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Can SAP HANA in-memory technology power customer-driven supply chain?

As the former supply chain director for the $12 billion consumer products maker Unilever, Simon Ellis knows a thing or two about making supply chains more flexible and responsive to customer demand. Ellis, now a practice director at IDC Manufacturing Insights, based in Framingham, Mass., brought that perspective to the SAP SapphireNow 2013 conference in Orlando, Fla., where in this video interview, he commented on the potential of HANA in-memory technology to help manufacturers and retailers to better manage their supply chains.

"We have to start thinking about technology in the context of solving business problems," Ellis said. "What are the things we are actually going to use all of this in-memory power for? What are we going to use the speed that it gives you for?"

Today's manufacturers and retailers are increasingly trying to exploit point of sale (POS) and social media data to make their supply chains more responsive to customers. "It's going to require these kinds of technologies to turn that data into useful information," Ellis said.

Read the transcript below.

We're talking today with Simon Ellis of IDC Manufacturing Insights. Simon, it seemed like at the Sapphire Now conference that we're at this week that SAP was showing a lot of intriguing HANA-based analytics for manufacturers and retailers. Can you give us your take on what you saw today?

Simon Ellis: Sure, yeah. I think that HANA is an interesting technology, no question. I do think, though, that we have to start thinking about technology in the context of solving business problems. What are the things we're actually going to use all of this in-memory power for? What are we going to use the speed it gives you for? I think when we start thinking about how manufacturers and retailers interact, and sort of this desire to be more customer-driven, and all of that data that comes out of that desire, the point-of-sale-data, social networking data. It's going to require these kinds of technologies to turn that data into useful information, so that we can actually make better decisions and run our supply chains more effectively.

A lot of what I saw HANA, or SAP, talking about today seemed to remind me of the demand signal repository technologies from folks like Terra, a few others, that were all about collecting point-of-sale data and analyzing it. Any thoughts about whether this could be a competitive factor for that?

Ellis: Well, I mean, SAP have their own demand signal repository, right? I mean, it's something they've been developing for the last year or two. I mean I don't think of HANA as a data repository analytics capability necessarily. It's a data storage engine, right? It's ability to have data easily accessible and to process it quickly. So the demand signal repository, at least the traditional ones, still relies on traditional database. So a DSR powered by in-memory technology, I think, has powerful potential. You know, not all data needs to be in real time, though, right? That's kind of how you need to make these distinctions. If the data that I need is something that I need weekly or monthly, okay, then maybe a traditional database is okay. If, on the other hand it's real-time data that I need to be leveraging quickly and with very short latency, then a DSR powered by these kind of technologies is an intriguing proposition.

Will this bring some kind of qualitative change to what people can do? I mean, I understand the quantitative differences with just more data and faster, but will it lead to some kind of a singularity so to speak?

Ellis: I don't know. I mean, qualitative. I think it will certainly allow people to do things more quickly. I don't know if that's qualitative or quantitative.

So more of the same, basically? Just better.

Ellis: I think it's just, at the end of the day there's lots of things in the supply chain, which we've been kind of working on for decades, right? So whether it's S&OP [sales and operations planning] or whether it's trade promotion, or whether it's trying to understand the vagaries of demand, you know we've been working on these for a while -- ten years, twenty years. And I think what we're seeing today is, we're seeing technology enable those capabilities in ways that we've not seen previously. So whether that's quantitative or qualitative I'm not sure. I think the two kind of become somewhat intertwined. But it allows you to make better decisions more quickly and in a more comprehensive way that ultimately, and hopefully, will create business opportunities and solve some of these problems, like out of stocks, for example.

Does SAP have all of the pieces in place for this? Or is there more to come that they need to put into place?

Ellis: I think they have the foundational pieces. I think that, at the end of the day, what we need to see is, we need to see customer-based used cases, where customers are using these tools. Because, what invariably happens is, as people start to use these things, as the business processes may change a little bit in the context of the new technology, it becomes a little clearer about, perhaps, what some of the gaps may be.

What has IDC been hearing from its clients about their interest in doing this, their ability to do this? Are any of them already doing it?

Ellis: Yeah, some of them are. I mean, I think the whole notion of the customer-driven, sort of using the demand side of the supply chain to drive the supply side, is certainly not new. We've seen customers using these kinds of technologies to their advantage in terms of service levels and the ability to deliver better service levels. We don't see a tremendous amount of companies kind of drive this over to the supply side of the supply chain. I know I've written a lot about this notion of responsiveness versus forecasting and supply chain resiliency. So, I think it's an area that's still maturing. But you know that certainly those companies in their respective market segments who, kind of, we would view as the front edge of innovation are certainly thinking about these kinds of things, yes.

How about HANA? Is it just tire kicking going on right now?

Ellis: What do you mean? In terms of …

In terms of using this as a DSR platform. Or, just kind of …

Ellis: No, I mean I think there are companies out there that are using S&OP on HANA. And they're looking at HANA technologies to do a better job of leveraging demand data. It's early days still, obviously. And there are certainly plenty of companies out there that may be skeptical about the potential benefits. But, like I said, I think as we start to get some tangible use cases here. That's, you know, supply chains are not always the most innovative things, right? Follow the leader is not a bad way to go. So, if there are companies out there who start to develop new capabilities as a result of these technologies, the fast-followers and ultimately the laggards will come along for the ride as well.

Well, thanks a lot, Simon, for talking with us today.

Ellis: My pleasure, David.


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