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The Role of Sustainability in the Modern Supply Chain

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Last week this author attended Oracle’s Modern Supply Chain Experience conference held in San Jose California. This conference is hosted annually by Oracle, and provides a singular focus on broad supply chain related technology and business process topics.  Attendance this year was impressive, upwards of 2000 attendees from multiple industry settings.

I had the opportunity to participate in two different panel discussions.  One was the role of sustainability in the modern supply chain.  Our panel was moderated by Rich Kroes, Director, and Sustainability Strategy at Oracle and included two other panelists besides myself: Jon Chorley, Chief Sustainability Officer and Group Vice President, SCM Product Strategy at Oracle and James Ayoub, a student at Penn State University.    Oracle_MSCE_Jan_16

To its credit, Oracle sponsored the attendance of nearly 80 students from various supply chain management programs both in the local area and across the country. These students were afforded the opportunity to attend general sessions, a dedicated set of student focused session tracks as well as participate in a panel discussion, including our sustainability panel. Our sincere thanks and shout-out to Oracle for their generous outreach and support, was of the first that this author has witnessed from a specific technology company.

Our sustainability panel touched upon various topics regarding how sustainability is manifesting itself across industry supply chains.

On Supply Chain Matters, we have highlighted industry supply chain efforts dating back to at least our founding in 2008.  While some initiatives have stemmed from regulatory directives and requirements such as REACH across chemical focused supply chains, RoHS within high tech, or Conflict Materials, others have been spawned from aggressive and committed corporate sustainability goal setting. Many global corporations have declared carbon reduction and sustainability goals mapped to specific timelines and much of the facilitation or enablement of such goals originates specifically within supply chains because product value-chains are responsible for a considerable portion of carbon and greenhouse gas emissions. Consider the carbon emissions footprint of transportation and logistics, manufacturing or agricultural production for example.

Many Consumer Products and Food producers such as Procter & Gamble, Nestle and Unilever and others are recognized for their wide reaching efforts for incorporating sustainability in business strategy. Beverage companies such as Coca Cola, PepsiCo and SAB recognize that large consumption of water is a critical component of a sustainability strategy.  They have each appointed senior managers responsible for water conservation and sustainability initiatives that insure supplies of water are continuous.

High profile manufacturers in the high tech and consumer electronics sector such as Apple, Dell, Hewlett Packard and others have always been on the forefront of sustainability initiatives.  Across various other industries, innovators have been openly active and committed to sustainability efforts because it drives benefits.

Consumers and customers have in-turn, continued to actively support brands that demonstrate a commitment to sustainability and preserving our planet. James Ayoub was very articulate in expressing how consumers of his millennial generation care about their environment and factor buying and loyalty decisions based on the reputation of the brand in active sustainability efforts.  James further shared highlights of internship efforts in supporting corporate initiatives in this area as well as how Penn State’s supply chain management programs and academic instructors weave sustainability into the curriculum.

Jon Chorley noted the dual role of Oracle in the area of sustainability, first as a corporate citizen and in providing technology that supports the management and tracking of such efforts.  Having inherited a high tech manufacturing supply chain from the past acquisition of Sun Microsystems, Oracle inherited a high tech manufacturing value-chain with many opportunities for continued efforts in sustainability.  As Chorley exclaimed to the audience, it makes good business sense to have sustainability weaved into business strategy in four impactful dimensions:

  • Innovation- both product and process focused and in supply and value-chains that become self-sustainable
  • Enhancing the Brand– Consumers and customers making their buying decisions not only on product form and function but on the brand’s commitment to sustainability and combating climate change.
  • Strategy and Stockholder Value– Sustainability efforts insure strategic continuity of supply of commodities, raw materials and natural resources. They insure that a firm has plans and strategies that can support long-term competitiveness and industry leadership.
  • Cost– in carbon and missions reductions that save our planet and in the monetary costs of materials, processes, product packaging and movement of goods.

I also had the opportunity to share with our audience my perceptions of the potential industry supply chain impacts from the recent Paris climate agreement. In December, 195 nations became parties to the Paris Climate Agreement (COP21) that commits to holding the increase in global average temperature below 2 degrees Centigrade (3.6 degrees F) above pre-industrial levels and to pursue efforts to limit temperature increase to no more than 1.5 Celsius above pre-industrial levels.

