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Hype Cycle for Supply Chain Management, 2010 Page 2 of 41
Capable-to-Promise Systems
Sales and Operations Planning
SCM in India
Supply Chain Collaboration
Integration as a Service
Real-Time Factory Scheduling
Business Process Hubs
Strategic Network Design
Supply Chain Analytics
Supply Chain Management C&SI Services
Voice-Directed Picking in Warehouse Management
Warehouse Labor Management Systems
TMS Shipper-Centric Multimodal Domestic
Service Parts Planning
Entering the Plateau
Supply Chain Planning for Process Automation
Appendices
Hype Cycle Phases, Benefit Ratings and Maturity Levels
Recommended Reading
List of Tables
List of Figures
Analysis
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On the Rise
"MDM Aware" Applications
Analysis By: Andrew White
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Definition: Master data management (MDM)-aware business applications have been designed (or
adapted) to work better with MDM hubs and solutions. The improved designs simplify interactions
between master data hubs and business applications at several levels, by adopting:
Externalized metrics and analytics related to master data across all data stores (to support the
governance of master data)
A publish/subscribe mechanism to facilitate access to data via MDM hubs
Exposed metadata describing master data stored in the business application (for consumption by
MDM hubs)
Most business applications are not MDM-aware, in that they have no interest or capability to work with
MDM hubs and solutions without IT assisting with added functionality to achieve integration.
MDM-aware applications externalize their master data and/or data models to the point where: (1) the
data model design is visible and adjustable in terms of design authority coming from outside the
purview of the applications (i.e., from the MDM system), and (2) the actual data can be accessible from
external systems (i.e., from an MDM system or a service bus carrying messages to/from the
MDM/application). As more master data is externalized from application sources — packaged
applications, applications developed in-house, business intelligence (BI) data warehouses, etc. — the
implementation style of MDM will have to change, to take into account the growing number of data
sources and subscribers. Finally, MDM-aware applications integrate using a publish-and-subscribe
model to facilitate visibility to the master data steward of the application-oriented metadata describing
the master data stored in it.
Position and Adoption Speed Justification: The need for business applications to "play well with
others" has long been known, but most packaged applications, and even many custom-made
applications, do not. To make MDM work effectively, legacy data stores that keep a copy of master data
for use in applications, and the emerging MDM systems, need to evolve, so that interaction between
the two is radically simpler, faster and more easily managed. This evolution in business applications is
emerging from a view held by visionary business application vendors that see this market
opportunistically.
A small number of business application vendors claim that their applications are MDM-aware. These
applications have externalized some or all of their master data and/or application data model, so that a
more usable publish-and-subscribe infrastructure can be implemented with an MDM infrastructure. As
the adoption of MDM continues, we expect the hype around MDM-aware applications to increase
quickly, although actual penetration will be slow, because of the amount of work that vendors and
application development teams will have to undertake to rewrite or modify business applications. Being
new, and highly dependent on how MDM evolves and matures, they will require more application
interaction with MDM systems.
Since 2009, Gartner has observed the emergence of "MDM-powered applications," which add the value
of an established MDM service to business applications. This development initially slows the likelihood
that MDM aware applications will emerge; however, in the long term, this is likely to increase pressure
for this adaptation in business applications.
User Advice: For users of packaged applications: Understand that there are few MDM-aware
offerings. As you continue to select and adopt packaged applications, vet the vendors for MDM
awareness, and ensure that new packaged applications have a road map whereby their master data will
be exposed more easily and made visible for integration to your emerging MDM infrastructure.
For developers of business applications (transactional, BI and analytic): Ensure that your
application architecture supports an externalized logical master data model that can support a uniform
master data metadata model for the enterprise. Ensure that your service-oriented architecture (SOA)
strategy supports a publish-and-subscribe framework of services among the externalized (and legacy)
data stores with your MDM application.
Business Impact: Applications that become MDM-aware will help IT to significantly simplify its
information infrastructure, and delivery enterprisewide master data governance, at a cost that IT and
the business can afford. Organizations that adopt an MDM strategy will have to determine which
systems (CRM, supply chain management, ERP, procurement, product life cycle management, custom
and best of breed) must be enabled for the external data governance performed by MDM. We are
seeing initial work in supply chain packaged applications (complex B2B environments where multiple
firms have to share product master data), as well as in retail and distribution (where there are a large
number of heterogeneous applications, and a low density of large, dominant, single data-model-based
application vendors). Given the primary focus of MDM in the customer and product data domain, we
expect application vendors and developers in these areas to adopt MDM-aware strategies.
Advantages focus on:
IT benefits, in terms of simpler and more-manageable integration environments across
heterogeneous systems, leading to lower costs
Business benefits, including rapid implementation of new business applications; more-accurate
data (in that they "plug into" the established MDM infrastructure), thus improving the efficacy of
user decision making taking place in the relevant business applications
Benefits will vary, but will be focused on the departments and domains that adopt MDM-aware
applications.
Benefit Rating: High
Market Penetration: Less than 1% of target audience
Maturity: Embryonic
Sample Vendors: Aldata; JDA (i2); Soft Solutions
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classification, has been around for many years (for example, consider ABC classification). Customer
segmentation has also existed in the CRM arena. As supply chains cope with increasing levels of
external chaos driven by factors such as globalization, virtualization, economic uncertainty, complexity
and business strategy diversity, leading companies are pushing toward the orchestration stage of
Gartner's demand-driven value network (DDVN) model, which calls for a value-driven supply chain
response.
Enterprises looking to expand the scope of their segmentation strategies must bring together
capabilities from different technology areas, such as supply chain analytics, supply chain planning
(SCP), supply chain execution (SCE), ERP, business intelligence (BI), sales and operations planning
(S&OP), network design, simulation and inventory strategy optimization (ISO). These applications will
continue to merge and progressively form more coherent capabilities that support aspects of
segmented supply chain response. For example, ISO and network design are already converging,
adding design proficiency to the analysis and modeling capabilities of ISO technology, all of which are
important aspects of segmented supply chain response.
SCP and supply chain performance management are combining so that BI-derived insight can have an
impact on business processes. These two islands must converge in order for strategic plans to align
with operational plans, but some pieces are still missing. The necessary convergence of planning and
execution — that is, the ability to execute across a parallel set of supply chain configurations — is
missing from most vendor road maps, although capabilities at the network level exist in both domains.
The initial identification and analysis of product and customer clusters, as they are relevant to supply
chain performance, are only available through data mining and offline, ad hoc analysis. They're also
fragmented across different organizational domains, such as CRM and SCM.
User Advice: Because segmented supply chain response is a set of competencies that requires a
portfolio of solutions, it can't be purchased in its entirety from one vendor just yet. Pieces to the puzzle
are available, though, with the most obvious being network design and new analytic solutions like ISO,
which are used to leverage investments in SCP applications, as well as supply chain performance
management solutions, which use BI capabilities. Users interested in segmented supply chain response
should start with these technologies. Eventually, this point application sourcing approach will be
replaced by the integration of planning and execution, perhaps by the ERP vendors as they develop
their functional depth and breadth and provide suitable segmentation frameworks.
Business Impact: A segmentation approach has demonstrated significant benefits in terms of
customer service and total delivered cost by addressing one of the primary reasons supply chains
underperform: a mismatch between product and customer characteristics and the supply chain
performance profile.
Benefit Rating: High
Market Penetration: Less than 1% of target audience
Maturity: Emerging
Sample Vendors: IBM; JDA; LLamasoft; Manhattan Associates
Recommended Reading: "Segment Your Supply Chain Response to Drive Enhanced Performance"
"Development of Chaos-Tolerant Processes Is Key to Supply Chain Optimization"
"Who's Who in Inventory Strategy Optimization"
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Recommended Reading: "Integrated Business Planning Fills the Gap Between Strategic Planning and
S&OP"
"MarketScope for Sales and Operations Planning"
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With the poor state of the global economy over the last 18 months, Gartner found that supply chain
management (SCM) user intention to invest specifically in green and carbon footprint reduction has
waned. Consequently, SCM vendor focus and investment in adding more capabilities in this area
declined, with few new capabilities emerging. In Gartner's annual SCM user study, we found, for the
third year in a row, that "green" was just shy of being at the bottom of the list of priorities over the
next three years.
User Advice:
Identify the largest contributions to your company's supply chain carbon footprint.
Complement your carbon-footprint reporting, and move toward resource optimization.
Adopt SCM technologies, such as new attributes, data and models, that identify, track and reduce
your supply chain's carbon output.
Business Impact: At a minimum, these solutions will enable enterprises to comply with emerging
government mandates and regulations as well as use their adoption of green initiatives as good
publicity. In many cases, however, optimizing green considerations offers complementary business
justification because reducing emissions can reduce other costs. For example, reducing wasted miles
driven for a green initiative translates into significant savings on fuel and overall transportation costs.
Benefit Rating: Moderate
Market Penetration: Less than 1% of target audience
Maturity: Embryonic
Sample Vendors: Barloworld Supply Chain Software; i2 Technologies (JDA); Infor; Lawson; SAS;
Supply Chain Consulting
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asset optimization projects to understand the information that's available and the additional
information needed to further optimize the process. Understand the infrastructure patterns for indoor
and/or campus-asset tracking, outdoor-asset tracking, shop-floor asset management and wide-area
asset management, as well as how additional information beyond RTLS can be beneficial.
