Last week, the chief marketing officer of cloud-based supply chain software vendor GT Nexus took part in an EBN live chat
about the role networks play in modern supply chains
Among the many fascinating discussion points, there was one interesting point Greg Johnsen made about the nomenclature that companies use for the systems that bind their enterprises.
"I'm hearing a lot now about the distinction between systems of record (ERP) and systems of engagement (collaboration, cloud)," Johnsen said. "In supply chain, this distinction is really critical. Supply chains are not chains, they're networks. It takes a system of engagement to 'connect' the players and enable orchestration. This isn't the domain of ERPs, per se, but if you look at any company today, it's defined by its outsourcing and distributed network. Companies are networks. But they've lacked the IT systems to behave as such."
It's a crucial distinction, and one that's more than about semantics. Shippers have been striving for years to develop systems of record -- ones to incorporate all the disparate documents and associated communication between internal and external parties -- to underpin their supply chain. By default, those systems tended to be ERP-based. That doesn't eliminate the chance for external parties to be networked in, but cloud-based systems are, by design, built to incorporate those networks seamlessly.
Cloud architecture enables these systems to reach farther and wider than more rigid, on-premise enterprise systems ever could. And that's also by design. Let's not forget that many organizations still prefer the licensed, on-premise model because of some of its more inherently secure characteristics. If you're more concerned about not letting what you have get out than networking all your partners together, then the discussion starts from a very different point.
But Johnsen's point -- one he and other GT Nexus officials have made for years -- is that supply chain and trade are environments that are meant for the networked, cloud-based model. The very nature of global trade -- with integral suppliers and partners located in far-flung locations -- puts a premium on this connectedness, to achieve the "one version of the truth" that IT vendors speak of so often.
In any case, I'll make a point of keeping an eye on which companies prefer a system of record and which strive for a system of engagement. That, more than size or volume or shipper type, might be the IT dividing line.