Whereas the prior Doha Agreement among 37 nations, the new Paris Agreement addresses climate change challenges after 2020. The Paris Agreement further represents the first time that such a large portion of the global countries have explicitly declared that the existence of climate change and heighted greenhouse emissions provides global risk.

From the accounts that I have read, the implication of this Agreement  reflect clear messages that much of the globe’s remaining reserves of coal, oil and gas must stay in the ground.  Reduction of deforestation must become global-wide priority.

The implications of such goals are yet to be fully understood by industry and supply chain audiences. One European based research firm declared that supply chain mitigation initiatives will be the Number 2 most effective strategy for achieving COP21 commitments.

Our panel concluded with thoughts that under COP21, industry supply chain involvement in sustainability has little choice but to move into a mandatory stage. Think of all the ships, railways, trucks and equipment that make-up the global movement of goods. Think about current manufacturing, assembly and farming processes primarily powered by fossil fuels and you begin to get a sense of the seriousness of this next stage.  Businesses and their associated supply chains must take on a more implicit responsibility to act in ways never before, in with innovation of a large scale.

Thus, vision and leadership among both public and private sectors is now a must and critical for alignment of efforts in joint investment, in policy, in rewards and in penalties.  Because supply chains are intrinsically global in scope, there will be requirements for far broader collaboration within and across industries, suppliers and service provider communities to overcome these new challenges.

I very much enjoyed discussing such an important topic with my fellow panelists and I thank Oracle for the opportunity as well as the commitment to the topic of sustainability.

Bob Ferrari

© 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


The Value Proposition of Cloud Computing is Broader in Scope and in Business Implications

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What is the business value proposition for adopting a Cloud computing strategy?  In this Supply Chain Matters commentary, we wanted to dwell somewhat on the implications of a full Cloud suite in supporting broad supply chain business process needs.

This author just completed nearly two days of briefings and conference presentations related to Oracle’s Cloud based technology offerings.  The first day included a full day of industry analyst briefings that updated us to the latest product strategies and customer interest levels generated by end-to-end Cloud suite offerings. The second day included attending Oracle’s Cloud Computing roadshow that has been touring across the U.S. and other countries.

As previously highlighted in our nuggets from Oracle Open World 2015, this enterprise technology vendor is convinced that wide-scale adoption of Cloud is an unstoppable force. So much so, that Oracle has released a broad spectrum of Cloud based technology that spans everything from hosting an entire computing, networking and data management infrastructure to various enterprise suite applications that can either run on the Cloud or behind the firewall. This includes the Oracle SCM Cloud suite that supports end-to end supply chain business processes that span planning, procurement, product lifecycle management, order fulfillment, transportation and warehousing. A Cloud based manufacturing management suite focused on discrete manufacturing process support has been added this month.

One specific area brought forward in the analyst briefings was the compelling pressures that today’s businesses are struggling with.  Oracle CEO Mark Hurd is a masterful communicator of such pressures. More demanding customers, new industry disruptors and relentless pressures to reduce costs and increase productivity abound.  I’m fairly sure that readers can relate to the environment described.

According to Oracle, thus far, many of the early adopters of the provider’s Cloud based technology offerings are indeed would-be industry disruptors or up and coming businesses. Rather than adopt an overhead structure that includes owned data centers and IT infrastructure along with supply chain, procurement or product management applications developed years ago, before today’s globally extended supply chains, they instead appear eager to adopt a different pay-and-adopt- as-you-go structure that offers flexibility to needs.

Think about that!

An industry disruptor with lower overhead, infinite flexibility to add technology when needed, and not burdened by supply chain applications that are too disruptive and far too expensive to upgrade.  Instead, supply chain functional and line-of-business teams have turn to opportunistic strategies to augment problem business processes, more often adopting a singular Cloud based application. The problem with this strategy is that while it addresses specific one-time process needs, it risks another Cloud-based island of information needing future information integration when other processes and/or applications change.