Business Impact: Traditional asset management systems have focused on cataloging and
documenting asset location and maintenance. Sensor technologies can enable enterprises to determine
where the assets are and how they're being used in a process in real time, especially as more become
mobile across the supply chain. This information can be used to infer the status of a business process
or assign responsibility for assets to the individuals or entities that control them. It can also associate
different assets and inventory within or across specific business processes. Ultimately, this improves
the efficiency or accuracy of the business process and reduces the number of misplaced and stolen
assets.
Benefit Rating: Moderate
Market Penetration: 1% to 5% of target audience
Maturity: Emerging
Sample Vendors: AeroScout; Cetaris; Check Point Software Technologies; Cisco; Ekahau; InSync
Software; Microlise; Texada Software; Zebra Enterprise Solutions (WhereNet)
Recommended Reading: "RFID in the 2009 Supply Chain: Overview and Best Practices for Maximum
Investment Value"
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infrastructure; incorporate your B2B integration strategy into your business application strategy, and
establish clear metrics for tracking the success of your multienterprise projects.
Business Impact: Initial impact is being seen in a number of areas, notably global trade, third-party
logistics, distributed order fulfillment, procure to pay and multienterprise collaboration. In the longer
term, we expect to see more adoption across widespread deployed business processes, such as those
found in application domains, such as CRM, ERP, procurement, product life cycle management and
supply chain management, as well as industry-specific applications.
Benefit Rating: High
Market Penetration: Less than 1% of target audience
Maturity: Emerging
Sample Vendors: Ariba; e-Builder; E2open; Perfect Commerce; Quadrem; Sterling Commerce
Recommended Reading: "Findings: Ownership of Processes Distinguishes Internal BPP From
Multienterprise BPP"
"The Emergence of the Multienterprise Business Process Platform"
"Best Practices: Checklist for Issues to Consider in Multienterprise Collaboration"
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At the Peak
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identify new sales opportunities, manage stock more effectively, drive agile responses, and provide a
basis for business forecasting and planning.
Benefit Rating: High
Market Penetration: 1% to 5% of target audience
Maturity: Emerging
Sample Vendors: AC Nielsen; G4 Analytics; Information Resources; JDA; Oracle; Relational Solutions;
Retail Solutions; Shiloh Technologies; Teradata; TrueDemand Software; Vendor Managed Technologies;
Vision Chain
Recommended Reading: "Predicts 2009: Consumer Goods Manufacturers Will Continue to Experience
Growth"
"Oracle's Demand Data Breakthrough"
"Using RSi's SaaS Approach to Address the Challenges of Consumer Goods Data Sharing"
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decades. However, most bundled IT solutions and B2B projects for specific multiparty business process
integration problems are still emerging or in the early adoption stage. IT end users' understanding of
B2B integration projects is evolving from the notion of "exchanging transaction data" to the notion of
"linking business processes," and the distinctions between these (such as the implementation of
process visibility tools and rule engines in BPNs to drive process improvement) is increasingly well
understand by IT end users.
As the IT industry continues to evolve and more IaaS, SaaS, application platform as a service and other
forms of cloud computing become available, awareness and adoption of BPNs will rapidly proliferate,
driving the hype around these to the Peak of Inflated Expectations in the next year or so. Next, we
expect there will be a mild slip into the Trough of Disillusionment as communities of interest discover
that, despite their utility, BPNs: (1) will not be flexible enough and cannot evolve fast enough to meet
more rapidly changing business requirements if not implemented using modern approaches, such as
service-oriented architecture and metadata-driven process definitions (e.g., via the use of BPMT); and
(2) do not easily solve diverse semantic business process differences and, thus, processes will not be
easily linked across industries. For example, most BPNs support substantially unique processes within
their communities of interest or industries.
User Advice: Enterprises and B2B communities of all sizes should look for opportunities to license,
operate or participate in BPNs when they offer a preconfigured method of implementing multienterprise
integration for a specific business process as an alternative to a custom multiparty business process
integration project.
When choosing a BPN, also carefully evaluate the degree to which your particular business partners are
(or are not) already on the BPN provider's network. BPN offerings where most of your community
members have already been provisioned on the network will substantially reduce B2B integration
project deployment time. BPNs with few of your community members on board will both increase
deployment time and may require additional business partner onboarding fees.
When available, consider industry standards, such as RosettaNet, SWIFT and UBL, as the basis for
BPNs, because these will accelerate time to production and are preferable to proprietary B2B
specifications when they can be leveraged.
When evaluating BPNs, look for evidence that the solution or project leverages a metadata-driven
definition of integration artifacts, including trading partner profiles, maps for translation, process
models, business rules, etc. BPNs that are more metadata-driven are more likely to be easier to modify
when changes are required in complex multiparty business processes.
Business Impact: Enterprises can implement multiparty business process integration projects with
external business partners faster and for less money when a BPN is available versus having to design
and implement a set of B2B standards and implement such projects from scratch. BPNs are available
for automating supply chains, making electronic payments, exchanging product information, sharing
foreign exchange calculations and linking a wide range of other multiparty business processes among
enterprises.
Benefit Rating: High
Market Penetration: 5% to 20% of target audience
Maturity: Adolescent
Sample Vendors: Ariba; cc-hubwoo; Descartes Systems Group; e-Builder; E2open; E4X; Elemica;
Financial Information eXchange; GXS; Inovis; Ketera Network; Liaison Technologies; OB10; Perfect
Commerce; Quadrem; Quick Connect Computer Services; Railinc; SciQuest; Society for Worldwide
Interbank Financial Telecommunication; Sterling Commerce; StrikeIron; SupplyOn; Wesupply; Xign
Recommended Reading: "Oracle and E2open Deploy BPN to Simplify B2B for Global Transport
Processes"
"Magic Quadrant for Integration Service Providers"
"IBM and Hubspan Deploy IaaS-Based Platform for B2B Project Outsourcing"
"The Four Styles of Process Execution in Multienterprise Scenarios"
"The Emergence of the Multienterprise Business Process Platform"
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one infrastructure
Multinational e-invoicing projects — especially in Europe and South America
Position and Adoption Speed Justification: IT vendors have offered various forms of B2B
integration outsourcing for years; however, the recent growth of multienterprise projects (see "Q&A:
Hot Questions for Multienterprise (B2B) Integration") is prompting more companies to reconsider their
B2B strategies. This includes considering whether to implement multienterprise infrastructure
themselves or to outsource this task. Traditional e-commerce projects continue to drive increasing
adoption of B2B integration outsourcing, but the proliferation of cloud computing, particularly software
as a service (SaaS), is driving additional demand to address cloud-to-cloud and cloud-to-on-premises
integration projects.
Many companies successfully brought B2B projects in-house via B2B software during the decline of
electronic data interchange (EDI) value-added networks in the early 2000s. However, the need to scale
up these projects to cope with more B2B dealings, and to address often-diverse B2B protocols and data
formats, combined with increasing pressure on IT organizations to outsource noncritical competencies
(particularly in a down economy where capital is tight), is — according to many Gartner clients we have
spoken to — fueling a selective withdrawal from new investments in modernizing or scaling up in-house
B2B projects. It is also increasing interest in the outsourced approach. In addition, as companies make
a "leap of faith" by capitalizing on business functionality from cloud-computing and SaaS vendors, it is
natural for the same companies to outsource their cloud service integration requirements, because
many of the factors that go into the SaaS versus enterprise software sourcing decision — such as lack
of capital, propensity to outsource noncore competencies, the desire to reduce internal IT assets, etc.
— apply to implementing integration projects as well.
Vendors are doing a better job of creating bundled IT outsourcing offerings that more consistently and
clearly combine the right services (such as multienterprise communications, in-line translation,
community ramp-up and ongoing project management) into simpler pricing models. Some of these
include fixed-price components — for example, a single price to develop a map for translation or to
"onboard" a new external business partner or to connect to a cloud-based service. The vendors in the
B2B integration and outsourcing market are remarkably diverse, reflecting the wide range of B2B
project styles enumerated earlier:
Vendors such as Crossgate, GXS, Inovis, Sterling Commerce and Tieto offer stand-alone B2B
integration and outsourcing services, typically for traditional e-commerce projects, such as supply
chain integration.
Vendors such as Atos Origin, Capgemini, HP (EDS) and IBM offer B2B integration and
outsourcing, more typically in the context of larger outsourcing projects, such as business
process outsourcing.
Vendors such as Appirio, Bluewolf and Celigo conduct B2B integration and outsourcing, often in
conjunction with the system integration they offer for cloud-computing/SaaS projects.
SaaS providers, such as Workday, offer B2B integration and outsourcing in conjunction with their
SaaS offerings to lower obstacles to doing business with them (see "Seeding the Cloud: B2B
Flexibility Drives SaaS Adoption").
Providers such as Boomi, Cast Iron Systems — just acquired by IBM (see "IBM Adds
Comprehensive Cloud Service Integration to WebSphere via Cast Iron Acquisition") — Informatica
and Pervasive Software deliver IaaS as an enabling technology, so that other IT service providers
can bundle it into B2B integration and outsourcing; these providers also offer IaaS for direct
consumption by companies that implement B2B themselves.
