Many supply chain and operations management professionals consider leveraging cloud services to deliver scalable functionalities with greater efficiency and at lower maintenance costs. As trading partners demand greater data visibility, the discussion around the cloud and cloud-based integration will only swell__and very well may change how businesses approach integration solutions.
While the industry has resisted jumping wholesale into the cloud, more decision makers are identifying specific opportunities to use the cloud to extend company infrastructure, rather than build on top of it. A recent Gartner study of 130 small- to mid-sized businesses found that 95 percent are currently using or evaluating using cloud services in some fashion for supply chain management. And of those that already use the cloud, nearly three-fourths had cut information technology (IT) expenses from 5-to-20 percent.
Transitioning to cloud-based applications involves a philosophical third-party infrastructure shift. Many fear moving traditional applications to a cloud platform could disrupt partner communication and expose critical data to unauthorized parties, resulting in damaged business relationships and loss of intellectual property. Others are overwhelmed by the perceived complexities of ensuring compatibility and functionality across disparate systems.
Ultimately, solid project management and smarter decision making enable seamless connection of on-site and cloud-based processes, thereby better positioning businesses to reap the benefits of the cloud. Typical cloud architecture encourages processing several smaller documents instead of a few larger ones, with the objective of enabling companies to distribute, acknowledge, and process transaction documents faster and more accurately.
While there are no universal standards for cloud integration, and every business’s needs vary, there are five crucial areas to consider to ensure a hassle-free and efficient integration.
1. Be sure your IT systems are cloud-ready. Can your current tool set and workload requirements withstand the demands of a cloud-based server? While cloud integration removes a chunk of hands-on maintenance responsibilities, cloud-based applications will not function without compatible infrastructure, connectivity, and communication tools. Before you consider evaluating cloud providers, you and your team should confirm that your server’s local and backup connections are strong enough to function once cloud servers are in place.
Additionally, data and security protocols are not universal, and companies must account for these differing standards to avoid confusion as data aretransferred. Transitioning to the cloud is the perfect excuse to upgrade to newer line-of-business applications, such as customer relationship management tools, for more efficient transaction processing and execution.
2. Transition in stages. It is unrealistic and impractical to move an entire IT portfolio off-site at once, given the considerable execution risk and operational constraints of such an approach. Similarly, the rise of the cloud has yet to result in universal standards to guide how on-premise and cloud applications will coexist. The less-risky and more cost-effective plan is to determine which applications are of the most immediate need to your operations, as well as which applications contain the greatest demand for resources (typically ones for projects that involve optimization and forecasting), and move them to the cloud first.
3. Price for your peaks. Among the most noteworthy benefits of cloud-based operations is the ability to respond in minutes to changes in activity level. Scaling out adds more resources to handle transactions__and, when transaction volumes decrease, unneeded resources are released. This concept of elasticity is a defining characteristic of a cloud environment. The cloud’s pay-as-you-go pricing model means you pay only for what you use, not for excess or standby capacity. However, pay-as-you-go pricing isn’t optimal for everybody, and more vendors flexing to customers have consistent demands when offering lower prices for specific usage commitments. When researching vendors, determine what pricing plan makes the most sense for your operations and trading partner network. Review IT performance metrics to determine which pricing and service models are the best fits, and look to arrange a steady rate in the slow times and a scaled-up rate for the busy ones.
4. Find where the skies differ. For companies that frequently interact with global trading partners, working through cross-border regulations and language barriers are routine for completing transactions. With the growth of the cloud, these same companies now have additional geographic regulations to keep in mind.Every global market maintains varying criteria on how much data must be kept within its national boundaries. Such limitations on in-and-out access restrict how much information can be stored in the cloud. And if no one outside your country can receive needed data, it can hinder the efficiencies the cloud normally brings. Additionally, data and security protocols are not universal, and companies must account for these differing standards to avoid confusion as data are transferred.
5. Build for the future. Cloud compatibility has led to a shift away from building single, monolithic applications and instead focusing on individual services that function well together as new solutions take shape. Clustering applications in this fashion generates greater management flexibility and enables supply chain and operations management professionals to pool together combinations of services that best meet their needs, rather than one that is incomplete or inflexible. As the cloud continues to change the way people do business, project managers can start preparing to find the most fitting and functional cloud model for their unique business needs.
While many organizations are awakening to the benefits of the cloud, it’s still necessary to be prepared for some initial bumps in the road__ones that may differ greatly from what your team has experienced until now. By asking the right questions and developing a strategic integration plan, the transition to the cloud can be a smooth one.
Reeve Fritchman is chief strategy officer for EXTOL International, a provider of business integration software and services. He may be contacted at email@example.com.