Another compelling business trend is that all corporate functions are under enormous pressures to reduce costs.  That includes IT where studies consistently reinforce that 50-75 percent of costs stem from maintaining existing IT infrastructure or business software applications.  Thus at every annual budget cycle, IT executives must present cost avoidance alternatives.  In large businesses, IT is often classified as a corporate-wide service that evokes a tax burden on various lines-of-business and functions such as supply chain operations. Throw in frustrations relative to on premise business applications that were designed prior to today’s changed business and supply chain frameworks and the pressure to change is somewhat more compelling.

For emerging businesses, a Cloud based adoption strategy that can avoid being locked into a cost intensive IT infrastructure or acquiring software that will receive little daily use makes more practical sense.  The analogy is why buy an automobile and pay for daily operation and maintenance when you can rent by the hour or day.

The takeaway for supply chain and line-of-business teams is to not dismiss Cloud based technology adoption as just more technology vendor hype. That may be short-sighted; Cloud is rather a response to growing industry frustrations related to today’s IT technology cost and service challenges.

Another takeaway is to view a Cloud based technology strategy from the perspective of a broader focus on an engineered suite of pre-integrated software applications that are continually updated to reflect changing business needs. Why settle for business application innovation every 1-2 years when every 6 months is an option, and with lower capital and overhead costs.

It is a compelling argument and one that from this author’s lens, will permanently change the technology landscape sooner rather than later.

Bob Ferrari

Copyright 2016. The Supply Chain Matters® blog and The Ferrari Consulting and Research Group. All rights reserved.


Top Ten Most Read 2015 Supply Chain Matters Content

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This Editor had the opportunity to view our Supply Chain Matters readership analytics (thanks to Google Analytics) for all of 2015 and can now share our ten most popular 2015 commentaries during the year.  Supply Chain Matters Blog

In reverse order:

Number 10

Highlights of the APICS Annual 2015 Conference held in Las Vegas in October, and specifically ex-GE CEO Jack Welch’s keynote interview. Welch expressed a number of insights on the topic of leadership, and more specifically, supply chain management, and the professionals who manage today’s supply chains. We are very pleased that this commentary made our top ten.

Number Nine

Our September commentary related to Tesla Motors contracting of strategic supply of lithium for its new gigafactory. Our commentary addressed the  broader strategy unfolding, one that extends beyond automotive supply chain needs, including the power storage needs of homes and businesses. The site was chosen because of its close proximity to supplies of the all-important raw material of lithium as well as to the Tesla factory in California.

It seems that our readers were quite interested in all news related to Tesla  since the auto manufacturer appears twice in our Top Ten.

Number Eight

Our July commentary addressing the needs of supply chain business intelligence for SAP environments, specifically that as supply chain business processes become ever more complex, teams try to fill the gaps with downloads of static reports and ancillary spreadsheets to provide more meaningful operational analysis. We felt and sense that this is indeed representative of the broader SAP community, and brought awareness to other options. Our commentary brought wider attention to Supply Chain Matters Named sponsor Every Angle Software who’s self-service operationally focused business intelligence tool includes an extensive list of European installed base customers with SAP backbones.

Number Seven

Our January commentary, “Extended supply chain” is the new supply chain, a guest contribution by Prashant Mendki, Director Alliances and Business Development for supply chain systems integrator Bristlecone. The commentary called for a holistic “integrated extended supply chain” rather than independent business processes where the entire ecosystem would be treated as part of the supply chain, and where suppliers would have complete visibility into key customer demand and have their response plan ready.

Number Six

Our September market education commentary bringing visibility to Xerox’s new more cost affordable smart labeling technology and the availability of two printed electronic labels that can collect and store information about either the authenticity or condition of products flowing across the supply chain. From our lens, the availability of such advanced labeling technology will foster new, more affordable dimensions of item level tracking, security and authenticity specifically related to products. This author characterized the development as the dawning of item-level tracking technology that industry supply chain teams have versioned for quite some time.