Providers such as E2open, Elemica and Hubspan deliver B2B integration and outsourcing bundled
into business process networks that combine prebuilt integration and networks for specific
multienterprise processes, such as order-to-cash, vendor-managed inventory (VMI) or
transportation management.
Several recent industry events underscore that there is a broad, industrywide recognition of the
importance of B2B integration outsourcing and the expectation that this market segment will continue
to expand: GXS and Inovis merged (see "GXS/Inovis Merger Is Likely Precursor to an Initial Public
Offering"), and SPS Commerce recently became an initial public offering (see "SPS Commerce Will
Wield Its IPO Like a Sword, But Not Lethally, in the Battle for B2B" and "SAP Finally Makes a Decisive
Move in the B2B Market"). All of these companies specifically cite B2B integration outsourcing as their
more-important, fastest-growing lines of business.
Given these industry events and our perception of substantially increased client interest in this
approach to B2B, we believe that B2B integration outsourcing is just short of the Peak of Inflated
Expectations. We believe that the Peak of Inflated Expectations is likely to occur in the next 12 months,
then IT users will experience a very brief dip into the Trough of Disillusionment as they experience
minor disappointment from oversimplified vendor positioning and commitments, discover that many
"off the shelf" B2B integration outsourcing offerings don't easily support their custom B2B project
requirements, and experience minor disruptions and confusion as vendors in the B2B integration
solutions market segment, merge or are acquired. We don't believe the dip into the Trough will be
dramatic, and, after that, B2B integration outsourcing will soon progress onto the Plateau of
Productivity.
Based on the combined factors above, and our perceptions from client discussions of increased demand
and solution maturity, and in line with our 2009 expectations, we believe that, through 2014, B2B
integration and outsourcing services will show a five-year average compound annual growth rate of
nearly 20%.
User Advice: Consider B2B integration outsourcing when you need to implement an IT project to
integrate your internal applications and data with your external business partners or with cloud
services, but would prefer to consume IaaS and have someone else implement and manage the B2B
integration project.
Like internal integration, multienterprise integration is a complex task. Also, much of the intellectual
property associated with B2B projects is often "sticky" and, as such, difficult to transfer to another
provider or to return in-house. You, therefore, need to select B2B integration outsourcing vendors
carefully, treating them as strategic technology partners. This is important because, although
"multisourcing" such projects could save you if one vendor falters, this approach also means that
intellectual property related to integration — such as maps for translation — is implemented using
different solutions from different providers. Another drawback of multisourcing is lower economies of
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scale — relative to a larger project with a single vendor — which is likely to mean a higher overall
project cost.
Vendor viability will be particularly important for larger projects (involving hundreds or thousands of
external business partners) with a five-year or longer life span. Although complex projects may require
custom implementations and quotes, prospective customers should consider vendors that manage
costs by using a multitenant B2B infrastructure implementation — and (when available) prebuilt
integrations, rather than custom deployments — and that offer unit pricing for one-time and recurring
fees (rather than custom quotes).
Business Impact: Although many companies implement their own B2B integration projects, the
alternative — B2B integration outsourcing — offers potential benefits for almost all firms, small or
large, across all industries and geographies. This is because these IT projects are relatively easy (e.g.,
compared with more-complex application infrastructure projects involving SOA) to segregate and
outsource, and because providers of B2B integration outsourcing offer a viable and cost-effective
alternative to implementing these projects in-house. The impact of B2B integration outsourcing will
continue to be substantial, and we predict that most midsize and large companies will still outsource at
least some of their multienterprise integration projects and implement some in-house (see "Q&A: Hot
Questions for Multienterprise (B2B) Integration").
Benefit Rating: Moderate
Market Penetration: 20% to 50% of target audience
Maturity: Early mainstream
Sample Vendors: Accenture; Advanced Data Exchange; Appirio; Atos Origin; Bluewolf; Capgemini;
Celigo; Comarch; Crossgate; DiCentral; eBridge Software; eZCom Software; E2open; EasyLink
Services International; EDS; Elemica; GXS; HP; Hubspan; IBM; Infosys Technologies; Inovis; Kewill;
Liaison Technologies; nuBridges; OmPrompt; QLogitek; RedTail Solutions; Seeburger; SPS Commerce;
Sterling Commerce; Tieto; Wipro Technologies; Workday
Recommended Reading: "Magic Quadrant for Integration Service Providers"
"Knitting Clouds Together: How Integration as a Service Enables B2B Integration Outsourcing"
"Q&A: Hot Questions for Multienterprise (B2B) Integration"
"Taxonomy and Definitions for the Multienterprise/B2B Infrastructure Market"
"Market Trends: Multienterprise/B2B Infrastructure Market, Worldwide, 2008"
"Cost Savings Finally Make the (European) E-Invoicing Steamroller Pick Up Speed"
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Strategy"
"Look Outside Core Application Platform Vendors for SCM Innovation Partners"
"The SCP for Process Innovation Landscape"
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Battery-Powered RFID
Analysis By: Timothy Zimmerman
Definition: There are two types of battery-powered radio frequency identification (RFID) tags: battery-
assisted passive (BAP) tags and active tags, which are used to collect and communicate asset-level
information. BAP, or Generation 2 (Gen 2) Class 3, tags use a battery for the operation of the internal
circuitry that facilitates the collection, processing and storage of ancillary information. The additional
energy may also be used to boost the communication process in difficult usage scenarios, such as
personnel tags. Active (Gen 2 Class 4) tags use batteries to power all functions of the tag — the
receiving and transmitting of a signal, as well as the power for the processing and memory chips. Both
solutions differ from passive-only tags, where there is no battery for communication, additional
processing or storage. Although active and BAP tags can technically be implemented at all frequencies
in which RFID is used, they are most common at 433MHz, 900MHz and 2.4GHz.
Position and Adoption Speed Justification: Cold storage, healthcare and perishable food supply
chain process requirements need tags to know where the asset is located, as well as to know about the
environment. To acquire this information, more intelligence is being added to RFID tags, so they can
measure such variables as temperature, vibration or humidity, which can affect products in transit. The
evolution of battery technology and the integration of sensors into RFID packaging are fueling the
adoption of these types of RFID solutions. However, there are still problems with the lack of
communication standards and interoperability in some of the applicable frequencies, making the
available information on the tag vendor-specific.
User Advice: Users need to understand their business requirements and the expectations of a battery-
powered RFID solution. Many solutions continue to be proprietary (depending on the frequency and
format), are not interoperable, and will require trading partners to agree on a common implementation
to clear this hurdle through alliances or standards. Vendor differentiation and technical competition will
improve the performance of battery-powered RFID and the robustness of data collected, but this will
also create the need for use-case testing.
Business Impact: Battery-powered RFID will continue to address asset knowledge applications,
requiring the collection of data during the transportation of goods in the supply chain. Cold storage,
healthcare and perishable goods items can see a significant return on investment for using the sensor
capability of battery-assisted and active tags, because the safety and shelf-life of these products can be
adversely affected by changing transit or storage conditions. A battery-assisted passive tag is the tag
of choice when it is available, because it usually has a lower cost, compared with equivalently
functional active solutions. As technologies develop, the surge will continue with the integration of RFID
tags with additional functionality into new areas where temperature, vibration or new parameters
enable vendors to make better business decisions.
Benefit Rating: Moderate
Market Penetration: 1% to 5% of target audience
Maturity: Emerging
Sample Vendors: AeroScout; Axcess International; Ekahau; Intelleflex; RF Code
Recommended Reading: "Assessing the Capabilities of RFID Technologies"
Back to Table of Contents
Profitable to Promise
Analysis By: Tim Payne; Andrew White
Definition: Profitable-to-promise (PTP) systems build on the capabilities found in available-to-promise
(ATP) and capable-to-promise (CTP) systems. PTP, however, also considers the projected profitability
of fulfilling a specific customer order at the time of acceptance, taking into account the opportunity cost
of not consuming resources and leaving them for forecasted orders.
PTP commits customer orders based on inventory (planned and available), production capacity
(planned and available), equipment, people and materials (planned and available), supply chain
constraints (now and future), multiple steps and nodes in the production process and supply chain
network, and transportation capacity (available and planned). It also considers the opportunity costs of
accepting the order against the value and revenue of fulfilling a future possible order (forecast) of a
higher margin. This means PTP reconciles actual customer requests, orders and order forecasts for
resource consumption. It should also be able to assess the relative profitability of the different
scenarios (e.g., part ship, delay, expedite and decline) and the customer placing the order: Is this a
profitable order from a profitable or strategic customer? Is this an unprofitable order from a profitable
customer? Is this a profitable order from a nonstrategic or unprofitable customer? Depending on the
answers to these questions, different order acceptance and promising outcomes could be possible.
PTP enables organizations to get a clear view of the true profit generated by accepting a specific order
(or not accepting one in favor of a forecasted order with greater margin). It can also indicate the
impact on overall profitability at the customer and organizational level. Without this capability,
organizations are left to accept orders on the basis of available inventory and/or capacity, with a
margin assessment based on absorbed costs and average selling prices. This doesn't provide a true
view, given the prevailing circumstances of the supply chain, of the real profit generated by taking the
order.
