Systems Logic | News and Press Releases

News and Press Releases

Demystifying Cloud Computing and SaaS - Time to get your head out of the clouds!

For many years, most technology vendors and consultants have lived on the premise that “there is margin in misunderstanding”. Each decade, the Enterprise Software industry reinvents itself, just as clients and users alike start to figure out exactly what value they are, or in many case they are not getting. And so it begins again with SaaS (Software as a Service) or otherwise known and promoted as Cloud Computing, which sounds way cooler, and says way less.

Cloud Computing or SaaS, explained in human terms, is simply a software solution that is stored on somebody else’s servers, and your company accesses your data via the web. There are some very superficial benefits out there that are promoted by SaaS vendors. Some of which include; lower cost of I.T. Maintenance, greater accessibility to your data, and quicker deployment times for solutions. Why I say that these are superficial is simply put, that they do not tell you the whole story.

Having a history in the ERP (Enterprise Resource Planning) industry, and experience with both SaaS and local software solutions, which includes today, our organization utilizing both models, I would like to share what I believe the reason for the promotion of SaaS and Cloud Computing, and some of the hidden (or not so much promoted) reason it exists, and things to be aware of.

A good part of the resurgence of Cloud Computing, and yes I said resurgence… It is not new

History

From the software industries perspective, the value in most of their organizations, outside of the technology itself, is the reoccurring revenue stream. Historically, software companies had generated approximately 45-55% of their annual revenues from the reoccurring revenue generated by Annual Support Contracts. Many companies had purchased these support agreements at anywhere from 18 to 22% of the cost of their software, and after years of paying them, started to question what value they were truly getting from these agreements. To most, it seemed, any time you made a call about the software, the support group would tell you it was a customization, and you would be billed. Companies, in record masses, started to demand these contracts be renegotiated or cancelled all together. After all, they owned the software, and it did most of what they needed, so why keep paying.

Software companies began to lose revenues, and with no new customers to sell solutions to, what was the answer? Change the game. SaaS a.k.a. Cloud Computing, were a new way to create a dependency on the software organization. After all, after a company had invested the time and monies into the new solution, and if change was hard, the companies were not likely to ever change. And with the solution now being billed monthly, it would in fact replace the support contract, and the entire business model would be reoccurring revenue, the investors dream.

The Hype and the Reality

The SaaS and Cloud Computing industry continue to promote some key features:

Lower I.T. Maintenance costs – The idea being that since they have the servers, and not you, they will maintain them and it will cost you less. While this is partially true, in many cases, most small and midsize organizations run on a single server, and don’t have to replace it weekly, or have somebody sitting over it. In fact, it is usually the client machines that require the greatest amount of maintenance, and these don’t go away, and will still require the same maintenance. Additionally, servers bought around a solution, don’t usually require changing through the life of that solution, and with many new more efficient applications are capable of running on nothing more than a powerful desktop computer. Additionally, if there are issues with the servers (theirs), you are now left to their schedules to resolve. If it is in your house, and something breaks, your IT guy, or somebody local, can usually have it resolved the same day, exactly when you need it, and it won’t require you depending on trying to explain your issues to an individual in another country, over the phone. While the industry tries to say that there are no issues in the cloud, this is not the case. See http://www.sitepoint.com/blogs/2009/02/25/gmail-dark-cloud/# for just one instance of the Cloud crashing. If software giants like Microsoft and Google can have issues in the cloud, how does that fit with most small organizations? Additionally, in the SaaS model, they schedule the system maintenance, which is usually done outside of 9-5, but they don’t consult you, they simply tell you when it will happen, and you are left to deal with it. Many of our clients hold hours outside of 9-5, and can’t simply put their business on hold for somebody else’s update.

Greater accessibility to your data – This statement is true, only if you compare it to technology from 20+ years ago. Under the SaaS model, you supposedly have greater accessibility; anywhere you have an internet connection… Oh yes, the internet connection. If your internet connection goes down for any reason to the outside world, you are left with no connection or access to your data even inside your four walls. We have clients in the mid-west, who on occasion, have been known to lose the internet for a day or two, due to tornadoes or other storms. In this case, they would have no access to their critical business information for large lengths of time, putting their clients at risk. In their case, they are working with OEM automotive, and if they can’t access their information, they can be out of business. The reality is that technologies have existed for a while, and allow you to access your business information from anywhere in the world, without having to move the critical business data out of the security of your four walls. So, you don't need SaaS or the cloud to access your local Solution. The best part is, the use of this technology is already on most organizations servers, and is no additional cost. The reality is that under SaaS, your data is not any more accessible, and in fact, may be less accessible at times.

Quicker deployment – Again, this is something that the SaaS industry benchmarks against old 20+ year technology. They say, that it is easier to deploy, because you don’t have to install it on everybody’s PC, they simply open their web browser. Once again, misinformation rules the day. The reality is, many of the newer .NET based solutions out there have tools that automatically deploy the solution to both desktops and mobile computing devices, with the simple use of an email. They are in fact, just as easy to deploy as any SaaS solution, and you don’t have to worry about the software being impaired because of updates to your web browser or its security. What they neglect to tell you, and which is what impacts most Business System implementations and updates, is the training time, and tailoring or customizations that slow things down. Not simply installing the software. In our solution, we can actually send clients an email that is put in a folder, that can then automatically deploy new updates to all remote facilities, with no need for an IT person to do it, or ever get in a car.

