prospective customers will choose vendors that do provide a road map, i.e. vendors with more related and integrated products in the same suite. These are not visionary statements; the trend is already clearly visible.

The SCM2 scenario is most likely for niche vendors and industry vertical oriented vendors. However, the acquired point-solution products -whether standalone or integrated in a suite - will have little to offer for the established SCM2 vendor. Those products were not designed from the onset to allow the kind of tight modular integration required for SCM2. More likely than not the vendors will be acquired simply for their install base, and their products will be retired.

The reasons SCM2 will co-exist with ERPII are twofold:

1. SCM2 will claim the industry vertical and niche market stake that mainstream ERP vendors currently and their future ERPII descendents cannot provide the right fit for.
2. SCM2 will be much quicker and cheaper to implement due to the modular structure than the integrated suits of ERPII products. This provides a huge value that has a similarly huge market appeal.

In summary, SCM will not truly die, but it will evolve into something else. The Neanderthals did likely co-exist with Heidelbergensis and Erectines before they died out, and those in turn likely co-existed with Homo Sapiens. Are we truly something new, or do we still have some Neanderthal in us? Like the Neanderthals got extinct, so will SCM as we know it. And like the Neanderthals are referred to as hominids like ourselves, so will future forms of SCM still be referred to as SCM.