Simplicity-as-a-Service: A New Value Proposition for Software Vendors and 3PLs?

There were plenty of highlights from the recent JDA FOCUS 2016 conference, where more than 2,000 customers, prospects and partners gathered to learn about creating “a seamless supply chain,” which was the theme of this year’s conference. As JDA CEO Bal Dail said in his opening address:

Our vision at JDA is to deliver a seamless supply chain to you, our customers, so you can deliver a seamless consumer experience because that’s what they want. And that is not just for retailers, but distributors and manufacturers too.

How can you create a seamless supply chain? Dail talked about the importance of addressing the 3 Cs — Customer Centricity, Next Generation Collaboration, and the Convergence of Digital and Physical Supply Chains. He also discussed the roles of Profitable Customer Commerce, Adaptable Manufacturing, and Intelligent Fulfillment in getting there, with plenty of breakout sessions devoted to each during the conference (for example, I attended several great case study presentations by Unilever, Caterpillar, Walgreens, and others).

What got the wheels turning in my head the most, however, was a single phrase spoken by Razat Gaurav, JDA’s EVP and Chief Revenue Officer, in his keynote address, which I immediately tweeted:

A new definition for SaaS: Simplicity-as-a-Service.

Gaurav mentioned it in reference to JDA’s ongoing efforts to improve the user experience of its solutions, but the phrase sparked a different question for me: What if Simplicity-as-a-Service became the main value proposition software vendors and third-party logistics providers (3PLs) offered their customers?

Which led to another question: How would I define Simplicity-as-a-Service in that context? Here’s what I came up with:

Simplicity-as-a-Service is enabling customers to achieve their desired outcomes in an ever-changing business environment with less time, effort, cost, risk, and resources.

For software vendors, offering Simplicity-as-a-Service goes beyond making user interfaces more intuitive and easy to use; it’s also about, for example, providing optimization, simulation, and analytical capabilities to help companies make smarter decisions faster. And it’s about removing the cost, resource, and risk barriers that have prevented many companies from deploying enterprise software solutions in the past, which is why most software vendors are shifting their business models toward cloud and software-as-a-service.

For 3PLs, Simplicity-as-a-Service is a more enlightened answer to the question, “What business are you in?” It is about, for example, helping companies enter new markets and introduce new products in a more timely, cost-effective, and less risky manner. It’s also about helping companies respond more quickly and intelligently to changing customer requirements, competitive threats, regulations, and other market forces.

Simplicity-as-a-Service is why the business models of third-party logistics providers, software vendors, and consultants are converging today. As I wrote a couple of years ago in Putting 3PLs and Software Vendors in a Box, the reality is that manufacturers and retailers have a diversity of options today in terms of who can help them, and the right partner is the one who can provide them with the right mix of technology, services, and advice to help them achieve their desired outcomes.

All that said, however, we have to ask: Why is simplicity even needed?

“Complexity is arguably the most insidious, hidden profit drain in today’s business world,” writes John L. Mariotti, former president of Rubbermaid Office Products Group and Huffy Bicycles, in his book The Complexity Crisis. He goes on to say:

Businesses must compete in more complex global markets than ever before. Most companies are seeking double-digit growth in markets growing at low single-digit rates — or not growing at all. This quest for growth has led to runaway complexity caused by the proliferation of products, customers, markets, suppliers, services, locations, and more. All of these add costs, which go untracked by even the best of modern accounting systems. Complexity also fragments management focus, wastes time and money, and ultimately reduces shareholder value. The problems grow, but they remain under the radar of management attention.

Somewhere along the way, companies decided that it’s better to deal with complexity instead of getting rid of it, which is why so many supply chain process maps and IT systems look like a Rube Goldberg drawing.

So, the first step is for companies to take a step back and look for ways to reduce the complexity of their supply chains (or at least slow its growth). How do you do it? Mariotti states that you first have to measure it, and he outlines several metrics and techniques in the book, including ranking customers by annual sales, profit, and gross margin percentage. “Among those lowest volume and least profitable customers is where complexity usually hides,” according to Mariotti.

The next step is to find a Simplicity-as-a-Service partner who through the right mix of technology, services, and advice can help you achieve your desired outcomes more quickly and with less effort, cost, risk, and resources than going after it alone.

What do you think? Is Simplicity-as-a-Service a better way for software vendors and 3PLs to position their value proposition? Post a comment and share your perspective!

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