Number Five

The highlights of our Supply Chain Matters interview with Irfan Khan, CEO of Bristlecone while attending the Gartner Supply Chain Executive conference. Our interview touched upon a number of areas including predictive analytics applied to supply chain decision-making needs. Irfan opined that mainstream acceptance of the full spectrum of smarter analytics (Descriptive, Prescriptive and Cognitive) applied to supply chain and manufacturing capabilities will take additional time for most organizations to be fully prepared to leverage. He confirmed organizational change management readiness and client skill impacts that take time to work through

Number Four

Oracle’s July announcement of expansion of public cloud capabilities applied to order fulfillment, specifically Oracle Order Management Cloud and Oracle Global Order Promising Cloud. Out takeaway for readers was that Oracle remained committed toward a broader development and release plan surrounding SCM applications in the public cloud platform than perhaps other competitors such as SAP.

Later in 2015, in conjunction with Oracle Open World, the full Oracle SCM Cloud suite was announced by Larry Ellison in his opening keynote. From our lens, Oracle had developed one of the broadest cross-functional supply chain management, public cloud based applications currently available in the marketplace. That stated, there are qualifiers in that this public cloud suite provides standard functionality as opposed to the ability to support customized customer business needs. Its strength resides in faster time-to-value and potentially lower IT infrastructure deployment costs.

Number Three

Our highlights and impressions regarding the FedEx acquisition of both Genco and Bongo International. Genco was one of the largest 3PL’s in North America and Bongo International provides an e-commerce platform that facilitates international customers purchasing items from domestic websites.  We were intrigued by the low price paid for Genco which as less than current earnings.

Number Two

Our February commentary reflecting on Tesla’s operating results reflecting some supply chain strainsOur observation was that while showing some supply chain strains at the end of 2014, even more challenges remained for Tesla’s supply chain in 2015. Tesla has often demonstrated the effective use of advanced technology applied to manufacturing and supply chain business processes, and that 2015 will be no exception to that trend.

We just published a follow-on commentary reflecting on Tesla’s 2015 delivery performance leaving some Model X customers rather frustrated.

 

Finally, our Number One most read 2015 content was:

Our unveiling of the full listing of 2016 Predictions for Industry and Global Supply Chains published on December 15th.  We interpret that to mean that our readers are keenly focused on what lies ahead in the New Year, and that’s OK with us.

 

We trust that all of our line-of-business, IT and cross-functional supply chain readers have gained value and insight from our independent lens on supply chain focused business developments, business process and technology challenges among various industry and global perspectives. We believe we have accumulated a truly in-depth library of industry-specific and functional content.

Once again, as we enter our ninth year and remaining as a top ten or top twenty-five presence among supply chain blogs, we again thank our loyal global based readers and our sponsors for their continuing support.

Bob Ferrari, Founder and Executive Editor

© 2016 The Ferrari Consulting and Research Group and the Supply Chain Matters® blog.

Content appearing on Supply Chain Matters® may not be used by any third party without written permission of the author and/or our parent, The Ferrari Consulting and Research Group LLC.


Report Card for Supply Chain Matters 2015 Predictions for Industry and Global Supply Chains- Part Four

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While industry supply chain teams wrap-up their various 2015 strategic, tactical, and operational line-of-business and supply chain focused performance objectives, we continue with our series of Supply Chain Matters postings looking back on our 2015 Predictions for Industry and Global Supply Chains that we published in December of 2014.  Supply Chain Matters Blog

Our research arm, The Ferrari Consulting and Research Group has published annual predictions since our founding in 2008.  Our approach is to view predictions as an important resource for our clients and readers, thus we do not view them as a light, one-time exercise. Thus, not only do we publish our annualized predictions, but every year in November, look-back and score the predictions that we published for the year.  After we conclude the self-rating process, we will then unveil our 2016 predictions for the upcoming year.

As has been our custom, our scoring process will be based on a four point scale.  Four will be the highest score, an indicator that we totally nailed the prediction.  One is the lowest score, an indicator of, what on earth were we thinking? Ratings in the 2-3 range reflect that we probably had the right intent but events turned out different. Admittedly, our self-rating is subjective and readers are welcomed to add their own assessment of our predictions concerning this year.

In the initial posting of this Predictions Score Card series, we looked back at both Prediction One– global supply chain activity during the year, and Prediction Two– trends in overall commodity and supply chain inbound costs.

