DC Velocity - October 2017

Will back-to-back disasters move the
cloud investment needle?

No one has to give Peter Edlund religion in the value of cloud-based supply chain management systems. Edlund is a founder and senior vice president of global product marketing of DiCentral Corp., a global business-to-business IT (information technology) integration provider that serves as the backbone for the various systems that connect supply chains. He and his company are also based in Houston, which will likely always be remembered as the city nearly drowned by a hurricane.

Because Hurricane Harvey did not disrupt DiCentral’s operations, the company was able to meet its service commitments to customers nationwide that needed to get goods to market. Still, it didn’t stop Edlund from surveying the major damage inflicted on his hometown and wondering how many firms using on-premises software platforms were flooded out and couldn’t recover as fast as they would have liked. By contrast, firms that already had data in the cloud—and hadn’t lost electricity—could quickly reconfigure their networks, redirect purchase order flows, notify their carriers of changes in routing, and redistribute their inventory as quickly as possible, Edlund said.

Hurricanes Harvey and Irma—whose names have been conjoined into the apropos moniker of “Harma”—will provide much fodder for the discussion about the increasing need for resiliency and redundancy. It may also provide fresh impetus to the conversations about cloud computing, which refers to the sharing of resources, software, and information via the Internet, where data is stored on physical servers maintained and controlled by a provider. While the storms may not trigger a wholesale migration to the cloud, internal champions of a cloud-based strategy will “have more ammunition to push it further,” Edlund said.

NOT A PANACEA

A cloud network, which eliminates the need for the user to install software on premises, can result in considerable cost savings because of reduced staffing, maintenance, and power consumption, among other factors. However, it is not a panacea. Businesses have poured considerable investments into on-premises networks and are loath to dismantle them for a technology that isn’t as well proven. In addition, power outages can shut down access to key data; in Florida, where Irma’s fierce winds and storm surges toppled power lines statewide, taking the Internet with it, on-premises systems would have allowed a user to remain operational, providing the physical structure wasn’t flattened.

Ian Hobkirk, managing director of Commonwealth Supply Chain Advisors, a supply chain consultancy that works closely in the warehouse management systems (WMS) segment, said his firm hasn’t heard of many instances where a natural disaster will trigger a migration to a cloud-based WMS. In fact, it might result in the opposite behavior, he said. Following Superstorm Sandy’s assault on the New York metro area in October 2012, a Commonwealth client engaged in a WMS selection project deliberately steered clear of a cloud-based solution because its on-premises network had kept it operating through the storm, while its cloud-based rivals all went offline, Hobkirk said.

Companies should appoint “chief disruption officers” to lead innovative thinking that will help them stay ahead of competitors, keynote speaker David Roberts told attendees at the MHI Annual Conference earlier this month in Boca Raton, Fla.

Only disruptive thinking can help companies avoid the fate of Finnish cellphone giant Nokia, which ruled its sector for years by making inexpensive flip phones but was quickly made irrelevant by Apple Inc.’s launch of the large-screen iPhone in 2007, said Roberts, who is a faculty member at Silicon Valley think tank Singularity University, chairman at drone services company HaloDrop, and chairman at quantum computing firm 1QBit.

Revolutionary technology can strike any
industry, but leaders must be able to
distinguish between mere innovations—
which are ways of making existing things
better—and true disruptions—which are
so radically new that they make previous
platforms obsolete, Roberts said in his talk,
“Responding to disruption; 12 actions to
take this month.”
Many firms find it difficult to react
to such broad changes due to a “corpo-
rate permafrost” or resistance to change,
Roberts said. One way senior managers
can battle that inertia is to hire a mil-
lennial as a mentor, asking the younger
employee to teach the elder about opaque
issues like why they use the Snapchat social
media platform or why they prefer to buy
products from certain brands, said Roberts.

Unless they learn to think flexibly, business leaders will not be able to predict disruptive change, which can strike from any direction, he said. For instance, disruption can arrive as the result of steep cuts in cost, such as the drop in solar cells from $76.67 per watt of electricity produced in 1977 to just $0.36 per watt in 2014, he said.

Change can also come from huge improvements in power, such as the growing ability of artificial intelligence (AI) to perform complex tasks, from diagnosing human diseases to calculating driving routes, Roberts said.