Jim D’Addario, Sr. Director Product Marketing, Oracle SCM Cloud
Businesses today are increasingly focused on modernizing their core enterprise applications to enable end-to-end business operating models: According to a recent Gartner survey, 45% of respondents cited this as one of their top five IT priorities. It’s easy to understand the sense of urgency behind such initiatives, given the increasingly fast pace of modern technology innovation and the role these innovations have played in transforming the competitive landscape.
“Modernization,” however, can be a slippery concept—and potentially a daunting one. That’s especially true when we apply the concept to supply chain management. The challenge here isn’t simply retooling a firm’s SCM software to accommodate a long list of new and upgraded capabilities; it also demands an approach to SCM that embraces constant, fast-paced, and often highly disruptive change as a permanent fixture, not as some kind of passing phase.
A traditional, on-premises application such as SAP ERP is a powerful and capable tool. Unfortunately, neither it nor its successor, SAP S/4HANA was designed or built to accommodate today’s supply chain challenges. We’ve made the case elsewhere why a cloud-based solution such as Oracle SCM Cloud offers a compelling solution to this conundrum. At the same time, it’s important to acknowledge that for some firms, a comprehensive “rip-and-replace” migration process generates its own potent mix of cost, complexity, and business risk.
Worse still, a rip and replace scenario may do little or nothing to protect a firm’s existing investments in its SAP ERP environments. Especially when direct investments include software licenses, servers, IT infrastructure upgrades, and the like. A 2015 survey found that 56% of IT executives viewed sunk costs in legacy technology as a major roadblock to cloud migration initiatives. This challenge also extends to a firm’s investments in business-process adjustments, employee training and support, application integrations, and all of the other capabilities that allow an enterprise application to generate long-term value for a business.
Oracle SCM Cloud offers tremendous value in a standard rip-and-replace scenario, and the savings are typically significant enough to offset a firm’s near-term migration costs. Oracle SCM Cloud also gives firms currently running SAP ERP environments another path to value — one that is far more nuanced and flexible — and that gives firms more opportunities to protect the value of their existing SAP investments.
3 Keys to Value on Your Firm’s Cloud SCM Journey
Let’s illustrate this point by looking at three areas where Oracle SCM Cloud gives current SAP customers an especially compelling alternative path to value:
1. Enhancing the Value and Impact of Business Data
It’s hard to imagine a firm competing (or even surviving) today without data-driven decision-making analytics capabilities. A legacy SCM environment, together with new digital SCM applications, will play a key role in a firm’s holistic data analytics story. The key is integrating and normalizing data from a variety of sources, and applying the analytics tools that extract useful business insights.
Most SAP SCM users continue to face challenges integrating and normalizing data sources across an organization while maintaining a cutting-edge approach to analytics and data-driven decision-making—largely because of multiple instances and master data challenges. Oracle SCM Cloud excels at closing these gaps—for example, by supporting Master Data Management capabilities that allow them to consolidate, enrich, analyze, and share actionable insights; giving organizations access to the latest innovations in predictive analytics, demand modeling, and other areas; and extending the reach of a firm’s analytics activities to include upstream and downstream supply chain partners.
2. Preparing Firms to Thrive in a Dynamic Technology Landscape
Over the past decade or so, the pace of technology innovation has continued to increase. In one industry after another, upstart firms have used this trend to their advantage — disrupting markets, tearing down barriers to entry, and in some cases, dethroning market-share leaders that had dominated for decades.
These changes add some perspective to any conversation about protecting the value of a firm’s SCM investments. In fact, any enterprise application that lacks the agility to embrace and adapt to fast-paced tech innovation is living on borrowed time. A traditional application migration process rarely makes this problem any better and can, in fact, make it worse, especially in an on premises architecture.
Oracle SCM Cloud allows SAP customers to adopt a different attitude toward transforming the operating model. Oracle SCM Cloud offers a faster and simpler process for embracing technology innovation, including fewer integration constraints and faster deployment that involves the business at an earlier stage than traditional IT deployments; the use of open and widely adopted application development standards; and an architecture that allows developers to extend a firm’s technology capabilities without introducing unwanted cost, complexity, and risk. When a firm implements Oracle SCM Cloud alongside its existing SAP environment, it can think of the former as its “innovation and customer interface,” allowing it to embrace and benefit from cutting-edge technology.
3. Migration Models Based on Flexibility, Convenience, and Choice
One of the biggest drawbacks associated with rip-and-replace migrations is the tendency to promote a binary deployment model. Either a business is running an on-premises SCM environment or it’s running SCM in the cloud. But this perspective can create countless other problems down the line.
In reality, a firm’s SCM workloads typically reflect many points on a spectrum of deployment options and applications. Some workloads and their data sources are appropriate for multitenant, public cloud environments. Other workloads are more appropriate for private cloud or hosted environments; and still others may require a firm to maintain various levels of on-premises SCM capabilities. In addition, some of these requirements may be due to short-term budget, staffing, or operational constraints, as well as strategic priorities. Others may be necessary to comply with long-term legal or regulatory mandates.
Oracle SCM Cloud employs a design philosophy that recognizes and respects these differences. It enables firms to implement cloud SCM workloads alongside its legacy on premises environments, and to follow a migration roadmap based entirely on its unique business and technology requirements. Ultimately, this commitment to freedom of choice and flexibility is a critical distinction, and without it, any conversation about protecting a firm’s SCM investments would simply pay lip service to the concept.
A Faster, Safer Path to SCM Success
The notion of investing in Oracle SCM Cloud to protect legacy SAP SCM investments can seem a bit unusual a first—an unconventional point of connection between traditional software rivals. For many firms, however, this is truly a “no pain, all gain” proposition: a path to the cloud that maximizes a firm’s freedom and flexibility, even as it prepares them to compete and succeed in a fast-changing business and technology landscape.