Position and Adoption Speed Justification: Variations of PTP have been around for years, usually in
the form of sophisticated CTP systems with additional cost and pricing attributes. The PTP market has
been quiet for the past two years as companies struggled to implement basic ATP and more complex
CTP systems for their supply chains. However, the stuttering economic recovery has put the focus on
costs, with many supply chain organizations asking what a profitable response to demand is. As the
recovery gathers steam and demand picks up in several industries, there's a likelihood of under supply.
For this reason, utilizing constrained capacity to maximize profitability will be a competitive advantage.
More companies will look to PTP capabilities to help them make complex decisions in near real time.
They'll be disappointed, though, since they won't have sufficient integration across the planning
processes of their supply chains or detailed and relevant-enough cost information to drive coherent and
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meaningful PTP calculations. This often results in aggregate- or average-level cost information used to
derive customer-level profitability analysis, which limits the usefulness of the calculations in
determining the true impact of customer-level activity on the supply chain.
User Advice: Be practical in terms of what you can achieve: get ATP and CTP up and running before
jumping to PTP. ATP and CTP initiatives will quickly highlight issues with system or process integration
and supply chain data availability and quality. PTP layers in another requirement for integration to
customer management and information processes as well as meaningful cost data. Since PTP is hard to
bolt on to existing planning systems, carefully consider the right technology to support it.
Business Impact: PTP brings the examination of what drives profitability to the operational level,
where it's often missing. How the supply chain is run has a significant impact on a company's
profitability, but most detailed analyses of profit are backward looking. Any forward-looking profit
analysis is typically very high level and fairly meaningless to operations. Profit-generating policies can
be devised and enacted in operations through the deployment of PTP.
Benefit Rating: High
Market Penetration: 1% to 5% of target audience
Maturity: Emerging
Sample Vendors: JDA; Logility; OM Partners; Quintiq; River Logic
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organization's ability to increase revenue, optimize cost, increase agility and meet compliance
requirements.
MDM of product data systems is relevant to all industries and government, but the projects take
different forms. This depends on whether the product is a physical product or a service, on the
complexity of the product structure and consuming business processes, and on whether the focus is on
the sell or buy side of the business.
An MDM of product data strategy is part of a wider, multidomain MDM strategy (potentially
encompassing customer, product, supplier, employee, location, asset and financial master data). An
MDM program is a key part of a commitment to enterprise information management (EIM) and helps
organizations and business partners break down operational barriers, enabling greater enterprise agility
and simplifying integration activities.
Position and Adoption Speed Justification: In the past 18 months, growth in the MDM of product
data solutions market has slowed because of changes in MDM business drivers, with a greater focus on
cost optimization and asset utilization. In 2010, we see a slow return to business growth and customer
service drivers. Related hype in the past 12 months had slowed, but is showing signs of responding to
or leading spending trends.
MDM of product data is increasingly defined by complex requirements (see "Magic Quadrant for Master
Data Management of Product Data"), which have converged around different user-oriented focal points.
Adoption and maturity of this technology varies by industry, technology adoption criteria and vendor
strategy.
Industry adoption varies where enterprises with physical products (not services) focus on this
technology longer than other enterprises, due to the need to share such data among
organizations in B2B relationships.
Innovators (Type A organizations) have adopted this technology and are deploying the second
master data domain (e.g., customer). Fast followers (Type B organizations) are active with the
technology and are implementing it. Mass-market (Type C) organizations are showing signs of
interest, as the global economy seems to be improving. This suggests the start of a significant
upswing in demand and hype.
Large megavendors (IBM, Oracle, Microsoft and SAP) have acquired and/or developed their MDM
of product data capability, and this is at the heart of their information architecture strategy.
Small, niche or custom-made solution vendors in this market — like Data Foundations, Kalido,
Orchestra Networks and DataFlux — continue to survive by offering differentiated capabilities.
Open-source MDM technology made a splash in 2009 with Talend, an open-source vendor of data
integration and data quality technology.
This market has spawned other MDM segments, MDM of asset data and MDM of purchased parts, two
other "things" of differentiation across industry, use case, drivers, implementation styles, etc. Some
vendors have specialized across these data domains. 2011 will be a key year for MDM of product data
vendors as they race against MDM of customer data vendors to claim the lead in mastering multiple
domains. By 2012, product MDM will introduce ways to manage generic master data domains and
another wave of vendor consolidation.
User Advice: Make MDM of product data part of your overall MDM strategy, and determine when, not
whether, to adopt MDM. Seek business benefits across all IT programs, and business intelligence and
application programs, that can be addressed with one information management approach, rather than
a piecemeal approach. Review the organization's capabilities and challenges in governance, process
and organizational change, toward uniformly managing product data, as well as its ability and political
willingness to use one product view. Educate the organization about the challenges and their effects on
the business.
Create a vision (how sustaining a single view of product/thing data supports preferred business
outcomes like reduced time to market) for what can be achieved. Consider creating a central MDM for a
product data repository that integrates with established source systems and becomes the system of
record for master product data in a synchronized, heterogeneous environment. Focus on key business
problems, and build a business case based on benefits. Analyze likely short- and long-term scenarios
where the enterprise wants to use an MDM system. This will guide your choice of a vendor, because
products have different sweet spots that differ by industry and implementation style. MDM of product
data systems must have rich, tight-knit facilities, including a comprehensive data model, information
quality tools, workflow engine and integration infrastructure. Evaluate MDM products, including those
embedded within business applications, based on objective, balanced criteria, including industry
experience. Start small, "think big," and deliver early and often.
Business Impact: Large, complex and heterogeneous enterprises and many midsize enterprises
spread product data across many systems. It is fragmented and often inconsistent. This makes it hard
for organizations to streamline business processes and operations efficiently, and to develop new, agile
business processes. Without a single view of a product, organizations can't effectively deliver better
effectiveness across the supply chain or a sustained and effective customer experience, leverage
operational benefits from merger and acquisition activity, identify efficiencies on the buy side with deep
insights on spending data analysis, or a competitive new-product introduction process. There will be
upsell and cross-sell inhibitors if organizations don't have a good handle on the products and services
customers have acquired. Thus, the single-product view is key for managing the value chain. The
impact on business applications and intelligence can be significant, as organizations grapple with the
complex workflow of this initiative. MDM and, specifically, MDM of product data, impact all business
applications and intelligence data stores, in that it becomes the centralized governance framework
across all data stores.
Benefit Rating: High
Market Penetration: 1% to 5% of target audience
Maturity: Early mainstream
Sample Vendors: DataFlux; IBM; Kalido; Oracle; Riversand; SAP; Stibo Systems; Teradata; Tibco
Software
Recommended Reading: "Mastering Master Data Management"
"Ten Best Practices for MDM of Product Data"
"How MDM Can Help Enterprises Achieve a Single View of Product"
"Toolkit Best Practices: Strategies for Successful MDM Implementation"
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look beyond just inventory to include all facets of the supply chain (sourcing, pooling, replenishment
strategies and demand priorities, for instance) in order to develop segmented supply chain response
strategies (e.g., plan inventory levels, sourcing points, postponement, routing rules and push-pull
decoupling points) for customer and channel segmentation. ISO technology is beginning to integrate
with and even encompass supply chain network design constraints and tools at one end and operational
supply chain planning (SCP) constraints and tools on the other.
Most ISO products use optimization-based technologies with limited business intelligence (BI) and
analytics capability. Over time, they're adopting event-based simulation and stochastic algorithms that
enable companies to represent uncertainty factors. Long-term business what-if evaluations and
scenario planning will eventually be commonplace to support any number of strategy and tactical what
ifs. Users will need frameworks to support the allocation of products to specific supply chain response
models.
Position and Adoption Speed Justification: A small number of vendors have defined the basis of
this technology. The ones that originally offered MEIO are expanding their functional footprints to help
users model any number of constraints, with a view to determining the range of responses needed to
achieve business objectives. These capabilities will eventually evolve into innovation and/or best-
practice templates. However, the majority of user deployments remain focused on inventory
optimization across multiechelon supply chains.
Fewer independent vendors remain in the market, since SCP vendors have either developed or acquired
the capability to offer as an add-on to their application suites. Longer term, it's likely the operational
and tactical inventory optimization capability will be commoditized into the SCP suites to support
integrated inventory policy optimization. More specialized modeling tools — the ones supporting
segmented supply chain design and postponement strategies, for instance — will likely merge and/or
integrate with IBP tools to support more strategic supply chain analysis and design.
User Advice: For complex, distribution-intensive industries like consumer products, retail, aerospace
and defense, utilities or telecom, use these and classic SCP tools to extract the greatest value from
inventory and supply chain assets.
Business Impact: ISO solutions enable enterprises to use supply chain assets — people, equipment,
inventory, money, suppliers, routes, locations and promises — more effectively, while at the same time
realigning or segmenting their use across multiple customer and channel segments.