In our Part Two posting, we revisited Prediction Three– the momentum in U.S. and North America based production and supply chain activity, as well as Prediction Four– wide multi-industry interest in Internet of Things.

In Part Three, we revisited our supply chain industry-specific predictions.

We focus this commentary on predictions six through eight.

2015 Prediction Six: A Stalling of Big Data and Predictive Analytics in Favor of Alternative Application Focused Strategies

Self-Rating: 2.5 (Max Score 4.0)

We predicted that the promise of Big Data and Predictive Analytics technology in enabling more insightful and predictive decision-making at the enterprise level would stall in 2015, mainly because of certain technology and organizational constraints. The promises in capabilities to analyze terabyte streams of enterprise structured and unstructured data related to customers, products, suppliers and equipment are dependent on software and database capabilities that can accommodate large data streams and simultaneous user inquiries.  We felt that the term Big Data itself was a symptom of a far more perplexing problem, namely that enterprises, organizations and industry supply chains are currently overwhelmed by collecting too much extraneous data.  The challenge at-hand was collecting and harvesting “smarter data”.

We are actually pleased that from the technology side, vendors provided special attention towards helping customers to narrow the scope of analytics initiatives, helping organizations to initially pilot both the technology as well as the organizational skills and change management perspectives. Thus, this proactive attention muted our prediction.

A further concern we raised was the organizational challenges in addressing security and governance of mission critical data. Here again, our polling of both vendors and end-users across multiple industry settings indicates that a lot more attention was focused in this area.  While legitimate concerns remain, especially in the light of even more cyber-security and hacker information attacks, IT and line-of-business teams seem to taking proactive and balanced approaches. The need to be more predictive and be far more agile to business change seems too prominent.

We further predicted that more supply chain, procurement and S&OP focused applications would be augmented with embedded predictive analytics and machine learning capabilities. We felt that supply chain planning applications that include predictive analytics and/or augmented simulation will continue to lead in this effort. For the most part, supply chain planning vendors such as JDA Software, Kinaxis, Oracle and others are indeed developing and releasing more predictive analytics capabilities. Specialized supply chain operational and financial intelligence vendors such as River Logic and Every Angle are concentrating specifically in the need for more predictive and prescriptive capabilities across cross-functional and enterprise environments.

Interest levels in enabling more predictive capabilities remains high among industry supply chains, and organizations are taking a balanced and risk-aware approach. Thus our self-rating reflects a lower score relative to our original prediction.

 

2015 Prediction Seven: A Turbulent Year in Global Transportation

Self-Rating: 3.5 (Max Score 4.0)

We obviously for the most part, nailed this prediction, but then again, as we entered 2015, the signs were obvious. Our one misreading of turbulence was that of the U.S. rail industry.

We predicted a continuing shake-out of excess capacity among ocean container shipping lines leading the re-sizing of global transportation fleets.  That trend continues in earnest, with more ocean container ships being idled. For the most part, shipping rates collapsed for most of 2015 leading to a buyer’s market, despite multiple attempts among carriers to influence higher rates.  By October, industry watcher Drewry predicted upwards of another three years of industry overcapacity while the CEO of industry leader Maersk Lines, openly called for further industry consolidation. In November, China’s two ocean container lines announced their intention to merge while speculation continued that Neptune Orient Line was seeking a buyer.

We predicted that the “perfect storm” of dysfunction among U.S. west coast ports in the latter half of 2014 would have implications in how shippers, exporters and retailers route future shipments destined for the United States and global markets.  That trend indeed manifested itself with ongoing reports indicating that this year’s traditional holiday seasonal surge in shipping really never occurred.  Retail and other industry supply chains suffered a sizable inventory overhang as 2014 holiday inventories arrived in the early part of 2015.  While 2015 data relative to a volume shift among U.S. West Coast, Gulf and East Coast port activity is still to be determined, current trending numbers to-date point to supply chain teams indeed exercising a more balanced inbound routing. We pointed to the issues uncovered in 2014 labor contract negotiations, and work stoppages involving independent trucking’s driver contracts, the leasing and 3rd party deployment of tractor-trailer carriages to transport containers as needing to be addressed by transportation industry and labor union players to avoid a repeat of what occurred in 2014. Those issues remain at-odds, especially among independent truckers without full-time labor agreements that account for idle and delay time.

