Hewlett Packard Now Operating as Two Separate Companies: Supply Chain Test Comes in the Coming Weeks
Today marks the official first day of high-tech firm Hewlett Packard operating as two separate and distinct companies. One company, Hewlett Packard Enterprise Company will oversee operations of the former HP Enterprise division, a $55 billion dollar entity. The other, HP Inc., will oversee operations of the former HP Printer and PC divisions, of equivalent revenue size. Supply Chain Matters commented on this proposed split, along with supply chain implications in a July commentary, as we envisioned a very busy summer across the company.
The massive HP split involved separating balance sheets, facilities, IT systems and applications, including those related directly to the support of HP’s end-to-end supply chain. Purchase agreements among various suppliers would have to be recast foe each new company along with various special agreements.
A published article from the San Jose Mercury Times provides perspective on the scope and efforts that went into this split, which overall involved 300,000 employees among 651 global locations. Formal planning began last February and initially involved a flow chart that consumed a 40 foot length, 10 foot high wall. Approximately 60,000 employees had to be moved to separate locations, along with a reported 2700 bank accounts and IT systems.
An interesting perspective brought out in the article was the planning could not be a consensus-driven decision-making process. Instead, a small group of executive decision-makers were supported by a separation project team that grew to about 400 people.
The real-test of this separation comes over the coming weeks as the spilt processes and systems begin efforts as two separate enterprises. From a supply chain and product management perspective, key sensitivities will be seamless uninterrupted operation of both order fulfillment, supply chain planning and execution systems. A further perspective will be how inbound direct material and indirect materials contracts are structured, implemented and managed under the split. The Mercury Times report indicates that HP Labs will remain as a separate research and development center shared by both companies.
Obviously, the good news here was that the November 1st separation milestone was completed as required. The systems shakeout period will hopefully occur without major snafus.
Supply chain technology provider Kinaxis today reported its third-quarter 2015 financial results. Beyond rather positive financial performance numbers, there were two rather significant announcements affecting the company from a longer-term perspective.
Highlights of Q3 financial performance included:
- Total revenues of $23.7 million, an increase of 34 percent
- Nine months YTD revenue performance of $67 million, up 31 percent
- Subscription revenues of $16.5 million, an increase of 24 percent
- Gross profit of $16.8 million, an increase of 31 percent / Net profit of $3.8 million
In conjunction with reporting earnings, Kinaxis senior management shared two strategic noteworthy announcements. The company has appointed long-term executive veteran John Sicard to succeed Douglas Colbeth as CEO, effective January 1, 2015. Sicard, a well-recognized 22 year veteran of the company, was most recently chief product officer, responsible for all activities related to Kinaxis’s product portfolio. He has had previous leadership roles in development, consulting, marketing and customer support.
Colbeth, who has served as CEO of the company since 2003 will continue in his role as Chairman, along with other strategic activities. According to Colbeth, this announcement is a result of the company’s succession planning strategies.
Senior executives further disclosed that Kinaxis has signed a strategic initiative agreement with Accenture for joint customer development and solution development. This formal strategic partnership opens the possibility for Kinaxis’s penetration in larger corporate accounts, global geographies, broader industry verticals and in complimentary managed services related to supply chain response planning. In the earnings briefing, Colbeth noted that Accenture has already had a positive effect in sales pipeline activity, and that in his continued role as Chairman, he will serve as the ongoing executive sponsor to the Accenture relationship.
Technology companies often sustain growth as a result of the combined efforts of solid leadership, dedicated and energized employees and strong strategic partnerships. These latest developments concerning Kinaxis strike many of these facets.
Disclosure: Kinaxis is one of other named sponsors of Supply Chain Matters and the author is a guest blog contributor to the 21st Century Supply Chain blog hosted by Kinaxis.
Supply Chain Matters at Oracle Open World 2015- Reflection on the Importance of Accurate Information
We continue with our series of Supply Chain Matters commentaries concerning this week’s Oracle Open World Conference being held in San Francisco. Our previous commentaries can be viewed here and here.
While attending enterprise vendor related conferences, I make it a point to attend sessions that provide updates on new functionality and inputs from customer advisory councils. Attending two such sessions at this year’s Open World provide some consistent evidence that technology consumers are becoming far more concerned with ongoing data management, discovery and maintenance. That is clearly good.
While attending a session related to the latest 12.2.5 release of Oracle E-Business Suite Order Management (OM) application, a reflected theme was customer advocating for information discovery tools. A product manager described Oracle’s prior acquisition of Endeca as the “greatest acquisition that Oracle has made” regarding the ability to leverage its information discovery capabilities across order management capabilities. With its latest release, OM includes the ability to perform 360 degree customer views of information related to orders from various channels including online. There is added application in quoting, where users can explore which quotes were the most successful along with product pricing attraction trending.
One of Oracle’s more popular applications in the area of supply chain management is Oracle OTM (transportation management), the result of the prior acquisition of G-Log. The session related to the latest version of Cloud OTM reportedly responded to customer council input related to more simplified, automated tools to update freight rate changes. Rate simplification maintenance includes the ability to easily download rates to a spreadsheet for easier user update. Also included were needs for improved dashboards, data visualization and adoption of Oracle’s standard ADK web user interface that can accommodate a wider variety of computing platforms including tablets and smartphones.
