i2 this week launched a solution aimed at catapulting S&OM (sales and operations management) to the “next generation,” where software and services will help customers make better and faster decisions in response to todays rapidly changing and increasingly complex business problems.
The first prospects for i2 Technologies Inc.s new S&OM Solution will consist of companies in the CPG (consumer packaged goods), high-tech and auto industries, in which supply and demand has gotten “so variable that (sales) plans often fail,” said Karen Laucka, i2s solutions director for S&OM, in an interview.
Laucka acknowledged that many of i2s competitors also provide S&OM functionality. But, she added, i2s solution represents the start of a “next generation” approach to S&OM, providing users with BI (business intelligence) that will support quick, flexible, and effective decision-making.
Some analysts agree that supply chain vendor i2s new S&OM Solution puts it way ahead of the rest of the pack.
“S&OM is a business process to balance demand and supply. [All businesses] do that,” said Stan Elbaum, an analyst at the Aberdeen Group.
But S&OM has changed dramatically in recent times, according to the analyst. “Historically, [businesses] would do S&OM on a monthly or maybe a quarterly basis. Now, some of them are balancing demand and supply every day,” he told Ziff Davis Internet News.
“In the past, if sales said there would be more demand, it was the job of the supply side to figure out how to meet that demand. [But today], the supply side might ask, I have excess capacity, so why dont I tell sales to push harder?”
Companies often change courses in midstream, when it turns out that their original forecasts were wrong and their plan havent worked, Laucka said.
Playing into the increased complexity are wide variances in the profitability of different products, according to Elbaum.
To Elbaum, i2s approach differs from that of smaller business process flow specialists, as well as S&OM offerings from both i2s supply-chain rivals and big ERP giants such as SAP AG and Oracle Corp.
“But i2 has managed to translate into software the whole system of planning, execution, analysis and re-planning,” he said. “There might be others out there who can do this, but at this point, we havent seen anything else that can.”
Next Page: Scenario Management looks at “what-ifs.”
i2 Launches New Business
On the product side, i2s S&OM Solution combines i2s workflow management engine with Scenario Management, a new “what-if” simulation tool from i2, Laucka said.
Now several years in the making, the workflow management engine is a great example of an SOA (service-oriented architecture) in action, Elbaum said. “It is Web-oriented, and it calls (business process) models as services from a central location,” according to the analyst.
By using the workflow management engines BI to perform root-cause analysis, customers can quickly get to the bottom of a situation, according to Laucka.
“If you have excess inventory, for instance, why is this problem happening?” the i2 executive said. “Thats where our domain expertise comes in; its manifested in the software.”
Aberdeens research shows that, “when theres a variance, [businesses] arent getting to the root of the problem 90 percent of the time,” Elbaum said. If a product shortage crops up, for instance, a company might blame the warehouse, when in reality, the manufacturing department missed its deadline.
The new Scenario Management tool, on the other hand, lets customers simulate different possible remedies for a problem, to gauge possible effects before implementing a new business plan.
Customers can access the various “scenarios” via dashboard or portal views provided through i2 Studio, an ingredient in i2 software suites such as Demand Planner, Supply Chain Planner and Factory Planner.
“If a huge order comes in unexpectedly, for instance, you can recast your plans very quickly,” Laucka said.
Now on i2s roadmap are plans for further integration between the S&OM Solution and “Monte Carlo” risk management and mathematical probability capabilities already present in i2s supply chain software.
“Were going to wrapper these in a new UI (user interface), but we dont have a timeframe for that yet,” Laucka said.
Some of i2s customers are already using the risk management and mathematical probability capabilities “on kind of an alpha basis,” Elbaum said.
The features provide “linked probabilities,” according to the analyst. When it comes to projecting the effects of price changes, for example, some risk management software will simply run the price change and keep other variables the same.
“Yet we know that a price change can also change probabilities for cost or [sales] volume. I2s software embeds all of this in software and sort of spins a Monte Carlo wheel across it,” he said.
Next Page: New solution is heavier on services.
i2 Launches New Business
But according to Laucka, i2s new S&OM solution will be even “heavier on services than products,” in line with i2s recently articulated strategy to increase its emphasis on services.
For most customers, the first step in the S&OM Solution will involve engaging with i2 consultants for three to four weeks for a diagnosis on how to use their systems in ways more in line with S&OM best practices.
Customers might find out how they can get improved visibility into analytics, for example, or better performance management.
These consulting services can be “fairly inexpensive,” Laucka said, citing prices in the under-six-figure range.
“Youre not looking at something thats large-scale here. The consulting can be very tactical, to get rapid benefits for the customer,” she said.
Implementation of new software tends to be pricier, however, typically pushing costs into the mid-six figures, according to Laucka.
In contrast to some other companies, i2 doesnt view services as a “loss leader,” said Aberdeens Elbaum.
“[i2] is not going to walk away from services. Theyre handling the whole spectrum of products-to-services. But I do think that, at the end of the day, [the S&OM Solution] will accelerate software sales,” he said.
Elbaum also pointed out that i2s workflow engine underlies a lot of other applications, too.
“It seems as though i2 is kind of using [the SO&M Solution] as an illustration of how its [workflow engine] can be used to manage a process,” the analyst said.
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