Benefit Rating: High
Market Penetration: 5% to 20% of target audience
Maturity: Adolescent
Sample Vendors: IBM; JDA; LLamasoft; Logility; Oracle; SmartOps; ToolsGroup
Recommended Reading: "The SCP for Process Innovation Landscape"
"Top Supply Chain Planning Processes"
"Chaos-Tolerant Networks Will Drive Adoption of Inventory Strategy Optimization"
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The solution market for SCM mobility solutions remains highly fragmented, with no dominant vendors
yet emerging. A high percentage of early adopters have been forced to assemble and build their own
solutions, which has previously limited the market. The market is currently divided among large
equipment providers, applications providers and specialized system integrators. Over the next several
years, the market will consolidate and more holistic solution providers will emerge.
User Advice: Be realistic about the potential for mobile technologies to improve your SCM processes.
Maximizing their value will depend on an enterprise's ability to leverage real-time data in new or
improved processes, including automated alerts. These processes are based on consistent data
communication standards.
Develop a multiphase IT strategy that leverages mobile technologies' short-term potential, such as
vehicle inventory management, and establishes an infrastructure to fully exploit a technology's long-
term potential, such as automated appointment scheduling or real-time routing and scheduling.
Recognize that a real-time supply chain requires a real-time information chain beneath it. Without
wireless, such an information chain is not possible.
Business Impact: A mobile supply chain brings the real-time enterprise scenario closer to SCM.
Although initial solutions will augment established processes with moderate benefits from automation,
future generations of solutions will exploit mobility technologies to engineer new or significantly
enhanced processes that add greater levels of value.
Benefit Rating: High
Market Penetration: 5% to 20% of target audience
Maturity: Adolescent
Sample Vendors: Cadec; EDS; PeopleNet; Qualcomm; Rockwell Automation; Sprint Nextel; Symbol;
Trimble; Trimble (@Road); Xata
Recommended Reading: "Cool Vendors in Supply Chain Management, 2009"
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most sophisticated optimization systems, these external queries are held together with load tenders
and are optimally assigned at a specified point based on maximum resource use. For example, if there
is congestion during a particular period, then the system would not operate on a first-come, first-serve
appointment basis. Instead, the materials being delivered or shipped would be evaluated based on
criticality or capacity to determine which appointments must be scheduled during the congested period,
and which can be scheduled during alternative periods.
Position and Adoption Speed Justification: Scheduling functionality is a long-standing concern
among many of the world's largest shippers. However, recent challenges in carrier capacity, increasing
customer requirements for on-time shipment performance and the effects of government mandates
(such as hour-of-service rules that demand faster and more consistent shipment turnaround) have
driven more enterprises to evaluate this technology. With the economic slump, some of the business
drivers have eased, but pressures to reduce costs and increase productivity have kept up interest in
dock scheduling. In addition, a scheduling and appointment management system can be used in
conjunction with constraint-based warehouse optimization to begin creating a supply chain execution
model that moves more toward flow-through and cross-docking models.
Integration with warehouse management systems, transportation management systems or yard
management systems is becoming a more important consideration, and vendors of these types of
solutions are adding rudimentary, often Web-based appointment requesting and dock-door allocation.
More advanced solutions are emerging from the leading WMS vendors. Current models use portals to
request appointments, but increasing acceptance and availability of mobile applications offer the
potential to move this closer to the driver and mobile assets, as well as to add additional capabilities,
such as geo-fencing, wherein a GPS device notes when a truck is within a certain distance of the
distribution center and the appointment can then be electronically confirmed.
User Advice: Users with capacity constraints in their yard or dock areas should evaluate this system.
In addition, users that are capacity-constrained within the warehouse should evaluate dock scheduling
and optimization as part of an overall flow-through system. Users with large numbers of unnecessary
penalties for excessive dwell time caused by drivers having to wait for a dock should also look at these
technologies.
Business Impact: Dock scheduling and carrier appointment management reduces the amount of
administrative time required to set carrier appointments and manage the dock schedule. If managed
properly, this approach can improve relations with an enterprise's carriers, customers and suppliers
because the system can be more responsive than manual processes. Finally, scheduling and
appointment management can improve the overall throughput and capacity of a warehouse by
optimizing appointments and activities, reduce operating labor costs by reducing idle time and lower
transportation costs by increasing the number of cross-docking opportunities.
Benefit Rating: Moderate
Market Penetration: 5% to 20% of target audience
Maturity: Adolescent
Sample Vendors: i2 Technologies (JDA); Manhattan Associates; One Network; Oracle; RedPrairie
Recommended Reading: "Issues to Consider When Building a TMS Business Case and Evaluating
TMS Sourcing Options"
"TMS Sourcing Options Are Expanding With the Increase in the Number and Types of Products"
"Evaluating the Efficacy of TMSs as SaaS"
"Stratifying Transportation Management Systems: A Multilevel View"
"Magic Quadrant for Transportation Management Systems"
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inventory management. However, RFID and similar sensory technologies are emerging as a strong
asset management tool, with the ability to collect information about an asset as it moves through the
supply chain and provide asset location visibility. Many large carriers and shippers will consider RFID-
enabled projects because of the global adoption of electronic manifesting. Standard RFID technologies
alone cannot provide long-range geolocating, such as tracking the location of a vehicle miles from its
domicile, so look for sensory technologies to intertwine with RFID tags to observe and communicate
location and environmental conditions.
One trend in this market is the combination of sensory technologies (for example, RFID/GPS,
RFID/onboard computer, RFID/bar codes and RFID/Wi-Fi). Sensor-based combinations will become
more viable with the standardization of the interface between the tag and the sensor, which is currently
defined as Gen 2 Class 3.
It has been assumed that a network of connected RFID readers will emerge at ports of entry,
warehouses or mobile assets, such as on light rail, but this has not yet materialized beyond narrow
pilots. The technical and architectural requirements of sensory-based combinations, or "automated
identification technologies," will be dramatic in scale. This will be difficult and expensive to achieve
beyond specific usage scenarios. If the technical and architectural goals are achieved, it will be vital to
understand what to do with the data now being collected along a sensory supply chain to provide a
realistic return on investment. Although there have been some large-scale deployments (such as the
U.S. Department of Defense) that span multiple organizations, these specialized and often expensive
initiatives have not been fully commercialized. More narrowly focused offerings that are more
commercialized will help improve adoption.
Various technologies will coexist because each technology is suitable to specific process situations.
RFID use varies by segment, with asset management (such as tracking returnable assets and
transportation) leading adoption. On the government track, be prepared for RFID-enabled projects to
monitor assets with relatively long use cycles. Toll payment (900MHz) and contact-less cards
(13.56MHz) have been in use for some time, whereas applications in logistics and traffic management
are emerging. However, RFID will not replace bar codes or other mobility solutions, such as GPS.
User Advice: Monitor and be aware of privacy impact assessments. Participate in RFID-enabled
tracking systems, if only as a pilot project, to gain experience and positioning for the widespread
adoption of larger, RFID-based system implementations in the future. RFID will require an
infrastructure beyond tag/reader, necessitating data storage, network performance, middleware and
applications.
Business Impact: Major initiatives that use or propose to use this technology will include tracking of
assets, loss prevention, inventory management, rail transportation, logistics, toll payment, traffic
management and transportation asset tracking and control. The impact and business value will vary
across industry segments, proposed use or business solutions and regions. Within an enterprise, the
value will be derived from the potential additional benefits of using RFID technologies versus other
identification technologies, such as bar coding. In these cases, a cost-benefit analysis should compare
the various identification technologies, and RFID should only be chosen if the business case proves it to
be the better approach.
The grander yet still elusive vision is the value RFID would offer as part of the extended supply chain
and logistics challenge, where it would be used to track, monitor and facilitate the flows of products
and modes of transportation across the global supply chain. To achieve RFID's end-to-end vision,
standards must emerge that define the requirements the system components must follow to operate
across enterprises and geographies. For example, global supply chains will require a set of common
standards to facilitate proper interchanges of information across the entities involved in an international
shipment transaction.
As the vision for RFID has evolved away from a replacement for bar codes to places where it could offer
unique benefits, there exists potential for RFID to be transformational as unique and highly valuable
solutions emerge. Indeed, not all projects will be transformational, and the value will depend on the
RFID use case.
Benefit Rating: Transformational
Market Penetration: 5% to 20% of target audience
Maturity: Emerging
Sample Vendors: Alien Technology; Atmel; Hi-G-Tek; IBM; Intermec; Lockheed Martin; Motorola
(Symbol); Savi; Texas Instruments
Recommended Reading: "Securing UHF RFID Passive Tag Communications"
"RFID in the 2009 Supply Chain: Overview and Best Practices for Maximum Investment Value"
"Cool Vendors in Supply Chain Management, 2009"
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Business Impact: DOM can significantly reduce costs, such as the interoperation costs for
coordinating a sale with a partner, eliminate manual intervention during a sale by enabling the
organization to work with partner systems information and eliminate manual intervention required to
follow through or correct partner orders. DOM can also enable an organization to sell products and
services it doesn't own or stock — selling a product or service that is fulfilled by a channel partner or
distributors. DOM can create partner loyalty by reducing the number of errors a partner needs to
resolve after a sale and decreasing the amount of support during a sale. Additionally, organizations are
beginning to use DOM solutions for their multichannel and cross-channel order management where
orders now go into a single DOM queue from multiple customer channels.
