In the past few years, the cloud was successfully implemented in Human Resources Management (HRM) and Customer Relationship Management (CRM). It is not a surprise that this trend has also impressed the Supply Chain Management (SCM) market as well. With vendors building their supply chain models on the cloud, the potential of double-digit growth has become more tangible. However, the consumerization of Information Technology and the shifts towards the cloud has also taken its toll on legacy Enterprise Resource Planning (ERP) providers.
The traditional “build once” model of ERP providers has been disrupted by this shift, making it more difficult for them to keep up with cloud-based solutions. On the other hand, cloud-based SCM offerings have been attractive. Generating consistent high margin and superior cash flow, they are more remarkable compared to the traditional license-based business models. The shift to the cloud benefits BoB on-demand SCM vendors, but it also attracted traditional vendors that acquire and develop Software as a Service (SaaS) offerings.
According to the study conducted by Gartner, the cloud penetration rate in Supply Chain Management is expected to grow to 29.5 percent by 2017 – a great leap from the 18.3 percent in 2012. It ranks second to the cloud penetration rate in CRM, which has a 16.6 percent change in 5 years. Compared to the traditional business model, the SCM software market growth is far greater. With 18.6 percent growth by 2017, it is more impressive than the 6.3 percent market growth of traditional business models.
With these numbers, it is more important for companies to constantly develop their supply chain management systems. They should also appreciate the necessity of strategic supply chain management in their business operations. As the global supply chain stretches further into emerging economies and market manufacturing centers, the demand for SCM software also increases. In fact, there is currently a continued strong growth in Asia and Latin America in SCM investment.