SUPPLY CHAIN IN THE CLOUD: A PRIMER FOR NETWORKED TRADING COMMUNITIES. An E2open White Paper. Contents. White Paper

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1 White Paper SUPPLY CHAIN IN THE CLOUD: A PRIMER FOR NETWORKED TRADING COMMUNITIES An E2open White Paper Contents Executive Summary What is Cloud Computing? IT Benefits of Cloud Computing Business Benefits of Cloud Computing Why Supply Chain in the Cloud? Powering Global, Multi-Enterprise Supply Chains Security & Availability Conclusion e2open.com White Paper: Supply Chain in the Cloud

2 Executive Summary Most of us use cloud applications every day and just don t think about it ondemand movie viewing, Google Docs, online banking, WebEx. But in the world of business applications, people are still concerned that this is just marketing hype and wonder if it s really secure and reliable. Fear of the unfamiliar, fear of unknown vendors, and fear of an unstable economy are probably the biggest factors standing in the way of broader adoption. The cloud infrastructure is growing stronger and more reliable, with bigger vendors getting more skin in the game every day. We believe that eventually virtually all IT service delivery will be cloud delivered. But, like the march toward a PC on every desk, it will take time probably another 8 to 10 years. A desire to move to cloud won t be a driving factor in itself; rather, when it s time to upgrade to the next-generation platform, cloud computing will (eventually) be the obvious choice. E2open is the first supply chain solution to fully embrace cloud computing. E2open enables a network of trading partners to connect, work together seamlessly, and make smarter decisions faster with clear lines of crosscommunity visibility. This white paper presents E2open s unique, flexible cloud computing approach to multi-enterprise supply chain management and demonstrates business and IT benefits companies can realize quickly with a cloud solution. What is Cloud Computing? The technology industry is rife with acronyms and terminology that is tough enough for IT experts to keep on top of, much less for business and supply chain experts to wade through. With market pundits like IDC declaring that the cloud computing market could reach $42 billion by 2012, this term will not be going away any time soon. So let s strip out the marketing hype and define cloud at its most basic level: simply put, the cloud is a metaphor for Internet-based tools used by a variety of different customers, at any time, from any location. There are a few other terms thrown around that we should also become acquainted with. Software as a service (SaaS), infrastructure as a service (IaaS), and platform as a service (PaaS) are really just the three pillars of cloud computing and are explained below. But don t worry too much about the definitions now; it s the benefits derived from cloud computing that we want to focus on. Page 2

3 Software as a Service (SaaS) Business and consumer software applications are shared and consumed in real time over the Internet in a one-to-many fashion. Customer relationship management (CRM), enterprise resource planning (accounting/erp), and human capital management (HCM) applications have seen deep penetration and broad acceptance in businesses large and small in the past decade. Complementing these applications are one-to-one and one-to-many online collaboration tools as well as IT management supporting all these application services. Platform as a Service (PaaS) More and more software developers are leveraging the delivery of underlying application infrastructure (including hardware and software) as a consumable service upon which they can build and deliver their IT service (usually a business or consumer application). Examples of PaaS include Salesforce.com s force.com, Amazon s EC2, and NetSuite s SuiteCloud. Infrastructure as a Service (IaaS) This is the delivery of computer infrastructure (typically a platform virtualization environment) as a service. Rather than purchasing servers, software, data center space, or network equipment, clients instead buy those resources as a fully outsourced service. The service is typically billed on a utility computing basis and the amount of resources consumed (and therefore the cost) will typically reflect the level of activity. It is an evolution of Web hosting and virtual private server offerings. This diagram shows how the components of cloud computing are related. Like clouds, they all work together: Figure 1. The three pillars of cloud computing. Page 3

4 IT Benefits of Cloud Computing What cloud computing does and how it does it are great, but again, is there fundamental value being created, or is this simply a different way of providing and accessing IT services? The good news is that there s significant value being created. Cloud computing-enabled services are simpler and faster to deploy. They re typically provisioned, up, and running in a few days. In contrast to large upfront capital expenses based on an estimate of lifetime usage, the cloud computing model is generally financed in monthly installments (subscription) requiring you to pay only for what you use. Your IT organization is now free to focus on more strategic activities, as cloud computing doesn t eat up valuable IT resources or budget (nothing to install or maintain). The cloud offers the latest functionality, frequent upgrades, and customizable use benefits at odds with each other in the traditional software model. Cloud computing encourages more standard IT and it drastically simplifies sharing of systems and information. Business Benefits of Cloud Computing While the IT benefits of cloud computing present sheer advantage, let s get back to the business evaluation of potential for improvement of business activities and financial performance. Cloud computing equips today s supply chain business operating model the multi-enterprise trading network with real-time, cross-community visibility. Processes can be conducted seamlessly and efficiently and individual and community decisions can be made faster based on a single source of truth. Add to these operating improvements the benefit of lower-cost shared services and now a supply chain community has the flexibility to grow and contract to meet the needs of an entire business community (depending on product mix, market conditions, etc.). The shape of the community can morph as well, with the flexibility to frequently and easily change the shape of business processes supporting products, partners, and geographies. These operating improvements contribute to cut costs, free working capital, speed innovative products to market, and change quickly in response to the volatility of energy costs, demand, and credit that are complicating the already complex world of supply chain management. Page 4