Benefit Rating: High
Market Penetration: 1% to 5% of target audience
Maturity: Adolescent
Sample Vendors: CommerceHub; Jagged Peak; Manhattan Associates; Oracle; OrderMotion; SAP;
Sterling Commerce
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In some cases, SaaS is simply an alternative method for sourcing SCM functionality. However, in the
SCM areas where software as a service is used most, such as supply chain collaboration, transportation
management and global trade management (GTM), this approach offers additional characteristics that
support these multienterprise processes and differentiate it from on-premises implementations of the
same functionality.
In the case of transportation management systems, a distinguishing characteristic of SaaS TMS is the
availability of a pre-onboarded carrier network that gives shippers electronic access to a large
population of freight carriers. With SaaS TMS, users can theoretically tender shipments to any carrier
already on the network. In most cases, however, shippers will only work with carriers with which they
already have negotiated a contract.
In GTM, there are two areas where SaaS is prevalent: trade compliance and global visibility. With
global visibility, the differentiating characteristic of SaaS is similar to SaaS TMS. There is a pre-
onboarded network of carriers and other trading partners that participate in international shipments,
wherein users are electronically connected to organizations on the network. With trade compliance, the
differentiating characteristic of SaaS is on-demand access to trade compliance content — the rules and
regulations for conducting cross-border trade transactions. Because compliance content can change
daily, SaaS allows the vendor to update content once for all users, whereas on-premises models
require a content publishing capability.
SaaS in other SCE areas, notably warehouse management systems, is not as prevalent, nor in demand
by users, because other SCE areas have not been as affected by the need to operate multienterprise
processes. However, there are some vendors beginning to offer SaaS versions of WMS. In these cases,
SaaS is simply an option to on-premises deployments of the technology, making the business drivers
for SaaS more economic.
Position and Adoption Speed Justification: On-premises applications are still the dominant delivery
vehicle for SCE applications. Over all, SaaS represents less than 20% of the SCM application market,
almost all of which is with TMS and GTM. However, SaaS is growing in these areas, having moved from
just one option to a preference for many users. SaaS is becoming the preferred TMS delivery option for
smaller shippers (with annual freight spending of less than $50 million per year), and it is a viable
alternative in half or more of large shippers considering TMS. Overall, market penetration of SaaS TMS
remains modest, but in the aforementioned categories, it is growing rapidly. And for GTM, most of the
vendors favor SaaS deployment; vendors that offer on-premises are the exception. In other areas, like
supply chain planning and warehouse management systems, growth is negligible. Finally, the focus for
SaaS WMS has largely been on the very low end of the WMS market. While the numbers of customers
of SaaS WMS have grown, vendor revenue remains very modest.
User Advice: Understand and evaluate the trade-offs between rich functionality (which, for most
categories other than GTM, favors leading on-premises SCE applications) and upfront costs (which, in
most cases, favor SaaS). Companies with complex requirements that want and need more than the
basic SCE capabilities should focus on market-leading SCE solutions, which are primarily on-premises
solutions today. Companies with less-stringent requirements or ones looking for an interim solution —
less than three to five years of planned solution life — should consider SaaS SCE. Model costs for on-
premises and SaaS to at least five to seven years. This will enable users to compare the total cost of
ownership of looking at long-term subscription costs compared with upfront license and annual
maintenance costs, taking into consideration possible annual increases. Carefully review
implementation costs for which many SCE SaaS vendors overstate their advantages.
Business Impact: In general, SaaS SCE applications deliver the same business advantages of the
relative SCE application category, whether on-premises or SaaS. However, in TMS and GTM, the
availability of a pre-onboarded network improves the ability to collaborate with trading partners,
allowing for added flexibility for users to change their networks when and if needed, without the burden
of onboarding new trading partners each time.
Benefit Rating: Moderate
Market Penetration: 20% to 50% of target audience
Maturity: Early mainstream
Sample Vendors: 3PL Central; Descartes Systems Group; E2open; GT Nexus; Integration Point; JDA
(i2); LeanLogistics; Log-Net; Management Dynamics; Manhattan Associates; QuestaWeb; RedPrairie;
Sterling Commerce; Syncron; TradeBeam; TradeCard; Wesupply
Recommended Reading: "The Emergence of the Multienterprise Business Process Platform"
"Issues to Consider When Building a TMS Business Case and Evaluating TMS Sourcing Options"
"TMS Sourcing Options Are Expanding With the Increase in the Number and Types of Products"
"Evaluating the Efficacy of TMSs as SaaS"
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Yard Management
Analysis By: Dwight Klappich
Definition: Yard management is a set of capabilities, which is normally closely associated with
warehouse management, that deals with the management and process execution tasks and activities
related to or that impact a company's shipping yard and dock doors. It takes into consideration
equipment/facility/employee constraints and activity demands, focusing on the location and movement
of trailers in the yard. The scope typically starts at the guard-gate with check-in/check-out,
determining where to move incoming trailers, identifying where trailers are parked, coordinating
movements in the yard via onboard capabilities provided to "yard jockeys" and, increasingly,
coordinating with dock scheduling. The market is dividing between traditional data capture mechanisms
for locating assets and the use of real-time location (RTL) technologies, such as RFID, for automatically
identifying the location of assets.
Position and Adoption Speed Justification: In modern, large, high-volume logistics operations, the
yard has become an extension of the warehouse, both in terms of synchronizing the yard with dock
doors for shipping and receiving and in using the yard as a supplementary storage location.
Coordinating and managing the flow and movement of vehicles and trailers throughout the yard has
become an important activity for logistics operations. Yard management can be fairly rudimentary, with
the application simply noting manual entries of asset movements in and out of parking spaces to very
advanced use of real-time, asset-tracking technologies, such as RFID and related technologies. Real-
time visibility of asset movements is well-addressed by mature applications, while RTL technologies are
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Capable-to-Promise Systems
Analysis By: Dwight Klappich
Definition: Capable-to-promise (CTP) systems enable enterprises to commit to customer orders based
on production/resource capacity (available or planned) and inventory. CTP solutions consider resource
(equipment, people and materials) availability, capacities, constraints, work in progress or planned
work, multiple steps in the production process, multiple nodes in a supply chain network (including, in
some sophisticated use cases, supplier networks) and various rules to calculate accurate promises.
Newer systems also consider nonproduction-related constraints, such as transportation, which enable
delivery factors (such as shipping mode options) to be factored into promise dates.
Position and Adoption Speed Justification: CTP products are available and proven, but many users
struggle with issues of data availability, accuracy, information latency and cultural change. Although
CTP technology has been around for several years, adoption has not been widespread, and further
adoption will remain relatively slow because of user demand, not for lack of CTP technology. Many
customers have resorted to less-sophisticated, available-to-promise (ATP) systems, even though
visionaries are already talking about concepts beyond CTP, such as profitable-to-promise systems.
Historically, best-of-breed solutions have been the most robust alternatives, and they created
integration challenges. However, some ERP vendors are enhancing their CTP capabilities, but they are
not likely to see increased adoption until the economy supports more long-term investment efforts
needed to support CTP.
User Advice: CTP is a more sophisticated technology than ATP because it must look at more resources
and constraints. Select the appropriate approach that yields the desired level of customer service.
Recognize that CTP requires greater integration and more data from supply chain planning solutions
than ATP engines.
Business Impact: CTP systems enable enterprises looking at postponement, make-to-order and
assemble-to-order strategies to better use their assets and improve customer satisfaction by providing
better and more informed promise dates.
Benefit Rating: Moderate
Market Penetration: 20% to 50% of target audience
Maturity: Mature mainstream
Sample Vendors: Adexa; i2 Technologies (JDA); Infor; JDA; Logility; OM Partners; Oracle; Quintiq;
SAP
Recommended Reading: "MarketScope for Supply Chain Planning: Process Automation, 2009"
"Confusion Escalates in SCM Demand Planning Market"
"SCM Requires the Alignment of Decision-Making Solutions"
"Predicts 2009: How ERP and the Supply Chain Are Adapting to a Changing Economy"
"A Roundup of Supply Chain Planning Research"
"Use the Gartner SCM Maturity Model to Show the Business Benefits of SCM Investments"
"Roundup of Supply Chain Execution Research, 2008"
"The Four Technologies Most Used to Aid in Strategic Decision Making"
"Supply Chain Analytics: Driving Toward Product Performance Management"
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SCM in India
Analysis By: Yanna Dharmasthira; Denise Ganly; Asheesh Raina
Definition: Supply chain management (SCM) refers to the processes of creating and fulfilling demands
for goods and services. It encompasses a trading-partner community engaged in the common goal of
satisfying end customers.
Position and Adoption Speed Justification: Although SCM is gaining momentum, market
penetration in India remains low, especially in the small or midsize business (SMB) market.
Organizations continue to prioritize or remain focused on implementing and improving core applications
(such as ERP).
As the economic situation improves, organizations are back in growth mode, and market competition is
increasingly stiffened. Indian organizations that have adopted ERP and appreciated its benefits are
moving on to improve their supply chain capabilities, seeking cost optimization and market
competitiveness. The fast-growing Indian economy continues to trigger growth in all vertical industries.