One of the most prominent turbulence areas was increased merger and acquisition activity in the third-party logistics sector. We predicted that the added complexities and service needs related to  Omni-channel and industry-specific logistics would continue to spur more service and technology requirements by customers on third-party logistics providers (3PL’s), forcing them to invest in broader technological and systems capabilities along with broader scale, or risk losing business to larger more versatile providers.  The acquisition announcement by FedEx of GENCO at the end of 2014 portended this dynamic in 2015. Indeed that came to pass with continuous announcements of M&A activity involving both larger and smaller industry players. Among the most prominent, in April,  FedEx announced its intent to acquire TNT Express for $4.8 billion. That announcement came in the wake of UPS’s previous failed attempt to acquire TNT after encountering stiff regulatory resistance. In September, XPO Logistics announced its intent to acquire Con-Way for an estimated $3 billion raising the specter of further industry consolidation.  In October, Denmark based DSV announced its intent to acquire U.S. based UTi Worldwide.

We predicted that the plunging cost of crude oil prices would further add to turbulence involving existing fuel surcharges affixed to transport rate structures. Carriers and parcel shipment firms will likely attempt to drag out the suspension of fuel surcharges to protect or sustain ongoing margins. That turned out to be the case and the most visible attempts were from FedEx and UPS who each announced added fuel surcharges for both 2015 and 2016.

Turning to railroads, we predicted that Canadian and U.S. based railroads would encounter turbulence in accommodating higher volumes of crude oil shipments as well as increased regulatory pressures for upgrading sub-standard tank cars to new safety standards.  The opposite occurred.  The continuous decline of world crude oil prices triggered a noteworthy reduction in U.S. domestic crude production leading to lower oil train volumes. With lower volume, regulatory pressures for tank car upgrading seemed to have eased but there was a crisis involving the December 2015 deadline for railroads to have implemented positive train control technology.  That deadline was extended over an additional three year horizon.

 

2015 Prediction Eight: Sales and Operations Planning Transitions to Broader Scope Information Management Augmented by What-If and Simulation Activities.

Self-Rating: 3.5 (Max Score 4.0)

We have long advocated that today’s more globally based supply chains require end-to-end business network technology support in supply chain execution, customer fulfillment and more integrated business planning dimensions. With that perspective, we predicted that select industry sales and operations planning (S&OP) processes will begin efforts to transition toward inclusion of broader aspects of internal and external business planning, response management and predictive decision-making capabilities. We believed that this would most likely include deeper, cross-application information connections to product demand pipelines, augmented with traditional and social media based demand sensing. We further anticipated more-timely information connections with external or outsourced suppliers along with key customers, leveraging cloud-based planning and fulfillment synchronization networks.

Because of these needs, we expected B2B supply chain business network providers, including ERP players, to deepen their support for broader integrated business planning needs by leveraging cloud-based platforms or networks.

Our polling of technology vendors including where specific market interest occurred in 2015 reinforced that industry supply chain and line-of-business teams indeed expressed desires for integrating broader information streams and more contextual-based decision-making capabilities.  Also on the vendor side, briefings on product strategy pointed to consistent themes for augmenting S&OP process support with broader aspects of network-wide information and with more prescriptive and predictive decision-making capabilities.

When we made our prediction, we had in-mind that certain existing B2B business network technology providers would become more attractive in M&A activity. In February, private equity firm Insight Venture Partners announced its intent to take E2open Inc. private. In June, best-of-breed supply chain planning provider JDA Software announced a strategic partnership with Google directed at deployment of a supply chain wide public cloud capability.  In August, ERP provider Infor announced its acquisition of GT Nexus declaring the advent of the “first global commerce cloud” for small and large enterprises. Infor’s stated objectives are to implement broader supply chain business network support capabilities including S&OP processes. And at its annual customer conference in late October, Oracle announced its public SCM Cloud offering with the ability to integrate a broader B2B business network. Meanwhile, SAP continued with its efforts to broaden its Ariba B2B platform for broader support of direct materials procurement and integrated business planning.

