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Logistics Cloud Technology is Not About Lower IT Costs

By Chris Jones | 04/20/2013 | 6:34 PM

Let me get right to the point. If you think your cloud technology strategy should be focused on lowering your logistics IT costs, you are missing the bigger opportunities. I recommend that no time be wasted in this debate when it comes to cloud-based logistics technology. Instead, focus on new opportunities to transform your business with cloud-based solutions. Here are 5 reasons to think about cloud-based logistics solutions differently than on premise ones.

Enable multi-party processes: Most logistics processes are inter-enterprise, involving the shippers, carriers, logistics services providers and consignees. Better coordination across the parties represents the greatest opportunity for performance improvement because today’s phone, fax or email approaches are slow and highly inefficient. The cloud is a perfect medium for multi-party process solutions because they cannot be “hosted” by a single enterprise and require scale in connected parties to work effectively. That is why we are seeing the emergence of cloud-based multi-party solution providers that act as process brokers or, as recently described by Art Mesher, Entrusts.

Accelerate time to value: Because the pace of business is accelerating, logistics processes are evolving at higher rates, so the actual time to recoup the value from technology investment is getting shorter. Anything that can be done to reduce that time frame helps increase the chance that the planned business value will be achieved. Cloud-based logistics solutions, especially networked ones, shorten the time to value by not only providing the readymade infrastructure, but the pre-existing connections to the parties that will use the solution.

Become more agile: Let’s face it; there are very few enterprises that would claim that their IT operations are their core competency. But these same enterprises would say that IT resources are scarce and many of their IT-enabled logistics opportunities are constrained by the availability of IT resources. So why would you let a non-core competency throttle more important business opportunities? Instead, you should leverage cloud-based logistics solutions to minimize dependency on the internal IT organization to be able to take advantage of business opportunities when they arise.

Create solution portfolio flexibility: Not all IT investments need to be strategic, but a lot of organizations get still get paralyzed by this kind of thinking. When the only choice was on premise solutions with high upfront costs and a drain on scare IT resources there really wasn’t an option to plug and unplug solutions. Cloud-based logistics solutions give enterprises the opportunity to take more of a portfolio play on their IT investments, deciding which ones need to have greater longevity and which ones address tactical needs.

Align costs to value and owner: OK, there is one cost perspective to cloud-based solutions. It’s shifting the investment strategy from upfront capital intensive and IT-centric ownership to the operating budget and business unit. Think of it as a shift from the balance sheet to the P&L. In addition, the costs can be made variable and based upon more logical units of value. This kind of thinking is highly powerful because capital is scarce, traditional IT value quantification is arcane and inaccurate and the ownership of the costs can now be associated with the real users and based upon their actual use.

The real value of cloud-based technology in logistics isn’t simply to have another cost option for getting the technological solutions you need for your enterprise. It is to enable your use of IT to be more transformational. Whether that comes in terms of enabling new business processes, greater agility or financial flexibility, cloud-based logistics solutions enable you to think differently about the value and use of IT.

How have cloud-based logistics solutions allowed your organization to rethink its IT strategy? Let me know.



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The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

About Chris Jones

Chris Jones

Chris Jones is Executive Vice President of Marketing and Services at Descartes Systems. Jones has spent more than 30 years working with manufacturers, retailers, distributors, and logistics providers to improve their supply chain operations. One of his primary missions is to identify and leverage new and counter intuitive activities that make a difference in the business. Jones has held senior positions at Kraft Foods, Descartes, and Gartner. He has a B.S. degree in Electrical Engineering from Lehigh University.


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