This, in turn, increases demand for more sophistication in logistics and capability for supply chain
forecasting and planning, specifically in manufacturing, retail, distribution and automotive.
As the Indian manufacturing and distribution industries are integrating with the global supply chain
market, the need to trace goods in the supply chain cycle is increasingly crucial in the competitive
global trading environment. In addition, from the sourcing perspective, organizations continue to
improve their strategic purchasing cycle.
User Advice: The maturity of SCM technologies in India continues to lag behind the North American
and European markets, as well as mature markets within Asia/Pacific. Indian organizations considering
adopting SCM must ensure that their vendors are committed to the Indian market for their solution and
support. Obtain relevant Indian market references for any technologies under consideration. Advanced
SCM initiatives are likely to be needed to manage increasingly complex supply chains in India's
booming manufacturing industries, including steel, automotive and retail.
Because SCM skills are scarce in India, ensure that there are consulting resources for the deployment
and support of products under consideration, and expect to pay a premium for these resources. Given
the skill shortages, software as a service and cloud deployment may provide alternatives to in-house
deployment of SCM technologies, especially for SMBs. Because many SCM projects rely on collaboration
with trading partners that may lack SCM skills, enterprises should include trading partner training and
joint business planning as initial steps in an SCM project. This proved to be essential for many North
American and European SCM projects.
Business Impact: SCM affects all areas of an organization that deal with the processes of creating
and fulfilling demand. Supply chain capabilities will improve sourcing, supply chain planning and
execution processes. Once SCM consultants and skills are more prevalent in the local market, the
adoption toward mainstream will be more rapid.
Benefit Rating: High
Market Penetration: 5% to 20% of target audience
Maturity: Early mainstream
Sample Vendors: Ariba; JDA; Oracle; SAP
Recommended Reading: "Forecast: Enterprise Software Markets, Worldwide, 2009-2014, 2Q10
Update"
"User Survey Analysis: Plans for SaaS Application Software Use, India, Singapore, Hong Kong, 2009"
"Key Issues for SCM IT Leaders, 2010"
"Market Share: All Software Markets, Asia/Pacific and Japan, 2009"
"Market Trends: Supply Chain Management, Worldwide, 2009-2010"
"The Mahindra Group: Closing the supply chain loop"
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Integration as a Service
Analysis By: Benoit Lheureux; Paolo Malinverno
Definition: Integration as a service (IaaS) is integration functionality — i.e., secure B2B
communications, data and message translation, and adapters for applications, data and cloud APIs —
delivered as a service. IaaS is always scalable, sometimes elastic, but is almost always deployed with
enough multitenancy capabilities (see "Reference Architecture for Multitenancy: Enterprise Computing
'in the Cloud'") such that one instance of a provider's IaaS functionality can support multiple B2B
integration projects across multiple B2B communities.
There are two categories of IaaS:
IaaS for traditional e-commerce projects
IaaS for cloud service integration
The first category has existed for over 20 years and is associated with traditional e-commerce (supply
chain integration) projects, and the second category has emerged in the last four years in conjunction
with the emergence of cloud services. While these two forms of IaaS share much in terms of their
definitions and functionality, they differ substantially in terms of their approach to implementation,
usage scenario, vendor landscape and user ecosystem.
IaaS for Traditional E-Commerce
Twenty years ago, providers of IaaS were generally called value-added networks (VANs), trading
networks, Internet VANs, etc. However, in recent years, traditional EDI vendors have evolved, and new
vendors have introduced new types of IaaS to address various forms of e-commerce. IT providers have
labeled their various IaaS offerings as VANs, transaction delivery networks, Web services networks,
business process networks, business integration networks, business process hubs, integration service
providers, marketplaces, EDI SaaS, integration SaaS and so on. Regardless of what vendors have
named their B2B services, we have considered and rated them as integration service providers for the
purposes of the "Magic Quadrant for Integration Service Providers." Nearly 100 IT service providers
worldwide offer some form of IaaS, but other than that point of commonality they are exceptionally
diverse in their overall portfolios of IT services and industries served. Such providers include:
Evolving EDI VANs — for example, GXS, Inovis and Sterling Commerce
Emerging Internet VANs — for example, EasyLink Services International, Hubspan and SPS
Commerce
Providers from a particular industry (but now serving multiple industries) — for example,
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potential IaaS provider can meet their particular country-by-country requirements, including
local-language support, e-invoice formats and regulations, and in-country IaaS network points of
presence.
When negotiating an agreement with providers, look for transparent and predictable pricing.
Customers are increasingly signing deals with "bundled" B2B integration features, such as a
tiered number of external business partners and volume, fixed-price in-line translation, and
process visibility that associates relevant B2B documents (for example, purchase orders,
advanced shipment notices and invoices for order to cash).
Refer to the "Magic Quadrant for Integration Service Providers," "Who's Who in Cloud-
Computing/SaaS Integration, Volume 1" and "Who's Who in Cloud-Computing/SaaS Integration,
Volume 2" to gain an understanding of the highly diversified IaaS vendor landscape.
Integration projects can be deceptively complex, and, by itself, IaaS doesn't always sufficiently
address customer requirements. Determine whether your IaaS provider also offers such services
as B2B integration outsourcing (see "Taxonomy and Definitions for the Multienterprise/B2B
Infrastructure Market").
Business Impact: IaaS has been widely deployed worldwide for more than a decade. In 2009, IaaS
generated more than $1 billion in IT revenue worldwide for traditional e-commerce projects and more
than $50 million in IT revenue for cloud service integration. This makes IaaS one of the most widely
adopted and well-established forms of application infrastructure delivered as SaaS (see "Application
Infrastructure for Cloud Computing: An Emerging Market"). Although many companies still implement
B2B projects themselves, leveraging a combination of in-house integration middleware and B2B
standards or Web APIs, companies of all sizes in all industries and in most well-developed regions have
the option to outsource their B2B infrastructures, rather than licensing and deploying some form of in-
house B2B integration software.
Multienterprise projects are typically mission-critical, but the increased modernization, reliability and
scale provided by most providers of IaaS mean that companies have a viable alternative to B2B
software and in-house B2B infrastructure projects. Hence, from a sourcing point of view, they should
treat B2B infrastructure investments like any other IT investment when choosing between
implementing an in-house B2B infrastructure or relying on IaaS.
Even the simplest in-house, single-server B2B infrastructure project may require off-site hosting, high-
availability server configurations, disaster recovery capabilities, monitoring tools, archival of business
documents and a well-trained staff. Service providers with well-established, multitenant infrastructures
can generally achieve economies of scale to deliver such capabilities. For common integration
scenarios, they often provide some form of configurable or customizable prepackaged integration
solutions. This means they have the opportunity to save companies 10% to 30% on the cost of
implementing B2B infrastructure themselves in-house, by leveraging their packaged integration, as well
as fault-tolerant and disaster recovery capabilities across multiple B2B communities.
Benefit Rating: High
Market Penetration: More than 50% of target audience
Maturity: Mature mainstream
Sample Vendors: Bluewolf; Boomi; BT Group; Cast Iron Systems; Comarch; Crossgate; DiCentral;
E2open; EasyLink Services International; Elemica; GXS; Hubspan; Informatica; Inovis; Kewill; Liaison
Technologies; Mincom; nuBridges; OmPrompt; Perfect Commerce; Pervasive Software; Railinc; RedTail
Solutions; Seeburger; SPS Commerce; Sterling Commerce; T-Systems; Tieto; True Commerce
Recommended Reading: "Forecast: Sizing the Cloud; Understanding the Opportunities in Cloud
Services"
"Who's Who in Cloud-Computing/SaaS Integration, Volume 1"
"Who's Who in Cloud-Computing/SaaS Integration, Volume 2"
"Cool Vendors in Multienterprise B2B, 2010"
"Magic Quadrant for Integration Service Providers"
"SaaS Integration: How to Choose the Best Approach"
"Cost Savings Finally Make the (European) E-Invoicing Steamroller Pick Up Speed"
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the optimization. For this reason, understanding the available capacity and continuing to improve
demand sensing shouldn't be overlooked.
To do factory scheduling right, great attention must be paid to having accurate manufacturing master
data. Important elements include data from formulation systems, plant HR master data on
maintenance-mechanic and factory-worker skill levels and capabilities, changeover times and plant
variances, plant capabilities of each asset for each product, yields and yield variances and the reliability
of systems for first-pass yield. To make these systems work, the master data must be reviewed and
updated quarterly.
The provider landscape is industry- and manufacturing-style specific. As a result, technology providers
tend to be either mass market and generalists, or very small firms with less-established
implementation methodologies and a greater risk of going out of business. It is crucial the buyer is
extremely clear on the objectives and requirements for planning — for example, what's to be modeled,
how it's to be modeled and the need for what-if requirements — even more so than for other types of
advanced planning and scheduling systems.
Business Impact: Global manufacturers, on average, operate fleets of over 25 factories and
outsource some manufacturing to third parties. By leveraging real-time, factory-scheduling
technologies, enterprises can support better capable-to-promise strategies and improve customer
service with improved promise-date compliance.
