ERP market analyst Michael Koploy alerted me to his recent 2011 Warehouse Management Systems Market Trends report which provides some rather interesting observations. (Summary findings preview or Free download after user registration)

The report notes that an improving economy is giving buyers the confidence to tackle long-postponed logistics upgrades.  It notes that many smaller businesses have outgrown their current systems, or their ability to operate without a robust WMS. Also noted is that ERP vendors have managed to close functionality gaps and that their account control is tipping selection decisions towards the resident ERP.

Even more interesting is that the report also concludes that while a lot of small and medium businesses are leaning toward cloud-based WMS options, significant concerns remain for prospective buyers.  The report rightfully points out that logistics and operational managers are sometimes slow to adopt new software deployment models, favoring instead applications that have had a solid track record of successful deployments. Security of data within systems that are hosted off-site remain a potential deal breaker. I have heard this observation from other analysts, and I wonder whether these objections stem solely from operational teams, IT teams, or senior management itself.

Supply Chain Matters has been an advocate for cloud computing options in various supply chain applications, both planning and execution related. The potential savings in implementation time, required IT infrastructure and life-cycle software maintenance can be substantial. However, these lingering buyer concerns need to be adequately addressed by technology providers.

In an effort to provide some further clarity on buyer concerns related to cloud based applications, we have initiated a new Supply Chain Matters interactive poll which is displayed in our right-hand panel, about mid-way down.  We would appreciate readers taking some time to respond, and we will publish the results in a few weeks.

Bob Ferrari

ZD Net blogger Michael Krigsman penned a commentary on his IT Project Failures last week which our Supply Chain Matters readers should take the time to review.

Michael notes how the business failure of the UK’s largest auto glass replacement provider, Auto Windscreens, was publically attributed to a failure of an enterprise software implementation.  In his posting, Michael did a great job in social-media based background research, not only tracing certain facts, but also pointing out to his readers that sometimes, faulty IT projects mask other, more serious business issues in management and business process discipline.

This particular industry case study has some important supply chain business process overtones.  First, Auto Wndscreens can be termed to be a mid-market distributor and service company, where just-in-time inventory availability is a critical measure of business success. Too much inventory leads to cash flow problems while not having the correct inventory can lead to a lost sale. This can be a significant consideration for small and mid-sized companies where cash flow is a continuous challenge. In this particular situation, the IT system involved was related to overall inventory management. The primary question posed in IT Project Failures commentary is whether the IT application failure precipitate the business collapse or mask more serious, underlying management issues?

Somewhat coincidental, the Gartner First Thing Monday newsletter published today is a commentary, The Puzzling Myth of IT Failures, (subscriber sign-up required) authored by long-time AMR Research analyst Jim Shepherd. Shepherd’s argument is that a vast majority of ERP projects do not fail by any conventional definition, but because of unrealistic expectations of the buyers, as well as overhyped claims of the ERP technology providers.  The analogy drawn is that ERP is the equivalent for installing updated infrastructure, much like when we tend to renovate our homes or office facilities. “ERP should be viewed as the stable infrastructure that allows an organization to create and deploy the kind of innovation and differentiation that drives real business improvements,” Shepherd states.  His lament is that teams should “grow-up”, that nothing lives up to the salesperson’s claims.

My own view is that there is substance to the observation that IT projects can sometimes be the panacea for a flawed business process or non-responsive management processes.  Having worked for major ERP providers, I know that ERP salespeople are aggressive, and will do all that it takes to win the sale, including over-hyping the benefits. I quickly add however, that a solid management team fully understands the dance, and more importantly, fully understands their business processes, information needs and corporate culture.  Companies do not elect to buy infrastructure, the elect to buy innovation and competitiveness within their industry.  When considering the vast majority of mission-critical, supply chain related fulfillment processes, the stakes are even higher.

The takeaways from each of these commentaries is that supply chain teams need to constantly do their homework in continuously increasing their skills and awareness of information technology tools. More importantly, supply professionals need to demonstrate effective two-way communications and change management disciplines with all levels of management.

What is your view?   Do IT project failures mask underlying management and process issues?

Bob Ferrari