Many supply chain and operations management professionals are using cloud services as a growth catalyst to help them deliver scalable logistics functionalities with greater efficiency and lower maintenance costs. As trading partners demand greater data visibility, the discussion around the cloud and cloud-based integration will only intensify in the coming years.
Gartner estimates that, by 2015, 40 percent of integration projects involving application to application, business to business, and cloud services will use just one product to address all forms of application and data integration. While the industry has resisted jumping into the cloud, more decision makers are identifying specific opportunities to use the cloud to extend their company’s infrastructure. Additionally, as business leaders identify legacy applications that need replacement, they must debate whether to adopt cloud-based applications now or hold out for a broader integration strategy down the road.
Transitioning to the cloud involves a philosophical third-party infrastructure shift. Many fear that 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, effective project management and smarter decision making enable seamless connection of on-site and cloud-based processes, thereby better positioning supply chain and operations managers to reap the benefits. Typical cloud architecture encourages processing several smaller documents instead of a few larger ones, enabling companies to distribute, acknowledge, and process transaction documents faster and more accurately. The goal is an improved, zero-downtime information technology (IT) service that keeps application databases in sync with cloud databases, driving benefits that ripple all the way to the end user.
So what should professionals be looking for as they prepare to move to the cloud? While there are no universal standards for cloud integration, and every business’s needs vary, there are five crucial areas that can help ensure a hassle-free integration.
1. Be sure your IT systems are cloud-ready. Can your current toolset and workload requirements withstand the demands of a cloud-based server? While cloud integration removes many 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 back-up connections are strong enough to function once cloud servers are in place.
Additionally, the cloud transition is the perfect opportunity to evaluate your existing collaboration applications. Transitioning to the cloud is a great excuse to upgrade to a 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 for a company to move its IT portfolio off-site all 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 using integration techniques that support zero-downtime conversion.
As businesses develop new requirements for new applications, they will need to consider cloud functionalities and transferability. For customers with IT infrastructures in place, the optimal approach for the next five-to-seven years is to implement hybrid applications that combine best-of-breed in house and cloud-based components.
For example, if your business offers online users a virtual shopping cart to purchase items, the cart remains in the cloud until checkout and then shifts to the private cloud for secure payment and fulfillment. About 75 percent of online shopping carts are abandoned, and the return on investment on private infrastructure is low, making the cloud an excellent solution for such services.
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 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.
When researching cloud vendors, determine what pricing plan makes the most sense for your operations and trading partner network. If your peak business window occurs during a two-month stretch, it is probably unreasonable to pay for a physical infrastructure rarely used during the other 10 months of the year. Review your IT performance metrics, and arrange a steady rate in the slow times and a scaled-up rate for 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 the volume of data that must be kept within national boundaries. Such limitations on in-and-out access restrict how much information can be stored in the cloud: If no one outside your country can receive needed data, the efficiencies the cloud normally brings are hindered. Additionally, data and security protocols are not universal, and logistics teams must account for these differing standards to avoid confusion as data are transferred.
5. Build for the future. The fact that many software development tools and environments now offer a common development experience for both terrestrial and cloud applications is a sure sign the cloud is here to stay. Cloud compatibility has led to a shift from building single, monolithic applications to instead focusing on individual services that function well together as new solutions take their shapes. Clustering applications in this fashion generates greater management flexibility and enables supply chain managers to pool together combinations of services that best meet their needs instead of one potentially incomplete or inflexible offering.
As the cloud continues to change the way supply chain and operations managers do business, now is the time to find the most fitting and functional cloud model for your unique business needs. By asking the right questions and developing a strategic integration plan, the transition can be smooth, and your company can begin leveraging cloud applications to work smarter, faster, and more efficiently.
Reeve Fritchman is the chief strategy officer for EXTOL International, a provider of business integration software and services. He may be contacted at firstname.lastname@example.org.