5 Why Supply Chain in the Cloud? Now that we have established what cloud computing is, the question remains is it ready for multi-enterprise supply chain management? Again, E2open s answer is a resounding yes. And more importantly, SCM is primed and ready for cloud computing. The time is now for this shift, and while developing the right cloud application presents clear challenges for traditionally-minded software vendors, it will be neither as difficult and dramatic nor as costly for SCM users as previous paradigm technology shifts. The time is right and the market is hungry. Gone are the days of vertically integrated supply chains in which design, manufacturing, and distribution are overseen and managed by a single organization. Today, more and more companies are partnering closely not just with suppliers and distributors, but with third-party contract manufacturing resources as well. This multi-enterprise model is based on a community of trading partners sharing roles in planning, sourcing, inventory, and product fulfillment. It requires multi-company, multinational communication and collaboration to manage the movement of goods across both corporate and national borders. The elephant in the room is that while supply chain communities are rapidly advancing towards true multi-enterprise business networks, the supporting technology provided by traditional supply chain software vendors (e.g., SAP, Oracle, and i2) has lagged behind in its ability to support this community model. The reality is that supply chain trading partners work on different SCM, ERP, and CRM systems. Because of this heterogeneity, their collaboration mechanisms are mostly Excel spreadsheets or phone-fax. Clearly, trading partners would benefit from a homogenous way to work together across companies and borders. In the new supply chain model, all business process data needs to reside in a distributed format across manufacturers, supply partners, logistics providers, and end user customers. This new approach of trading partner networks demands a new technology model, and cloud computing is a natural fit for today s trading partner network model. Inter-company supply chain communication, collaboration, transactions, and movement of goods are like the cloud itself: distributed, shared, and in constant flux. Like a community of supply chain partners, the cloud s shape and size changes frequently and dynamically with the fluid business environment it supports. Page 5

6 Networked Trading Communities Require: B2B connectivity supporting integration of a variety of ERP and SCM systems and spreadsheets so that all participants can speak and work in a common business language. SCM for seamless inter-company business process management. Intelligent decision support for change recognition and rapid response in-system. Scalability, uptime, security, and failover to support the mission-critical nature of supply chain operations. Simple, flexible processes and practices that enable responsiveness to the everchanging shape and size of the supply chain community. Cloud computing represents the long-awaited great leap forward for technology enabling it to centralize information; bridge the process gaps; create real-time, cross-community visibility; and, most importantly, facilitate the product velocity needed for global business networks to effectively compete for the business of an increasingly demanding customer base. Today s cloud computing model goes far beyond the finite point-to-point connectivity of EDI. Cloud computing solutions are far easier for all parties to run and maintain than either EDI or a corporate portal (which typically focuses on merely exposing information in a secure manner rather than actually managing an inter-company process). And, unlike the B2B marketplaces in which low cost and speedy delivery are intended to trump long-standing business relationships, today s cloud-enabled SCM lets companies define a unique business style and partner set. For the first time, the right exchange of data and transactions can take place within the context of this new peer-to-peer trading partner network approach, rather than under the crushing master/slave relationships still prevalent. Powering Global, Multi-Enterprise Supply Chains With E2open, companies can free themselves from traditional SCM systems that were built for a different problem in another era. Unlike manufacturingcentric companies focused on optimizing manufacturing asset utilization, brand owners today focus on product velocity, requiring many-to-many relationship synchronization across a broad supply chain community. With E2open, supply chain professionals are able to collaborate with trading partners to plan, source, inventory, and fulfill products across a global trading community by unifying business processes on a single Web-native application. Page 6

7 Figure 2. Representation of a modern trading partner network. Each node contains unique ERP, CRM, SCM, hardware, and storage. Each link enables integration, collaboration, VAN, and more. An Open System with a Service Oriented Architecture (SOA) E2open recognizes that the majority of companies have acquired and embraced operating infrastructure and software applications unique to their company and industry requirements. No company has the appetite for a rip and replace strategy for SCM improvement, so E2open focused on building an open system a service oriented architecture (SOA)-based system that makes it simpler and more cost effective to work with a community of trading partners with differing software systems and business processes. The concepts of SOA are being abstracted even further and moved into the cloud. Tiered architecture can no longer support future scalability needs. Changing economic conditions, globalization, and outsourced manufacturing and services models are forcing you to rip apart the n-tiered application architecture we ve been building on for years and spinning each tier into the cloud database there, presentation layer here, middleware layer over there. Faster, Lower Cost, Less Disruptive and Manageable by Mere Mortals E2open is delivered on demand and provides anytime, anywhere access via a Web browser. Subscription pricing and cloud delivery provide lower, more predictable cost of ownership. E2open complements your existing SCM and ERP systems, so you don t have to rip and replace your core systems. E2open also makes it simpler to onboard customers and suppliers, helping to facilitate increased participation. Maybe best of all, E2open is manageable by mere Page 7