The session related to the current release of Oracle Value Chain Planning (VCP) outlined four development themes in the 12.2.5 release which all touched upon easier data management, update and discovery. VCP has now adopted the Oracle ATK web user interface, while the look and feel among the Oracle Demantra and VCP has been unified. There are now new, user-configurable, Oracle ASCP workbenches including the ability for planners to view key information they need to review on a daily basis. VCP now includes simplified export to spreadsheet capabilities, another customer advisory input. Users further requested workflow enhancements that help enable group workflow collaborations and quickly recover data from a stalled workflow.
With the current clock-speed of business across multiple industries, supply chain teams are managing the realities that planning and execution information synchronization are new table stakes for more responsive Sales and Operations Planning (S&OP). Applied use of more predictive analytics to anticipate events and better respond to events is only effective as the accuracy of the data and information fueling applications. A emphasis on easier and more automated means to insure data is accurate and timely is arguably a wise and prudent investment, and technology vendors such as Oracle are responding to such needs.
Insure that all of your on-premise and Cloud based applications software vendors are similarly sensitized to the reality that the velocity, clarity and accuracy of data and information are now rather important in insuring more contextual, relevant and timely decision-making. Tools that automate-simplify-enhance-alert to information management, discovery and maintenance will pay dividends.
In prior Supply Chain Matters commentaries, we have noted how both the small parcel delivery and third-party logistics services landscape is changing very quickly. The recent added rate hikes and surcharges proposed by FedEx, UPS and the United States Postal Service are added dimensions of cost burden for both online and Omni-channel fulfillment process needs. The current wave of acquisition and consequent consolidation occurring within the third-party logistics and fulfillment sector will likely continue and add further unknowns as to cost and services impacts.
Change surrounds today’s Omni-channel environment and teams need to be prepared.
As the 2015 holiday buying surge is about to kick-off, many retailers will remain challenged in managing the various implications of today’s quickly changing online and Omni-channel fulfillment business models. Manufacturers can be caught in this changing dynamic since 40 percent of manufacturers now sell direct to consumers.
Consumers demand more and broader selections in product offerings and in fulfillment channel, and yet, will often balk at paying high shipping charges. Many consumer surveys reinforce that reality. There is a building trend for consumers electing free shipping through pickup and pay at a local retail outlet. Similarly, online consumers expect the convenience of hassle-free return at a similar local outlet, which in-turn, must ship returns to another inventory processing center. The local physical store or pickup point has now become another online fulfillment node in a more complex Omni-channel network.
Online fulfillment costs are therefore exploding and some retailers are becoming more and more blindsided by such costs. Positioning inventory to support multiple fulfillment channels is now a necessity to insure margin goal performance, yet only 40 percent of retailers have network-wide visibility to such inventories. Logistics, transportation and service cost factors are now a critical input toward insuring overall business profitability. This is especially evident with the latest round of expected parcel logistics and transportation cost increases.
Augmented technology will certainly play an enabling role in overcoming such challenges. However, technology selection teams will need to determine that such technology has the ability to span supply chain planning, inventory, and Omni-channel fulfillment information streams in supporting more informed decision-making and to contrasting service needs with cost and overall profitability impacts.
Today’s Omni-channel supply chain is a literal network and requires technology that supports more informed decision-making with context to the entire network. There is a now a more important requirement in the ability to synchronize fulfillment execution with network-wide inventory management and inventory policy decisions with logistics and transportation cost implications. Distribution and fulfillment center support systems and transportation management systems can no longer exist as stand-alone information sources. Root cause analytics that offer recommendations and simulation modeling as to the cost impact of various fulfillment scenarios are other important considerations.
Beware that there are just a few technology providers that can provide such advanced technology in a packaged software offering.
The coming months are sure to provide further implications and realities to an ever-changing online fulfillment dynamic. Insure that your organization takes a cross-functional and cross-channel perspective to the overall process, decision-making and technology support implications of such changes.
In August, ERP provider Infor announced that he had entered into an agreement to acquire supply chain logistics and commerce network provider GT Nexus for $675 million. This Supply Chain Matters posting provides updated information regarding the acquisition as a result of an analyst briefing held earlier this week.
At the time of the acquisition announcement in August, the deal was expected to close within 45 days, pending regulatory approval. On Monday, Infor informed analysts that the acquisition has now closed, somewhat ahead of schedule. Once more, Charles Phillips, CEO of Infor outlined a rather aggressive schedule of planned technology enhancements related to GT Nexus. This is typical of Infor’s model related to acquisitions.
Three separate development teams have now been dedicated to GT Nexus integration and enhancements, including the additional of 40 new developers.
GT Nexus technology supports the ability of buyers to transmit order information across a connected supply chain business network, linking various suppliers, logistics providers and financial institutions. In the latest briefing, Infor executives reiterated the attractive opportunities among traditional ERP customers to implement broader supply chain business network support. Further communicated was that Infor and GT Nexus customer feedback has been universally positive.