In our next and final posting, we will look back on our final two predictions for 2015.

In the meantime, feel free to add to our dialogue by sharing your own impressions and insights regarding these specific industry challenges in 2015.

Bob Ferrari

©2015 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters blog.  All rights reserved.


Supply Chain Matters Attendance at Oracle Open World 2015- Some Random Information Nuggets

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This author managed to once again navigate among the various spread-out venues and thousands of people attending this year’s Oracle Open World. Making my way home, I accumulated some random nuggets of information which I felt would be of some general interest or perhaps curiosity to our Supply Chain Matters readers.

So in no particular order, here is some information to chew-on:

In his executive keynote, Oracle Co-CEO Mark Hurd shared the following data: For the period 2008-2015, average revenue growth among S&P 500 listed firms averaged less than one percent.  During that same time period, corporate earnings averaged 5 percent annually.  In Hurd’s usual direct style, he declared that those earnings likely came from an overwhelming pattern reflecting reduction in costs. From our Supply Chain Matters lens, is it no wonder that supply chains and IT remain under constant pressure for reducing costs further? Consider also the renewed wave of mega-mergers and acquisitions as another means to chase needed growth while shedding expenses. And, as many of our readers can attest, the most favored target for overall cost savings is the firm’s supply chain.

Mark Hurd further shared his collection of personal predictions regarding the IT industry over the next ten years.  One of these predictions declared that only two technology vendors will dominate 80 percent of the software-as-a-service (SaaS) market by 2025.  One was confidently expressed as being Oracle.  The other was left up for the audience to decide.  I’m sure our readers have their own guesses as to the other provider.  What’s your guess AmazonGoogleSales ForceIBMSAP?  Who can say?

General Electric CIO Jim Fowler shared that his organization’s goal is to have 70 percent of all internal applications running in the Cloud by 2020.  GE today has 20 percent of its applications now Cloud based. The company has an internal goal to achieve one billion in productivity savings over the next three years. In a separate Infosys keynote, David Bartlett, CTO of GE’s Aircraft division reminded the audience of GE CEO Jeff Immelt’s declaration about the velocity of business change: “Where once we were a diversified manufacturing and services company, we woke-up as a software and analytics company.” GE will not be alone.

In a press and analyst question and answer session, Oracle President Thomas Kurian indicated that Oracle currently manages 1000 Petabytes of information storage, 34 billion transactions and 30 million simultaneous users per day in its current Cloud landscape.  That transaction volume represents nearly six times the amount of daily credit card transactions across the U.S. The company further operates and manages 19 computing centers across North America, 7 in Europe and 3 in the Asia-Pacific region.  That is obviously a lot of silicon, iron and software code. That sort answers the question- why not outsource IT and let another vendor worry about all the headaches.

In all of the Open Worlds previously attended, we always look forward to Larry Ellison’s talks since they are direct and include many insights, albeit a bit biased.  In this year’s two keynotes, Ellison observed that the IT industry has quickly entered a new era of utility computing, which is as a big a deal as when the personal computer arrived. He further declared that it has taken Oracle nearly a decade to transform all of its applications and infrastructure to a true Cloud based architecture and services model. It was described as a huge engineering effort. Thus far in 2015, Oracle has released 83 different on the Cloud, including the newly announced SCM Cloud suite. According to Ellison, only one other competitor gets Cloud, that being Microsoft. “The rest of the major Cloud vendors are still in discovery. “  You can always count on Ellison to do not disappoint an Open World audience by a challenge to the competition.

And finally, one other nugget: Did you know that Larry Ellison prepares his own PowerPoint slides. Yes, he admitted on-stage that even though his presentations are sometimes criticized for lack of spiffy graphics, it is because he just does not have the inclination.  Since stepping aside as CEO into the newly created role of CTO, Ellison conducts his own on-live, on-stage software demos.  In his second keynote, he moved an entire large database from a private to public Cloud instance with just one-hint from an audience member (right-click!). How many 71 year old billionaires owning an entire Hawaiian island and an America’s Cup sailing team chose to create their own PowerPoints and conduct on-stage software demos? Perhaps not many.

You gotta love the world of tech!

Bob Ferrari

 


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