Headed for the cloud
JDA initiates a major policy shift for all of its operations.
By Geoff Whiting
Nearly every innovation JDA Software is planning for its future relies on cloud technology, and so it was with boldness that Hamish Brewer, the company’s president and chief executive officer, recently announced plans for a major shift to the JDA Cloud Strategy.
“In the history of the company there have been a few major decisions that have shaped the JDA business as it is today,” Brewer said, highlighting the company’s founding in 1985 by Jim Armstrong; its 1996 acquisition strategy initiated after its initial public offering; and the 2000 decision to move beyond just retail and into supply chain, which led to its purchases of Manugistics and i2.
“This decision about our cloud strategy I would put alongside the other three, in the same category of importance to JDA,” he said.
JDA’s new strategy will shift all services to a cloud base by the end of the year, Brewer said. He added the goal is to see new projects implemented on the cloud platform in 10 percent fewer hours with a 10 percent faster return on investment.
“On-premise deployments, with a very few exceptions, will become a thing of the past,” said David Johnston, JDA’s senior vice president of supply chain. “We’re removing the cost barrier to innovate.”
Although the cloud is not a JDA mandate, the company believes more customers will opt to leverage the cloud to deliver a lower overall total cost of ownership.
Brewer said “JDA has established a statement of direction: what we’re going to do is gradually change our business from a traditional behind-the-firewall implementation company to a cloud-based deployment company over the next three to five years. We believe this transition is going to drive substantive benefits to our customers.”
According to Brewer, the benefits of migrating to the cloud include a faster time to value, increased service quality, lower support costs for those that use the cloud, and making services easier to maintain. These benefits are based on the company’s experience with 100 customers that are already using JDA Cloud services.
In terms of its logistics operations, Johnston said transportation and supply chain services are available as cloud products now but customers can still get these services in any type of installation they want. He said structuring cloud-deployments like this would save both JDA and its customers money, and be up and running sooner.
“We can deliver cloud solutions faster and cheaper,” Brewer said, pointing to recent successes. In the past six months, JDA has deployed more than 50 application environments, each up and running in under three hours. The company is currently in the process of integrating its cloud platform with the JDA Enterprise Methodology, which will culminate in the JDA Cloud being the same across all deployed deliverables.
“We know based on our current customers using the cloud platform that you can provide a better experience to their business users by utilizing the JDA Cloud platform,” Brewer said.
The biggest quality improvement of the cloud-based platform is the ability to reduce the amount of support cases. Based on current implementations, Brewer said more than half of the customer support cases JDA sees are preventable because cloud users are already avoiding them. In the company’s 20 recent cloud-based “go lives,” JDA has had zero high-severity issues.
“We can make your experience using JDA software far better than it is today,” Brewer said. But a key to the cloud is that it also makes the experience far better for JDA. “Our cloud customers generate less work for us,” he said.
The cloud allows JDA to run 24-hour support at cheaper prices and since the company is seeing less severe problems through cloud implementations, it has decided to give cloud customers a 10 percent price reduction for support.
The company will go from a 22 percent to a 20 percent list rate for 24-hour support service. This swings back the other direction, however, and means customers that are more costly will continue to pay more. Since the cloud will mandate less work and customers using traditional implementation will be driving a disproportionate amount of service requests, JDA said discounts on traditional support will be substantially reduced over time.
JDA is embracing all aspects of the common cloud model when it comes to pricing. The company will offer traditional and pre-paid licensing options, but Johnston said this was mainly about maintaining a predictable cash flow.
One of the issues JDA’s current system can improve on when moving to the cloud is around updating software. “Upgrading software, the way it’s done today, is a painful and expensive process. I think one of the most important things that JDA can do to help customers move faster in the market place is to eliminate that issue,” Johnston said.
Brewer said JDA wants to be more like Salesforce because that company’s software updates without its customers needing to do anything. “Our applications today do not allow for seamless upgrades, that’s a fact. But we are going to make the investment over the next few years to get there,” he said. “We’re going to start delivering capabilities within 12 months on this.
“To be frank, I think that’s the future of enterprise software: upgrades have to be a non-issue,” Brewer said.
This shift in updates also leads to a change in the way people think about software. Instead of looking at it as an individual piece or version of software, JDA wants customers to look at the software as a tool that produces an optimized result for their customers. This is the goal of shifting from a product focus to a customer results-centric view.
There is a difference between JDA and Salesforce in the way the cloud is deployed. “When it speaks of cloud solutions, JDA means a private cloud, or hosted solution, rather than a public cloud, multitenant solution,” said Steve Banker, ARC Advisory Group’s director of supply chain management. Banker said Salesforce uses a public cloud, which can have less user control over security.
“JDA’s clients include the largest manufacturing, retail, and distribution companies in the world,” Banker said. “These companies require extremely rich functionality, but are also hyper-sensitive about the security of their data. JDA does not believe most of these companies would be willing to use a public cloud solution.”
“JDA’s approach to the cloud is to offer its solutions to clients without moving to a single instance, multi-tenant platform. This approach is more appropriate for enterprise cloud solutions,” Johnston said.
That goal was present within the company when it formed its JDA Managed Services division in 2009. Managed Services developed the company’s platform and integrated the i2 managed services when JDA bought that company in 2010. Led by this division, JDA announced some major innovations and tools for retailers at its 2012 FOCUS, the company’s annual global conference.
The first new tool that came from FOCUS was Assortment 8.0, which Brewer said is the first major product in the market that is a combination of JDA and i2 software. The latest Assortment is a merchandising tool that mixes consumer purchase preferences, in-depth analytics, complete assortment lifecycle planning, and pre-pack optimization to allow customers to plan and automatically execute localized assortments across any available channel and vertical. JDA hopes the combination of bottom-up and top-down planning will help retailers tailor assortments to the needs of their customers.
Another tool for retailers is the JDA Customer Engagement Cloud, which is a cloud version of its engagement tools that promises support of omni-channel commerce, inventory allocation with real-time visibility, customer order management, and cross-channel price execution. The big benefits from the cloud here are real-time visibility, a reduced cost structure for rolling out the service to all channels, and risk mitigation.
The final fruit of the cloud that Brewer touched on was the JDA Shelf-Connected Cloud, a fully-integrated suite that links business planning with shelf-level execution. This system allows JDA customers to link manufacturers and retailers by tracing information from the retail point of sale back to its initial manufacturing. JDA said this will allow both parties to see how different decisions impact performance and overall financials around specific products.
Brewer said the ultimate goal of the product is to be “hyper-scalable” and support information on every product placement on every shelf in thousands of stores, all in real-time. “We now believe and we’ve got the evidence to prove we can take this a lot further than simply running applications in a data center on your behalf,” he said.
“JDA’s cloud strategy does not solve all the problems associated with implementing and driving value from supply chain solutions,” Banker said. “Nor does the cloud strategy fully solve the customization problem. Nevertheless, ARC believes JDA’s initiative is laudable and can serve to improve the ROI associated with supply chain projects.”