Supply Chain Leaders Forum
Crafting Supply Chain Strategy –
How Technology Trends influence strategy formulation and execution
Today’s Speaker:
Scott R. Sykes
www.linkedin.com/in/scottsykes/
Center for Supply Chain Research
http://www.smeal.psu.edu/cscr
Presentation Date: 2013 – September - 05
Agenda
I. Context
II. Supply Chain Technology
Market – short summary
III. Two Topics to Share
IV.Your Questions & Feedback
Prepared for Penn State Center for Supply Chain Research – Supply Chain Leaders Forum, 2013 – September.
1
Context – technology’s impact over the past two decades
(just one example from the academic world for today…)
‘01
The gift and curse (?) of
technology innovation is the pace
and frequency of change – both
from a business and a personal
perspective --
‘10
$0
 It took two years for Microsoft’s
‘93 innovation to cut in half
Britannica’s two-century old
business (that lacked a serious
competitor in its own industry)
‘08
 Microsoft’s new business only
lived for 15 years itself (and they
were not impressive years at that)
‘95
$99
Britannica’s unit volume falls >50% from its peak year (1990)
 Technology innovation disrupts business “as usual”
1993
2003
Prepared for Penn State Center for Supply Chain Research – Supply Chain Leaders Forum, 2013 – September.
2013
 While Wikipedia had a shaky
beginning, it is now relied upon
daily by businesses, students
(and even scholars)
Implications for us…
2
Your company’s business strategy should [1] inform the creation of
your supply chain strategy, and [2] the selection & deployment of
supporting and enabling technologies to make it happen…
•
In a business age where in reality “there
are very few secrets out there anymore…”
•
“…the only differentiating competitive
advantage becomes SPEED…”
•
“…enhancing SPEED and agility
necessitates that organizations embrace
innovation and new technology models…”
Rollin Ford, CIO, Wal-Mart
For Wal-Mart, mapping supply chain strategy to business strategy entailed (at least) two
items: SPEED and AGILITY. For the company strategy – the key word is SPEED. For their
CIO, he adds the word AGILITY. His “technology footprint” must not only enable cost
supremacy and supply chain speed, but also afford the ability to adapt to change quickly.
Prepared for Penn State Center for Supply Chain Research – Supply Chain Leaders Forum, 2013 – September.
3
Today’s topic:
How to enable strategy with technology
Today’s other topic:
How to navigate change (and select technologies for your
strategy) against a backdrop of high uncertainty
Remember these?

Change and uncertainty are the constants we face today.

Technology is both a driver of the challenges brought by
change and a source of remedy for managing through it.
 Technology fuels change in many ways
 In degree…
 In pace/frequency…
 In our business lives…
 In our personal lives…
 Strategies must be set against this uncertain technology backdrop, and
 Supply chain technology strategies must be “sized” to fit [1] the strategic intent
of the business strategy, and [2] be balanced against the expected duration
Prepared for Penn State Center for Supply Chain Research – Supply Chain Leaders Forum, 2013 – September.
4
The best supply chain technology solution you identify for today’s
business strategy may very well be a member of one of these
“extended families” in the future…
Core Company
Technology Acquisitions Summary –
Just for fun: How many buys since the turn of the Century?
100+
technology buys since the turn of the century
80+
technology buys since the turn of the century
40+
technology buys since the turn of the century
This market reality has implications for the crafting of your firm’s technology
investment strategy (to enable corporate strategy and/or supply chain strategy).
Source: Wikipedia.org
Prepared for Penn State Center for Supply Chain Research – Supply Chain Leaders Forum, 2013 – September.
5
In 2012, roughly half of the SCM Software Market ($8.3B)
was concentrated in four companies -Company
2012 SCM
Revenue
2012 Market
Share
$ 2,040.4
24.6 %
$ 1,453.3
17.5 %
$
$
426.0
160.1
5.1 %
1.9 %
The consolidation that has occurred in the
SCM software market over the past decade
places large shippers and their trading
partners in a sometimes uncomfortable
position –
Either buy from one of the large technology
firms (as they currently exist), or choose to do
business with one of the much smaller
vendors remaining…
To help think this conundrum through, we will
review a decision framework that categorizes
the criteria that go into a technology decision.
The dimensions are “solution fit” and
“duration.”
“Rest of Market”
$ 4,216.0
50.9 %
Pursuing a multi-year strategy with
a short-lived partner presents risk
Source: Gartner, 2013-May
Prepared for Penn State Center for Supply Chain Research – Supply Chain Leaders Forum, 2013 – September.
6
Agenda
I. Context
II. Supply Chain Technology
Market – short summary
III. Two Topics to Share
IV. Your Questions & Feedback
Prepared for Penn State Center for Supply Chain Research – Supply Chain Leaders Forum, 2013 – September.
7
Three topics to share today --
1
Share a technology decision framework for assessing and
mapping your technology strategy to your business strategy
2
Address some key trends that are driving today’s technology
space – recognizing that career supply chain professionals
lack the “nerd gene” required to keep abreast of all the topics
and trends that come out of the tech world.
Prepared for Penn State Center for Supply Chain Research – Supply Chain Leaders Forum, 2013 – September.
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Technology decision-making model – Fit & Duration
Most are familiar with fit. Duration is an equally important dimension to assess.
Some enterprise technology choices have 10 to 15 year durations (and as we
have discussed this morning, a lot can change in that amount of time).
4
 Prospective vendor’s technical architecture (e.g., Is it a
new solution built to run on SAP HANA?).
