The supply chain software industry has been on quite a roller coaster ride over the past three years. The market changed from a situation where there was enormous interest and feverish buying to a situation today where many companies appear to be avoiding supply chain software purchases at all costs. During that same period, the stocks of most of the supply chain software vendors experienced similar ups and downs.

The 1990s clearly were the heyday of the supply chain software industry, with software sales growing every year. As we entered the 21st century, however, several problems became clear.

First, many software vendors created grand visions of elaborately connected supply chains that were simply unrealistic. They envisioned "exchanges" where suppliers, manufacturers, customers, and third-party service providers would share information freely and effortlessly. The reality, of course, is that individual business processes, data standards, and technology platforms take a long time to integrate.

Second, merely buying software does not create value. Redesigning processes and effectively implementing enabling software is what creates value. Too many companies failed to grasp this critical concept, so they never gained significant benefits from their software investments.

Today I am seeing an overreaction by shippers to the failures of the past three years. Many companies, stuck with supply chain software that has not yet been implemented or has not fulfilled its value proposition, are turning their backs on further investments in supply chain technologies. Not surprisingly, many supply chain software vendors are reporting little in the way of revenues from new licenses these days, and their stock prices are depressed.

I believe this overreaction by the market and pullback from investing in supply chain software is misguided. There have in fact been numerous supply chain software success stories. Leading companies like Dell Computer, Wal-Mart, Procter and Gamble, General Electric, Millennium Chemical, Zara Corporation (in Spain), Nokia, Best Buy, and others have gained tremendous advantages from supply chain software.

They have been successful because they were selective in the applications they chose, began by reengineering their business processes, and were diligent and attentive to both program and change management during carefully paced implementations.

There is still enormous value to be had from supply chain software. There are numerous software companies that offer powerful solutions in each functional area. Selected examples include Ariba in procurement and spend management; PTC in design collaboration; Manhattan in warehouse management; Yantra in distributed order management; World Chain in visibility, collaboration, and synchronization; and Manugistics, i2, SAP, and Aspen Technologies in supply chain planning. These and other software providers have made a huge difference in the competitive effectiveness of many of their customers.

Take a look at what the most successful companies are doing, and don't allow the poor implementations and overly aggressive purchases of supply chain software in the past to keep you from realizing an opportunity to add tremendous value for your company in the future. In the end, you will be happy you pursued this more thoughtful path.