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11th Annual Supply Chain Management Software Users Survey: Caution remains

Logistics professionals appear to be enthused by the gradual economic recovery and see the need for improved visibility to better meet new supply chain demands, but they’re still not ready to make the big investments necessary to fully realize those goals.
By Bridget McCrea, Contributing Editor
June 01, 2013

Cloudier skies ahead?
In the interest of conserving money, time, and precious IT resources, shippers are slowly moving into the cloud computing space in search of software options. Eighteen percent of firms say that they’ve already adopted such solutions, 37 percent are evaluating them, 13 percent don’t see cloud-based solutions as an option, and another 26 percent say they’re not sure of their company’s interest in cloud computing.

Key concerns that shippers cite in relation to cloud computing include security, system reliability, privacy, and backup plans. Those companies that are considering cloud solutions say that the ability to access from anywhere, bandwidth and capacity, and the fact that current suppliers are moving in that direction are driving their decisions.

Klappich says that the fact that 55 percent of respondents are either using or considering cloud solutions is meaningful. “This is a bit higher than what our research has found, but again I think this speaks volumes to the sample,” he says. “Small- to medium-sized businesses have a propensity to consider [cloud] at a higher rate than Tier 1 companies.” Smaller firms also tend to worry more about security, privacy, and reliability, says Klappich, whereas larger entities focus on issues such as performance and scalability.

An area that Klappich says stood out to him is the fact that when asked if they were considering cloud solutions, only 35 percent of the respondents said “yes” and 65 percent said “no.” “This is a sign that while many view cloud as an option, they’re not yet convinced it’s the right thing to do,” Klappich explains. “For the foreseeable future they will continue to do what they have traditionally done, which is to buy on-premise applications.”

Show me the results
According to this year’s study, ROI expectations from their supply chain software vary significantly. About 30 percent of firms expect payback for supply chain software purchases within 6 months to 12 months, 43 percent within 12 months to 18 months, and 19 percent in more than 18 months.

Klappich says that the more than 60 percent of shippers that expect payback of greater than a year may be overly conservative. “In the Tier 1 market we’ve seen significant pressure to invest in solutions with paybacks of 12 months or less,” he adds.

However, as logistics professionals continue to shake off the effects of the national recession and return to more typical IT spending patterns, the supply chain software sector will be well- braced to claim its share of the investment that’s doled out. Offering up new solutions that provide improved visibility, WMS, TMS, and GTM, will continue to play a critical role as logistics and supply chain operations become ever more complex and essential to U.S. business growth.

About the Author

Bridget McCrea
Contributing Editor

Bridget McCrea is a Contributing Editor for Logistics Management based in Clearwater, Fla. She has covered the transportation and supply chain space since 1996, and has covered all aspects of the industry for Logistics Management and Supply Chain Management Review. She can be reached at .(JavaScript must be enabled to view this email address).

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