 Prospective vendor’s strategic investors
 Prospective vendor’s management team’s bios
high
1st Gain
Confidence,
then Buy
- Solution Fit -
Buy on
Price
Explore
“free”
3
4
2
1
If the vendor’s “end game” might be with a larger firm
you prefer not to do business with, factor that in.
3
You find a good solution fit, and the expected
duration of this need is relatively short (3 years or
less). Buy on price and then manage your risk as
appropriate for the program in question.
2
No truly available solution yet exists to meet your
design. If your expected duration is relatively short (3
years or less), consider an innovation partnership
where your firm trades future referenceability for a
low- to no-cost solution (Note: many software firms
begin this way).
1
No. Self-explanatory.
Just
Say No
low
short
- Solution Duration -
long
You find a good fit. The duration of your intent is
long-term (measured in half-decades or longer). After
solution fit is scored, then assess:
Prepared for Penn State Center for Supply Chain Research – Supply Chain Leaders Forum, 2013 – September.
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5 Significant Trends in the B2B & Supply Chain Space
Topic
Observations
Players
Notes
Cloud
• OpEx v. CapEx
• Faster Deployments, less customization (typically)
• More data business opportunities
1.
2.
3.
4.
Salesforce
SAP
Oracle
JDA Software
-
Freemium
• Alternative economic streams (advertising, data)
• Point-of-entry strategic design to ‘land and expand’
1.
2.
3.
Tradeshift
Ariba
Countless others
- eInvoicing Platform
- Apps & B2B Network
- (many will fail…)
Big Data
• IPO’s happening now
• IBM’s smarter planet effort
• ERP’s buying in via analytics & cloud
1.
2.
3.
Tableau
IBM
SAP & Oracle
- IPO in May, up 50+%
- Product & Services Play
- Analytics buys (Business Objects
and Hyperion, respectively)
Mobile
• Leapfrogging infrastructure in emerging markets
(no cord to cut)
• App solutions designed for tablets rather than PCs
1.
2.
3.
Samsung
Apple
Nokia
- Bet placed on Google Android
- Innovation play
- Microsoft buy, 9/3/13 for $7.2B
Social
• Corporate “tribes” via Jive, Yammer, Chatter
• Professional default is LinkedIn.com
1.
2.
3.
Jive
Microsoft
Salesforce
- IPO Dec. 2011, now below IPO
- Yammer, 4y/o firm  $1.2B cash
- Chatter solution gaining wide
adoption in their installed base
Summary
1st profitable
M&A
M&A
Went Private to ∆
All of the technological shifts currently underway in the software market are going to have significant
and profound application to global supply chains. The forward-thinking firms that figure out the right
mix of solutions to apply in their businesses will capture significant competitive advantage.
Source(s): Wikipedia.org, Yahoo Finance, Kleiner Perkins Caufield Byers, Corporate Websites, and interviews with colleagues at these firms
Prepared for Penn State Center for Supply Chain Research – Supply Chain Leaders Forum, 2013 – September.
10
A fundamental requirement for the 5 trends that will
ultimately take them global…
Cloud
Freemium
Big Data
Mobile
Social
Reliable,
highbandwidth
Internet
USA Productivity Gains
1995 - 2004
2004 - Today
As more of Earth’s citizens
acquire the same access,
entire new waves of
economic productivity gains
and business value creation
can and will be triggered
Applied to the rest of the world?
2012 - 2021
2021 - 2031
+3.1%
+1.5%
= total gain
+1.6%
+0.54%
~ technology impact
?
= total gain
?
~ technology impact
Source(s): Federal Reserve, 2012; Northwestern Univ., Robert Gordon, Economist, 2012;
Investors Business Daily, 2013-June-26
Prepared for Penn State Center for Supply Chain Research – Supply Chain Leaders Forum, 2013 – September.
11
Global Internet access and reliability of bandwidth is
driving a big adoption cycle for business and consumer
Geography
2012 Internet
Users (MMs)
Additions from
2008-2012 (MMs)
244
+18
CHINA
564
+264
INDIA
137
+88
RUSSIA
70
+33
BRAZIL
88
+27
GLOBAL
2,406
+902
USA
% Penetration
of Total Population
78%
(vs. BRIC)
42%
11%
49%
45%
39%
Sources: United Nations, International Telecommunications Union, internetworldstats.com
Relevant Takeaway:
As more of the global population comes online and, as more and more
businesses become connected at high (and reliable) bandwidth, new
business innovations can move from the white board to the marketplace.
Prepared for Penn State Center for Supply Chain Research – Supply Chain Leaders Forum, 2013 – September.
12
One additional thought on the current relevance of the
Duration assessment criterion Question
Answer
How many firms in the Fortune 500?
500
How many firms in the Global 2000?
2,000
How much commerce flows annually in
G2000 supply chains?
~ $12T
How many years Duration can an enterprise
software investment represent?
10 to 15
A High-Stakes competition is queuing up – in your backyard
Holding things constant for ease of discussion then…over
the next 10 years, over $120 Trillion in commerce will be
conducted in global G2000 supply chains, all of it needing
enabling technologies to manage it.
Much of the previous enterprise cycle from Y2K and the
subsequent supply chain innovations that came out of the
business process re-engineering wave it triggered are
reaching their end-of-useful-life dates…
Prepared for Penn State Center for Supply Chain Research – Supply Chain Leaders Forum, 2013 – September.
13
_
Framework
_
Market Trends
Cloud
Freemium
Big Data
Mobile
Social
Contact:
[email protected]
www.linkedin.com/in/scottsykes/