New IDC Research Quantifies Value of Cloud for SCM

Digital transformation has become top-of-mind for executives in supply chain management (and everywhere else, for that matter), but what's the true payoff for companies that embrace it?

Recently, Oracle set out to find answers, engaging leading industry analyst firm IDC to conduct an independent study that quantifies the business benefits of a move to cloud in supply chain management. Specifically, IDC interviewed organizations that are running their supply chain, including manufacturing and operations, with the Oracle SCM Cloud platform. The results of the study were striking, to say the least.

IDC's research found that Oracle SCM Cloud customers had realized a truly impressive five-year ROI of 267%, a 12-month breakeven, and 28% more productive supply chain teams, among other benefits such as:

• 36% faster delivery of new products
• 1.6% higher revenue per organization
• 6% lower material costs
• 38% more productive SCM-related development
• 44% more efficient customer support teams
• 62% faster resolution of release errors

IDC's analysis showed that benefits like these translated into significant financial gain for study participants—namely, an average annual value of $264,400 per business application per year, equating to $4.91 million per organization. These gains came from the organizations' ability to win more business by delivering more products on time and at higher quality, as well as to increase employee productivity, lower operational costs, and increase efficiencies in SCM-adjacent teams, like customer support.

Digital Transformation Drivers in SCM

Many of the findings in the Oracle-commissioned IDC research are in lock step with the latest IDC Supply Chain Survey, published biannually. Among the more intriguing findings in its 2018 Supply Chain Survey, respondents felt that the top driver of supply chain change was the adoption of new digital technologies—something greatly streamlined by leveraging a cloud platform.

In this 2018 survey, IDC further states that:

• 60% of companies noted that meeting customer/consumer needs was the driving force behind their supply chain transformation efforts.
• 45% felt that the cloud was a critical element to delivering supply chain excellence both today and into the future.

Looking across both the Oracle-commissioned report and the 2018 SCM survey, IDC research findings reinforce two developments that we at Oracle repeatedly see across the supply chain market and hear directly from our customers.

First, supply chains are moving from being seen primarily as a cost center to a strategic enabler that creates business opportunities. It's no surprise that the C-suite is paying more attention to SCM and raising expectations for top- and bottom-line contributions from supply chain managers. Supply chain has become the battleground for customer loyalty as companies respond to fast-changing demands and business conditions. New technologies enable deeper visibility and more precise control in supply chain management for both B2B and B2C brands, and companies that adopt modern, cloud-based SCM systems are being rewarded with efficiency gains, higher productivity, and growing revenues and profits.

Indeed IDC research bears this out. IDC analysts note, “While the specter for disruption may be in the back of supply chain executives' minds, the opportunities for digital transformation to drive productivity gains are front of mind.”

Secondly, cloud has become a critical success factor for digital transformation. Not only does having a cloud platform streamline adoption of the emerging technologies essential to that transformation, but as IDC notes, “cloud is a major component in this thinking, being both faster and more flexible to support increasingly low-latency business models.”

6 Reasons SCM Cloud Boosts Results

It should come as no surprise that those moving to the cloud are seeing such notable performance gains given that modern, cloud-based SCM enables innovative, proactive, and continuously improving supply chain practices. In fact, the best SCM solutions have these six defining traits:

1. Agile. A cloud-based SCM system is not just responsive to change, but can also be an enabler for change—in the marketplace, in customer preferences, and in the environment where manufacturing and distribution takes place. It gives you the information to understand in real time what is changing and how to react.
2. Intelligent. As well as exception-based processing, modern, cloud-based SCM increasingly uses artificial intelligence (AI) and machine learning to automate supply chain processes that previously required human monitoring and manual intervention.
3. Demand-driven. Analytics and reporting capabilities, for example, enable cost-effective manufacturing and distribution of customized products or services.
4. Integrated. Integration creates more efficient, low-friction supply chain processes and provides end-to-end visibility into those processes so you can solve problems instead of just moving them to another part of the enterprise.
5. User experience. Cloud-based SCM is responsive and intuitive, and gives users the ability to personalize their workspaces so that data can be presented in a way that naturally adds value.
6. Open platform. Cloud-based SCM assumes that technology innovation will continue to drive rapid and often unpredictable change. It implements open standards and modular architectures to accommodate upgrades and improvements, to minimize change-related disruptions, facilitate integration with other applications, and always keep you on the current release.

Get the Full IDC Research Study

Interested in learning more about IDC's findings, as well their insights on digitally transforming your supply chain to unlock new business value and create competitive advantage? Then we invite you download the full IDC research study: Making Supply Chain Operations More Effective and Efficient by Moving to the Cloud with Oracle SCM Cloud.

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