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Ernst & Young Global Ltd.

6 minute read 26 Sep 2022
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When it comes to agility and resilience, cloud technology enables organizations to transform at speed and reframe their future.

In brief

  • Cloud computing is foundational for ambitious companies wanting to future-proof their business.
  • Organizations need to look beyond cost optimization as the key performance metric and instead prioritize speed and resilience.
  • Cloud can act as a data warehouse, deliver savings and stronger returns, and greatly improve agility and resilience.

We live in a world of unprecedented interconnectedness, manifested by a complex global network of extended supply chains. While this web of trade has driven value for decades, a growing number of unexpected events have converged to expose significant structural weaknesses. A ship trapped in the Suez Canal, a virus mutation in South Africa and a semiconductor shortage in Taiwan, for example, are no longer isolated crises. Their effects are amplified by global trade disputes, environmental disasters and civil unrest so that they significantly impact the operational effectiveness of companies across the globe.

In this complex and fast-moving environment, there is a clear operational imperative for organizations to reimagine business resilience, uncover new opportunities and reframe their future. The question is, how can companies achieve this, and more specifically what role will cloud computing play in making this a reality?

Monitoring risks as they develop in real time

A substantial part of the answer is for organizations to look beyond cost optimization as the key measure of business performance and, instead, prioritize speed and resilience —looking at it through the lenses of transparency and agility. When businesses first model and then monitor data in real time, and watch events as they develop, proactively mitigating risks, they can pre-empt adverse outcomes, orchestrating predetermined outcomes to gain significant competitive advantages over their peers.

Cloud computing is foundational for companies that are ambitious about moving and transforming at speed, meeting elevated customer expectations, and future-proofing their business. First, however, CIOs, CFOs, COOs and their teams must broaden their horizons beyond cost paradigms and refocus on speed to value — using cloud’s ability to act as a vast data warehouse, deliver savings and stronger returns, with greatly improved systems agility and resilience.

The pandemic has given us a glimpse of cloud’s potential, with hundreds of millions of employees collaborating globally every day, using software-as-a-service (SaaS) solutions. Microsoft users alone spend 30 billion minutes daily using the company’s cloud applications. The rapid take-up and ubiquity of video streaming services such as Teams and Zoom demonstrates the transformative potential of SaaS solutions. 

Cloud computing is foundational for companies that are ambitious about moving and transforming at speed, meeting elevated customer expectations, and future-proofing their business.

To begin to glimpse the future of cloud computing and how rapidly it can transform supply chains, it is necessary to look at how leading Enterprise Resourcing Planning (ERP) solutions providers are developing and deploying the technology.

A number of companies in this space are creating a new generation of innovative cloud-based virtual business networks. These enable users to push requests to potential trading partners within common, fully resilient, secure and cloud-optimized ecosystems. 

New generations of supply chains will be enabled by a set of simplified, elastic and highly agile business models, which allow firms to connect and disconnect with trading partners at speed to create dynamic new business networks.

Unlike existing supply chains, cloud-based solutions enable businesses to model, seamlessly link and provide visibility of entire supply chains digitally, helping organizations efficiently test and transform how they trade at speed and unlock new value. Digital twins, which use data gathered from various sources across a supply chain to create a virtual model, are a particularly powerful example of one such cloud solution. 

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    Event-driven supply chains will unleash real potential

    Cloud-based business networks are ushering in a new era of highly agile event-driven architectures in which ecosystems of transactions, processes and fulfillment are created automatically, triggered by an individual buying signal. Dynamic inventory management is a prime example of this, with inventory threshold changes triggering sourcing or selling actions, similar to stock exchange algorithmic trading. Cloud-native technologies are particularly well suited to fulfil this business use case, thanks to their ability to deal with real-time data streamed via application programming interfaces (APIs).
     

    Another example of a powerful event-driven architecture can be built around a consumer’s decision to purchase a new car. This decision would trigger a comprehensive list of associated processes, each essential to delivering customer satisfaction. A customer would research and select their vehicle and options, finance their purchase, the dealership would need to source the vehicle from the manufacturer, it would then be licensed, insurance would need to be purchased and the vehicle finally delivered. In our current world, each of these processes is typically managed in isolation, with many potential points of failure, and customer experience varying greatly.

    By successfully executing a robust cloud strategy with event-driven IT architectures, an ecosystem of business and governmental partners can be created automatically, seamlessly and securely. This strategy interconnects all the customer experience touch points to deliver real benefits for all parties. 

    Another example is a post-merger scenario after one consumer goods company acquires another. The harmonization of supply chain partners, with decreased fulfillment timing and increased customer satisfaction, begins with a common portal for enterprise multichannel commerce, with a roadmap to provide master data management and mobile commerce – all provided via SaaS. Such cloud-based solutions have many benefits, including:

    • Providing end-to-end visibility across the entire value and supply chain using a digital twin. This enables companies to rapidly model and pinpoint supply bottlenecks in real time, predict the impact they have on operations, role-play alternative routes to market and automatically select an optimum resolution, using effective data-driven solutioning.
    • Achieving organizational agility, fulfilling customer demand most efficiently by shipping from the right location, at the right cost and at a speed the customer requires. At the heart of this approach sits a cloud-based distributed order management system, maximizing inventory accuracy and visibility across all channels, while activating multi-channel fulfilment, such as store pick-up and ship-to-home.

    Cloud is the only platform capable of rapidly orchestrating such a complex ecosystem of suppliers, partners, producers, and customers in real time without significant capex investments and spend on commodity services, such as hardware procurement, build, maintenance and sunsetting.

    • Optimizing supply: Current, conventional supply chains are monolithic and struggle to flex in times of disruption. With cloud-based supply chain solutions, monitoring and mitigating developing supplier risks in real time and implementing alternative sources of supply, where required, often leads to great economic benefits.

    Additionally, cloud-powered business networks can deliver significant positive environmental impacts and financial savings. They do this by capitalizing on economies of scale achieved through shared infrastructure, power and physical premises. This contrasts with conventional inefficient, on-premise data centers which often underutilize the physical footprint, hardware and software.

    With 60% of consumers saying they are more likely to buy from companies “that are transparent in all that they do,” comprehensive product and supply chain insights give consumers the end-to-end information they need to make better-informed and more sustainable purchasing decisions.

    Resilient and sustainable supply chains have been a feature of boardroom agendas for a number of years. Until recently, however, they have generally been framed as compliance exercises, with limited remits of meeting financial reporting obligations or shareholder expectations. The global COVID-19 pandemic and the unfolding climate crisis, however, have highlighted the need for a broader, more agile, and transparent approach.

    Informed customers
    of consumer are more likely to buy from companies that are transparent in all that they do.

    The extent to which organizations rapidly maximize their use of cloud depends largely on the urgency to compete and win, the vision of the senior leadership, and the boldness of their cloud strategy. While some business leaders are tactically motivated by a “burning platform” scenario in which core systems and processes are threatened by obsolescence, others have the vision to fully capitalize on the potential of one of the most transformational technologies available to businesses today – cloud.

    Ralph Thompson, EY Asia-Pacific Technology Transformation Cloud Lead, also contributed to this article. 


    Summary

    Cloud technologies have become the foundation that enable businesses to transform, differentiate and gain competitive advantage. It is a big shift from the traditional way businesses think about IT resources. Cloud computing supports optimization by providing infrastructure, platform, and software solutions for the supply chain network, and leads to financial and operational benefits. The success in modernizing IT through the cloud is driven by a complete standardization and automation strategy that not only simplifies the process but also enables it to be more agile and resilient to innovate at scale.

    EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.