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In my last article, I illustrated why an SCM2 system should be one holistic solution, and touched on the modularity of such systems. In this article I will dive a little deeper into the modularity aspect. The first half will discuss why it will be modular, the second half will discuss how this modularity will need to be structured. As I mentioned in the previous article, there are two main reasons a holistic SCM2 system will and should be modular. First, it will be modular, simply because departmental boundaries exist and each department focuses on subareas within SCM. It is usually a single department within a company that has a compelling need for a SCM solution that triggers the search for a vendor that can address that need. The point-solution vendors for that area and the SCM2 vendors that provide a module dedicated to that area will be considered for purchase. Any vendors that only have larger solutions than the problem area will typically be considered overkill and will be ignored. Hence, SCM2 will be modular due to the vendor’s requirement to survive. Second, it should be modular, to allow incremental implementations of more encompassing solutions. From the customer’s perspective it is much more difficult to get project approval for a single 2 year project that costs $800K than it is for 8 smaller projects that build upon one another and each take 3 months and cost $100k. In the former scenario all the project risk is accumulated upfront, and the return will start no sooner than 2 years. In the latter case, the risk is limited to the smaller upcoming project and each project can be fully or partially funded by the return of earlier projects. The remainder projects can even be abandoned if earlier projects fail to deliver on promise. This provides significant risk mitigation and a much reduced impact on cash flow. → → → Continued Here! 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. → → → Continued Here! Much has been written about ERP II, which is the term coined to indicate the next generation of ERP systems. According to most experts SCM will become a part of this bigger better ERP. Personally I think this is only partially true. For certain industries that have mainstream SCM requirements this will be possible to a certain extent. For some industries the requirements for ERP and SCM are so fundamentally different across the board that I do not think these could successfully implement a single system that does both, at least not in the tightly knit form that is predicted for ERP II. As a consequence I believe for some industries ERP II will be the way to go, whilst others will be stuck with two separate systems: ERP and SCM2… Unless a revolutionary new form of ERP were to emerge that would be shaped more like SCM systems than present day ERP systems. I am very interested to hear about any such systems if they exist today. For this I will start a short posting on the products page, to keep the other pages completely free of sales and marketing speak. The root of the problem lies with the fundamental difference between ERP and SCM. Existing ERP systems are all built on top of a database with its inherently relational structure and around pretty standardized processes, such as accounts receivable, accounts payable, order-to-cash, bills of material (BOMs), etc. Any differences between implementations are usually captured by setting a series of parameters or flags on the one standard model. The processes themselves are always done through sequential rules and heuristics, rarely if ever through an optimization. Simply loading the right data into this rather rigid data structure will make the ERP functionality come to life. For SCM a lot of point solutions exist that each tackle a small piece of the total SCM pie. These can get away with the same approach used for building ERP systems. However, for some point solutions, and for pretty much all more holistic tactical and strategic solutions this is not an option. Especially point solutions in the manufacturing area will already need to deal with many complexities and uniquenesses of industry verticals and individual companies to warrant less of a straitjacket. Sure, any system can be customized, but this leads to support and upgrade hell, and is certainly not part of the ERP II vision, nor the SCM2 vision. → → → Continued Here! |
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