There was a candid admission that GT Nexus software was not the most user-friendly, and to little surprise, there are now plans to convert GT Nexus screens to the newly designed Infor user experience. Further outlined were plans to deploy a robust security model along with a plan to deploy Infor S&OP on the GT Nexus network. Another cross benefit opportunity was noted as the opportunity to augment Infor’s existing warehouse management and transportation management functionality with technology within GT Nexus.
While GT Nexus is now a stand-alone operating unit of Infor, executives did indicate a co-mingling of sales teams over the next 6-9 months. Infor’s fiscal year ends in April which is more than likely the target for a singular sales team.
There is little doubt that Infor views GT Nexus as a significant market opportunity for adding multi-industry support in deploying more robust supply chain business networks for both large and mid-market firms. While Infor’s marketing message declaring the “first global commerce cloud” is somewhat over the top, it should not negate the need for this level of supply chain technology support. Adding more robust planning and analytical decision-making components to the GT Nexus platform provides even more industry attraction. The open question however, is Infor’s pricing strategy and approach.
Customers with technology from either or both of these technology providers should expect accelerated integration and aggressive up-sell strategies in the coming months.
Supply Chain Matters has 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. From our lens, Infor’s plans related to GT Nexus will motivate other initiatives and/or acquisitions in this area.
With today’s ever increasing clock-speed of business, there should be little question that the overall planning, execution and synchronization of supply chain operational processes and resources has become far more complex and demanding. Yet, it is becoming more essential.
Industry market change is constant, customers are more-demanding and risk or disruption is a constant threat. These past two months alone, we have called reader attention to the severe typhoon that impacted Taiwan and coastal China, the sudden de-value of China’s currency and the significant warehouse explosions occurred in Tianjin China. Global equity markets continue to react to deep concerns about China’s economic growth and export economy.
Supply chain business and operational intelligence is not solely about business reporting, but increasingly focused on the ongoing performance, uncovering hidden risk factors and synchronizing performance of the entire supply chain.
Supply chain teams thus require intelligence capabilities appropriately configured and tuned for analysis of root causes of bottlenecks or supply and demand shortfalls.
Traditional Business Intelligence (BI) technology has evolved from a termed vertical design principle that allows users the ability to compare plans with actual results. The architectural approach stemmed tapping centralized data warehouses, where business software applications feed their data and information.
However, the success and uptake of these traditional BI approaches has been frustrating since more than often, effective use or specialized intelligence needs require the direct assistance of IT. The ability to leverage hidden intelligence is often constrained because of the resource limitations of IT, or the complexity of the centralized information warehouse.
Newer, horizontal approaches anchored in data discovery and more de-centralized business process or predictive analytics concentration such as supply chain and product management have since made their presence in technology markets. The design principle of this approach is root cause analysis, to tap important data and information existing in specific applications such as supply chain planning, operational execution, fulfillment and product management applications. Their premise is to identify bottlenecks and provide early warning to operational process outliers and exceptions.
As one can imagine the fundamental determinant of termed horizontal BI user uptake and adoption rests with user friendliness and empowerment. It is about empowering business users to support more informed decision-making predicated on operational intelligence and appropriate business process context.
Major ERP vendors are caught in the middle of this changing paradigm. As an example, older version of SAP ERP supported information architecture that fed operational data and information to SAP Business Warehouse (BW), where either SAP or external BI applications tapped that data for general business reporting needs. The flexibility to hone-in on specific root cause and supply chain operational business process needs was limited to the innovation and resources of IT or system integrators. Such requirements often came with a high cost in terms of resources and time-to-value.
Responding to the compelling market changes outlined above where users require more user-friendly, self-service operational BI tools, SAP continues to evolve its overall approach to accommodate such needs. And there lies a growing tide of confusion. The stated migration from Business Objects BI, Crystal Reports, and now SAP Lumira has both IT and business functional teams confused as to which strategy to employ. Least we mention the other elephant in the room, that being SAP HANA, and its foundational relationship to leveraging data and information across the entire SAP landscape.
In the light of this product strategy confusion, innovative best-of-breed players have gained additional attention and deployments.
In a prior posting, we called Supply Chain Matters reader attention to Every Angle Software, which provides a self-service and operationally focused business intelligence tool designed to leverage information within SAP R3, SAP ECC, and SAP Business Suite environments. What impressed this author about Every Angle was not only its ability to add in-process logic and sophisticated calculations that adapt to an SAP operations management configuration, but customer testimonials testifying to the end-user friendliness of the software itself. The software comes with built-in adapters for SAP, includes hundreds of pre-configured templates and built-in, configurable business rules, and accommodates access by end-user device of choice including mobile devices. The software can be deployed for either on premise, cloud, or outsourced hosted needs.
Functional supply chain teams have a lot on their plate right now with little patience nor tolerance for having their IT teams figure out the long-term BI product strategy, architecture and functionality of a large ERP provider such as SAP. That is why many continue to opt towards filling-in such technology needs with experienced best-of-breed specialists.
Disclosure: Every Angle Software is one of other sponsors of the Supply Chain Matters blog.