Cloud computing has risks… Your S&OP Should not be restricted to the Cloud

A Inc. we created S&OP solutions in early 2001 for large clients like Siemens. We continue to offer this hybrid solution approach of world class patented technology with rapid impact consulting to our clients. Our approach has been to avoid the pre-ordained business models of pure software or pure consulting and especially to look with skepticism at a rush to “cloud” computing as answers for supply chain / S&OP solutions.

We feel the recent failure of a “cloud” only S&OP solution (Steelwedge) rapid rollup into E2Open as good food for thought on what is the RIGHT IT strategy / arechitecture for your strategic S&OP solution ?


We think with this example news there is even a stronger empirical argument that a client should and can have more control of their S&OP solution and supporting IT architecture then abdicating to a share cloud. There are many reasons for this but for brevity will list a few here for discussion

  • S&OP is primarily as decision support solution and thus integration is not hard to transaction systems thus does not require the interlocking gears/ integration of most ERP components (CRM, accounting, purchasing, even transaction inventory control)
  • The technology to run a daily, weekly monthly S&OP netting does not require extensive computing power and thus can run on a simple dedicated server on or off premises. In fact many of our clients plans run in minutes on a laptop proving for most time phased netting computing power, in-memory architectures, scaled clounds are just plain overkill. They add complexity and cost not generally needed.
  • S&OP done correctly is not a supporting solution to a business it really IS the business. It is where you look forward and make decisions on what working capital to invest in, how to manufacturer, to source, to hold in what form and to provide options to customers in form of lead time and features that differentiate your business. Why on earth would any rational business person want to buy in to a structure where you are standing inline with hundreds / maybe thousand of other customers with many times that requested feature / modifications to make your business run leaner, faster, better. You would want at the option to run the complete S&OP solution under you direct control of both object and source code
  • Financial integration to S&OP really should take the form of using the proforma S&OP plan of items, planning bills and lead times and calculating using actual costs and margins what future financial statements look like. Not the opposite trying to take financial historical metrics and average forward. Thus no need to have tightly integrated to historical financials
  • The recent past has shown us business agility is probably the number one asset for a manufacturer. Adjusting costs and pricing to reflect dynamics week to week, quarter to quarter not accounting “averages” over a year. If you are in a que with thousands of other requests on some shared piece of code with developers in some far off land… is this even possible ?
  • Most planning problems are by distributed and asynchronous as that is how people / planners and distributed business run. So with a DCRA approach you can run plans offline on your laptop and check in and check out, rollup multiple divisions, distribute to contract manufacturers to give feedback and roll this back in. Thus execution data to plans are loosely coupled when they need to be. The technology does not require all participants to use the same “instance” or cloud. The big benefit of a “cloud” is to aggregate the execution system data to run and update the plan not run the plan.
  • This distributed model for DCRA even goes down to the planning surface which is a an Excel worksheet checked out with non Excel based algorithms and data provided by the centralized server control. This provides “smart” users to modify and update views, plans, even algorithms into new templates and submit back to the administrator for incorporation into new templates all can use. This is the feedback look is why most planning is still done in Excel as the actual users has incite into business that can not be capture or translated through IT let alone IT outsourced in a cloud probably in some far off land

So with the DCRA Inc. model you can run your S&OP solution on a small computer on site, you can run it on a dedicated server off site. You can purchase object code and run or you can have complete source code to modify to your business strategy or have us provide this service. This IT strategy / architecture we believe to be the right, best, business approach to S&OP. What is your experience ? What type of control and agility does your business need to create and run a successful S&OP support system ?

Jon Kirkegaard



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