On-Demand Value for B2B

Add comment March 28th, 2007 David Bush - Iasta

Aberdeen Group just released a report entitled B2B Collaboration: How On-Demand Platforms Accelerate Value and Impact TCO (How to Assess Whether On-Demand Solutions Are the Right Fit for Your Supplier, Customer, and Transportation Processes) that had some great statistics.

• 46% of above average supply chain performers use on-demand SCM applications today, and 8% plan to do so within 12 months compared to 28% of industry average supplier chain performers (where only 6% plan to adopt an on-demand solution in the next 12 months)
• 80% of respondents would consider on-demand solutions for increased supply chain visibility
• 69% of respondents consider the need for fewer IT resources to be a highly influential reason to adopt an on-demand solution
• 65% of respondents would consider on-demand solutions for improved demand-supply synchronization with suppliers
• 63% of respondents consider the possibility for faster implementation and ROI to be a highly influential reason to adopt an on-demand solution
• 35% of above average supply chain performers use on-demand for supply chain visibility, whereas only 25% of industry average performers use on-demand solutions for supply chain visibility and only 8% of below average performers use on-demand solutions for supply chain visibility
• 28% of above average supply chain performers use on-demand solutions for data synchronization as compared to only 2% of average supply chain performers
• Best in class companies are 88% more likely to estimate ROI before initiating projects and 130% more likely to measure ROI after project completion

In other words, companies that are 88% more likely to estimate ROI before initiating projects and 130% more likely to measure ROI after project completion are more likely to use on-demand solutions in the next year than traditional legacy software solutions (54%)! It looks like 2007 will be the year that on-demand hits the big time in the supply chain world.

It also has a great table that can be used as a starting point for calculating total cost of ownership:

Total Cost of Ownership

Start-up Costs Cost of software Cost of pre-requisite software Upfront hardware costs Software Implementation Costs (internal and external) Initial software training costs Recurring Costs Software maintenance fee Cost of customization Monitoring and on-going maintenance of hardware and pre-requisite software Data storage and continuity Business continuity Internal training costs for users and system administrators Help desk costs Internal IT staff maintenance and support Upgrading software (internal and external costs) Business Partner On-Boarding Costs On-boarding business partners (internal and external costs) Maintaining and trouble-shooting trading partner connections; process related training Total costs borne by business partners

And characterized some of the characteristics of companies adopting on-demand solutions:

• Under pressure to improve externally oriented processes, which legacy supply chain applications do not support sufficiently
• Need to rapidly support a new business practice or improve performance for a specific set of products, customers, or channels
• Need to coordinate a large supplier or logistics partner network
• Constrained internal IT resources or have (partially) outsourced IT
• Embracing an IT portfolio strategy of investing internal IT resources on differentiation

Entry Filed under: Analysts/Research, General, Technology