8 mortals, not Operations Research wizards armed with PhDs. It s designed for simpler implementation, ownership, and operations. Higher Product Velocity and Enhanced Customer Service Levels E2open serves growing customer expectations with greater product velocity and lower inventory and capital requirements. E2open provides end-to-end supply chain visibility and the scalability and agility needed to support the dynamic nature of today s supply chains. Security and Availability Two of the biggest fears surrounding cloud computing are those of security and availability. If we address these issues head on, it becomes clear that levels of security and availability meet or exceed those provided by companies themselves today. Audit Compliance As part of our commitment to quality, E2open holds quarterly third-party scans and yearly third-party security assessments to review documented policies and procedures for gaps and to stay up to date with current security standards. Since 2007, E2open has been in compliance with SSAE 16 and SAS 70 in four areas related to security: Physical Security, Environmental Security, Access Control and Information Security, and Network Security. Physical Security E2open s high levels of security can be attributed to both its state-of-the-art Equinix secure data centers as well as the internal layered controls built into the E2open product itself. The data centers that E2open employs in the cloud ensure security and redundancy across its operations to provide high levels of security for both the physical and electronic infrastructure of the network. The network was built to meet and exceed commercial telecommunications standards worldwide for availability, integrity, and confidentiality. Operations Security E2open takes proactive measures to ensure that applications are safe from Internet attacks. All servers are located behind a firewall, and are only accessible with specifically allowed protocols and methods. Securely designed segregated networks, load balancers with denial of service countermeasures, and application-layer filters create additional layers of protection against malicious acts. Page 8

9 128-Bit SSL Encryption From the moment you, your employees, or your trading partners access the E2open application login screen, the data is protected through coarse and fine grain authorizations. Your unique ID and password, as well as all data in the subsequent connection, are encrypted with 128-bit SSL. Continual Monitoring We employ a battery of scans and intrusion detection systems (IDS) to identify any vulnerability within our network. We block unauthorized attempts to access our data center, and we log and investigate any unauthorized connection attempts. Testing and Maintenance Just like the systems they protect, the processes that govern E2open s availability are continuously tested, improved, and maintained. Process management is governed by industry best practices. Transaction History/Audit Trail E2open continuously maintains a complete transaction history. It tracks each transaction by the user login details and provides a timestamp for each event. Scalability E2open has designed its systems to accommodate surges and spikes in usage, and to scale upward smoothly to address increased volume and transactions. Thus, you can also be confident that E2open is designed to accommodate dynamic and continuous growth. Backup Process E2open provides daily hot backups on all machines storing dynamic content of customer data as well as weekly full backups, which are placed onto tape for secure off-site archival storage. Product Security E2open was architected from its inception to provide thorough security measures throughout the application and to deter any attack that would jeopardize the integrity of customer data. E2open s product infrastructure helps assure you of business continuity. Application-Only Access The system is divided into layers that separate data from the E2open application itself. Our solution stacks are not shared across trading partners and we can assure that other users of the application cannot ever access your data to maliciously alter or copy it. Page 9

10 Role-Based Access Each end user is assigned a specific role with specific permissions to only see and use the features related to his or her own job. Disaster Recovery With proactive systems monitoring in place, E2open has developed a disaster recovery protocol to ensure ready access to data and the operating system for rapid recovery from a disaster. N+1 Systems E2open implements a redundant N+1 system, which allows one or more components, such as power or temperature control, to fail without any interruption in service. By having a redundant N+1 design, a standby component automatically assumes processing on behalf of the failed component. Availability Supply chain management is mission critical to product companies. As such, supporting business processes are in action 24/7 globally. E2open guarantees 99.5% uptime. E2open requires its own maintenance for upgrades and fixes, but these are only performed in regularly scheduled maintenance windows. Conclusion Cloud computing operating improvements contribute to cut costs, free working capital, speed innovative products to market, and change quickly in response to the volatility of energy costs, demand, and credit complicating the already complex world of supply chain management. About E2open E2open is a leading provider of cloud-based supply chain management solutions. The company provides software and services that enable visibility, collaboration, and control across large trading partner networks. E2open customers include Cisco, Dell, Hitachi, IBM, LSI Corporation, Motorola, Panasonic, Research In Motion, Seagate Technology, and Vodafone. Headquartered in Foster City, California with operations worldwide, E2open is recognized by Gartner Research as a leader among SaaS integration service providers. For more information, call or visit Offices Published: 2011 E2open, Inc. E2open and the E2open logo are registered trademarks of E2open, Inc. Customer legal disclaimer goes here. All other marks are trademarks, service marks or registered trademarks of their respective owners. All rights reserved. E2open Americas Foster City, California (HQ) Dallas, Texas Austin, Texas E2open Europe Reading, England Düsseldorf, Germany E2open Asia-Pacific Kuala Lumpur, Malaysia Taipei City, Taiwan Shanghai, China Page 10