techwatch
hey! you! Get on the cloud
MICK JAGGER HAD IT WRONG. YOU DON’T WANT TO GET OFF
the cloud; these days, you want to get on the cloud and stay there. The
cloud I’m referring to isn’t cirrus, stratus, or cumulonimbus; it’s
cloud in the sense of “cloud computing,” the latest information technology buzzword. If you haven’t heard much about cloud computing
yet, you probably will this year. Major software companies like
Microsoft are expected to announce initiatives in this area.
What is cloud computing? In simple terms, it’s the sharing and
storing of information over the Internet (the cloud is a metaphor for
the Internet). Under this setup, applications and data are stored on
servers on the Internet, where they are accessible via desktop computers, sensors, monitors, smart phones—practically any electronic
device anywhere on the globe.
Cloud computing is considered a step
beyond software as a service (SaaS), a business
model in which a user accesses a software
application hosted on the Internet through a
standard Web browser. The difference has to
do with where the data are stored. With SaaS,
the user generally maintains the data on a
computer in his or her office; with cloud computing, both the data and the application are
stored somewhere off in cyberspace.
Cloud computing is expected to gain traction quickly with supply chain software users,
who are already accustomed to using applications—particularly transportation management systems (TMS)—that are hosted on the
Internet. That “rental” option has proved to be popular with TMS
users for a variety of reasons. For one thing, they don’t have to spend
a lot of money upfront to buy a software license; instead, they simply
pay a relatively modest monthly fee. For another, the company can
avoid both the cost of integrating the application with other internal
information systems and the cost of maintaining the program.
The advent of cloud computing should only hasten the movement
of other supply chain applications to the Internet delivery model. A
number of big software vendors are readying cloud computing platforms to facilitate this transition. For example, Microsoft announced
that it will debut a cloud computing system dubbed “Azure” later this
year. Others, like IBM, HP, and Google, have already moved into this
area.
With companies like Microsoft entering this space, it’s no surprise
that at its October IT symposium, the research firm Gartner Inc.
identified cloud computing as one of the key trends to watch in
2009. In fact, the firm’s analysts believe cloud computing could level
the playing field in corporate America. That’s
because it would give small companies
access—at a low cost—to many of the same
software applications that big companies have
spent big bucks on to deploy.
That could portend big changes in distribution. In the past, many small companies
couldn’t afford (or couldn’t justify) the costs
of enterprise resource planning (ERP) or supply chain execution systems—
never mind the expense for
emerging applications like
demand forecasting, supply chain
redesign, and inventory optimization. But the delivery of software
applications over the Internet
could finally put these systems
within their reach.
Although cloud computing
would make it possible for a small
company to use an inventory optimization or ERP system, there’s
one software category where it
won’t have an immediate impact.
And that’s warehouse manage-
ment software (WMS). While it’s certainly
possible to put warehousing systems in the
cloud, this software would likely remain unaf-fordable for small players because of the costly systems integration work that would still be
needed to get the various pieces of warehouse
equipment to work together.
Even though WMS in the cloud may not be
totally practical at the moment, there will be
plenty of other types of supply chain applications that lend themselves to this approach. In
an economic downturn, this development
could make it easier for companies both big
and small to apply software intelligence to
their supply chain operations to gain the efficiency needed to survive—and even thrive—
in hard times.