Benefit Rating: Moderate
Market Penetration: 20% to 50% of target audience
Maturity: Adolescent
Sample Vendors: Apriso; AspenTech; JDA; Optessa; Oracle; Plex Systems; Rockwell Automation;
SAP; Synchrono; WAM Systems
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Definition: Strategic network design tools are typically stand-alone applications deployed on premises
or through external consulting services to help organizations analyze and design their distribution,
transportation and manufacturing networks. Companies can also use these products to support the
evaluation of different risk scenarios and options for strategic sourcing. Given specified constraints,
these applications use sophisticated mathematical solvers to optimize designs for network costs,
service levels and, increasingly, carbon emissions to find the optimum solution for a prescribed set of
inputs. Some simulate the performance of a particular network design over a specified period of time so
that users can study the behavior of a supply chain over a number of months or years.
Historically, consultants primarily used these tools to help companies realign their networks. The tools
were periodically used (about every three to five years) to help make strategic supply chain design
decisions. Today, many companies run these tools more frequently, using strategic network design to
facilitate tactical decisions, such as addressing seasonal builds, realigning their networks based on
seasonal supply-demand fluctuations and evaluating the network impact of a new large customer or
market. These tactical scenarios are then evaluated as part of a company's sales and operations
planning (S&OP) process.
Position and Adoption Speed Justification: Strategic network design tools have been in the market
for many years. They're used extensively by a limited number of sophisticated enterprises with
complex, multigeographical supply chains. With an increase in globalization and supply chain
complexity, more organizations want to use these tools to help optimize and simulate their supply chain
networks. Additionally, as strategic network design becomes more tactical, the need for solver
capabilities that can drive a higher level of granularity across global networks will become more
important.
Organizations will also need to link strategic network design applications with inventory strategy
optimization (ISO) tools so that the supply chain design and making specific inventory targets
operational can be modeled explicitly. Those that don't have the internal skills and expertise needed to
support this technology in-house will look to source strategic network design as a service from either
consultancies or vendors, which will build and operate the models on the customer's behalf.
User Advice: As the complexity of a company's supply chain increases, and as supply chain costs
become a greater pain point, companies should investigate strategic network design tools to help
identify more cost-effective supply chain models to deploy. These tools are available from specialized
vendors and some best-of-breed, broad-line SCP vendors.
Business Impact: These applications enable companies to identify significant cost reductions in their
networks through redesign, consolidation and optimization.
Benefit Rating: High
Market Penetration: 5% to 20% of target audience
Maturity: Mature mainstream
Sample Vendors: Barloworld Supply Chain Software; IBM; Insight; JDA; LLamasoft; OM Partners;
Oracle
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construct goal times for the performance of each discrete task in the warehouse. These are called
"engineered labor standards." This is done at a detailed level and can be based on a library of best
work standards that specialist implementers and vendors have developed. For example, the difference
in time it takes to reach the top shelf of a warehouse rack versus what is required at eye level is taken
into account. One of the most important components of this system is the incorporation of travel times
into the goal time. For this reason, it's important to pay attention to how the travel paths are
constructed in the system.
Once these parameters are determined, each pick task is analyzed by the warehouse management
system (WMS) or labor management system (LMS) to determine its goal time based on the individual
elements of that task, such as beginning and ending zone, person assigned the task and time on shift
(to account for things such as fatigue). Then, the actual time is compared to the goal time for the
specific task, and achievement is evaluated. This is superior to productivity management systems that
evaluate only the completion of an aggregate number of tasks during a work period (such as picks per
hour) because the more precise specifications of goals and performance enable the manager to
properly evaluate work, counsel for improvement and fairly compensate good performance. However,
most vendors have not completed the technology projects to enable the systems to fully comply with
restrictive labor laws outside the U.S. In addition, there are still few reference customers on these
systems outside the U.S., although some European companies use them at the aggregate level.
While basic labored reporting is mature, leading-edge systems are being extended to support labor and
resource planning and scheduling. The goal is to provide tools that will consider all the activities of the
warehouse, projected over a time frame, so that the labor and resource requirements can be more
accurately forecasted and scheduled. This trend is accelerating as warehouse managers strive to be
more proactive in planning and managing the work within their warehouse operations, taking into
consideration constraints and projected work requirements.
Position and Adoption Speed Justification: LMS use is mature in large grocery facilities, but the
technology and engineering standards have expanded during the past several years, making the
technology and labor management processes applicable to most midsize to large warehouse facilities.
However, most buyers of LMS remain users with large workforces working in large warehouses. LMSs
were once specialized systems, but with general use, there's more emphasis on integration with the
WMS and the technical fit and finish of the systems.
Most LMS implementations have been in the U.S. European companies have generally resisted this
technology because of local labor laws or perceived cultural constraints. In parts of Europe, unions or
work councils restrict detailed worker oversight from the use of tools such as labor management.
Therefore, LMSs are used only at the aggregate resource management level. Some vendors have
begun focusing on deployments outside the U.S., amending systems to meet local conditions. Gartner
expects these changes as well as real-world experience in other countries to accelerate adoption by
users outside the U.S. LMS can be an add-on to established WMSs.
Although the value is high and the market is mature, adoption as a percentage of the total addressable
market is low. There are several reasons for this. Many companies continue to operate aging WMSs
that do not have LMS as part of the package. These users are first focused on upgrading to a newer
WMS. However, we find that LMS is now a common requirement for a new WMS. Another reason is that
an LMS historically fit certain environments like grocery because the solutions were not strongly
packaged. Plus, the total cost of ownership (TCO) and the time, effort and cost to implement and
support LMS was high, so only operations with large workforces could justify it. As LMS has matured
and become more standard and prepackaged, the costs and complexity have come down, opening the
LMS market to more and smaller warehouse operations.
User Advice: Most users with over 100 workers in their warehouses in the U.S. should evaluate or
implement an LMS based on engineered standards. However, it isn't enough to just install the system.
Users must be willing to incorporate best work practices as well as build a program of worker training
and rewards based on the system. This requires a high degree of change management. Users that work
with labor unions should employ a consultant with specialized expertise in working with labor unions
regarding the deployment of labor management systems to ensure that a win-win business case and
business process are developed. Users outside the U.S. should begin evaluating LMSs to determine
whether there are real or perceived issues with cultural fit and legal regulations.
Business Impact: A typical warehouse might be performing at 50% to 70% of optimal performance
through the use of productivity management tools and a good WMS. The implementation of an LMS can
bring a warehouse to 90% to 100% of optimal performance. The deployment of pay-for-performance
schemes based on engineered labor standard goal times can move a warehouse to 110% to 120% of
"optimal" levels for true best-in-class performance. Sometimes, these systems can be used to evaluate
temporary labor to determine whether a full-time offer should be extended based on performance.
The scheduling components can be used to forecast labor requirements and reduce overtime
expenditures. The time-and-attendance systems can reduce the need for costly third-party systems
Benefit Rating: High
Market Penetration: 20% to 50% of target audience
Maturity: Early mainstream
Sample Vendors: Catalyst International; CyberShift; HighJump Software; Infor (WFM Workbrain);
Kronos; Kurt Salmon Associates; Manhattan Associates; RedPrairie; SAP
Recommended Reading: "Magic Quadrant for Warehouse Management Systems"
"Supply Chain Management Vendor Guide, 2008"
"Gartner's SCM Scenario: Post-Lean Supply Chain, 2008 and Beyond"
"Key Issues for SCM, 2009"
"Predicts 2009: How ERP and the Supply Chain Are Adapting to a Changing Economy"
"A Roundup of Supply Chain Planning Research"
"Use the Gartner SCM Maturity Model to Show the Business Benefits of SCM Investments"
"Roundup of Supply Chain Execution Research, 2008"
"Stratifying WMS: A Multilevel View"
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Appendices
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Phase Definition
Technology A breakthrough, public demonstration, product launch or other event generates significant press and
Trigger industry interest.
Peak of Inflated During this phase of overenthusiasm and unrealistic projections, a flurry of well-publicized activity by
Expectations technology leaders results in some successes, but more failures, as the technology is pushed to its
limits. The only enterprises making money are conference organizers and magazine publishers.
Trough of Because the technology does not live up to its overinflated expectations, it rapidly becomes
Disillusionment unfashionable. Media interest wanes, except for a few cautionary tales.
Slope of Focused experimentation and solid hard work by an increasingly diverse range of organizations lead
Enlightenment to a true understanding of the technology's applicability, risks and benefits. Commercial off-the-shelf
methodologies and tools ease the development process.
Plateau of The real-world benefits of the technology are demonstrated and accepted. Tools and methodologies
Productivity are increasingly stable as they enter their second and third generations. Growing numbers of
organizations feel comfortable with the reduced level of risk; the rapid growth phase of adoption
begins. Approximately 20% of the technology's target audience has adopted or is adopting the
technology as it enters this phase.
Years to The time required for the technology to reach the Plateau of Productivity.
Mainstream
Adoption
Benefit Definition
Rating
Transformational Enables new ways of doing business across industries that will result in major shifts in industry
dynamics
High Enables new ways of performing horizontal or vertical processes that will result in significantly
increased revenue or cost savings for an enterprise
Moderate Provides incremental improvements to established processes that will result in increased revenue or
cost savings for an enterprise
Low Slightly improves processes (for example, improved user experience) that will be difficult to translate
into increased revenue or cost savings
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