Clouds descending on supply chain software

A new study from Gartner Research suggests that more companies are adopting cloud-based supply chain solutions. "Cloud computing" occurs when companies use the Internet to access applications and store data on the Web.

Gartner surveyed some 130 companies in the retail, consumer goods, manufacturing, and high-tech sectors and found that 95 percent of them were either using or were considering cloud computing for supply chain applications. Of those respondents, 82 percent said they were evaluating or using it for customer relationship management software and 76 percent were using or considering it for supply chain execution systems or supply chain planning systems.

Some are already seeing benefits from the shift to cloud computing. The study noted that 38 percent of the respondents said that they had already realized supply chain cost reductions through using cloud computing. Manufacturers turned to cloud applications to decrease supply chain costs while consumer products companies were using this approach to reduce their cost to serve customers.

While only 41 percent of the respondents who are now using cloud solutions were able to measure the savings, those that were say they are seeing demonstrable results. Nearly three-quarters of those respondents said they had achieved a 5- to 20-percent reduction in information technology expenses.

The study noted that some businesses remain hesitant to use cloud computing due to concerns about security and data ownership and a reluctance to undercut a heavy investment in enterprise resource planning (ERP) systems. In spite of these concerns, interest clearly is growing in this approach. However, Gartner argues that while cloud computing provides benefits to companies in the short term, it cannot yet replace an on-premise application.

[Source: "Significant Benefits Realized with Supply Chain Management in the Cloud," Gartner Research, 2010.]