Monthly Cost of SaaS vs. Upfront fees of local Solutions – The SaaS/Cloud Computing Industry tries to promote how much cheaper the SaaS model is, because you don’t have a large upfront cost. What they also forget to tell you is that you also don’t own anything but your data. And should you ever want to change, they will be very happy to turn off the switch and email you reams of spreadsheets containing your data, in its raw format. With SaaS, it may be low cost up front, but you pay forever and own nothing. It is the equivalent of renting a home vs. buying a home. If you buy a Local Solution, then you own the solution, and should you ever decide to not want to continue with support, or you wish to sell your business, the local solution will be an asset of your business. Additionally, even in a SaaS or Cloud solution, you still have to pay separately for any hardware for mobile computing, or for any training and consulting required to learn how to use, and to set up the solution with and for you. If you look at a standard Enterprise Software Solution, you are only really looking at 1/3^rd of the true cost falling under the SaaS monthly billing, with the rest still having to be paid up front to consultants and hardware vendors. To get the best of both worlds, we have found that many of our clients have gone the route of Leasing their Local Solution. Many leasing companies have changed the rules, and now are willing and able to lease the Software, Services and Hardware, for up to three years, with costs being no more, and in many cases less than those of a SaaS solution. And the best part of it, is that you own the product and the data, and on your terms.

Again, within our own organization, we actually use a SaaS CRM package. We have found it to be a valuable tool to us, but more because of its design and functionality, and not because it is in the Cloud. Additionally, if it were to go boom tomorrow, we would feel it a bit, but not cease to function, nor impact our clients. Our own solutions that we have, can work under either model of SaaS or Local, but we simply believe that in our vertical of Third Party Logistics’ and Distributions that the Cons outweigh the Pros, and as such, do not promote it to our clients.

There is a clever series of commercials out now by Ally Insurance. These commercials focus on the misdirection and misconceptions created by the insurance industry. Unfortunately these same commercials can be applied to the technology industry. I think that SaaS and Cloud Computing have some good applications, but am challenged by the marketing of the perceived benefits in an Enterprise Solution, that are really no different than technology already available today in a Local Solution. Simply put, while there are some benefits that are heavily promoted by those who choose to gain from Cloud Computing, don’t be swayed by the marketing of juggernauts like “big blue”. Make an informed decision.

Anthony Allwood is President and Founder of Systems Logic (www.systemslogic.ca ), a leading provider of Warehouse Management Solutions to the 3PL and Distribution Industry. With a long rich history in the selection and implementation of numerous mid-tier Enterprise Solutions, the success of Systems Logic, originates from their consultative and process centric approach to finding the best solutions for their clients.

Systems Logic is Featured in Logistics Magazine

Logistics Magazine - Feeding a Need May 10, 2010 - Systems Logic is interviewed for the feature article in the May 2010 edition of Logisitcs Magazine!

The article investigates the logistics challenges that were faced by the Daily Bread Food Bank in Toronto and their implementation of Wireless Warehouse in a Box as the WMS to solve those needs.

Article text is copied below...

FROM SIMPLE TO SOPHISTICATED - by Allen Janssen

05/10/2010

In 2008, when cold cuts contaminated with lysteria found their way onto store shelves, food distributors relied heavily on complex computer programs to track the tainted product and keep it out of the hands of consumers.

While they used their sophisticated warehouse management systems, however, The Daily Bread Food Bank in Toronto relied on a more rudimentary method of keeping the supply chain safe. They consulted their Excel spread sheets and then walked the aisles of their 50,000-squre-foot warehouse, visually hunting and manually picking the suspect product.

Primitive? By modern supply chain standards, yes. But that’s the norm for most of the 700 food banks supporting over 3,000 different food distribution points across Canada. Annually, they distribute more than 100 million pounds of food. And they’re powered largely by volunteers and donations. A warehouse management system is a luxury they cannot afford.

David Carroll couldn’t accept that reality. The associate executive director of The Daily Bread Food Bank was already pushing for a WMS that would modernize and secure a supply chain that handles a million pounds of donated food every month. The lysteria scare was just one more reason to get it done quickly.

“We did have some of that tainted food in-house,” he says. “We were fine. We dealt with it, and we quarantined the food. But that really encouraged us to become more active in being able to trace things.”

He believed the manual systems they were using, which relied largely on judgment calls and intuition, would not be sustainable as the food bank continued to grow. A chartered accountant by profession, he put a business plan together for a proper warehouse management system, secured funding from private donors, and met with some developers to see what kind of solution they could offer.

The answer was in a warehouse management system custom built by Systems Logic, of Brantford, Ont. They’ve been using it since October, and the results have been nothing short of dramatic.

Now, when Daily Bread invites volunteers into its 40,000-square-foot warehouse to sort gaylords full of donated foods, they enter product codes into the system using a simple scanner. Administrators know precisely what they have and where it is. Pick tickets are automatically generated for all of the food bank’s 178 agencies (the local distribution points across the city), and everything is tracked as it goes out.

“It’s a much more measured and empirical kind of approach,” Carroll says.

That’s exactly what Anthony Allwood, president of Systems Logic, was going for. In assessing the food bank’s current processes and future needs, there was one inescapable conclusion: this was an organization which desperately needed to reduce its dependency on key people.

“I always say it’s good to have dependable people, bad to have a people dependency,” he says. “In this case, if it wasn’t for the quality of people they had, there’d be nothing else holding the place together. They had no business processes in place. It was one of the hardest consulting documents I’d ever had to write.”

It wasn’t news to Carroll, though, who’d had experience in companies with complex business processes. He knew it was one of the food bank’s biggest challenges. And as the two worked together, they formed a good idea of what was required to bring The Daily Bread Food Bank into the 21st Century.

“How do you make sure that when you’re going to create 178 different pick orders you don’t accidentally give somebody too much of one thing and not enough to somebody else?” says Allwood. “We developed a system of logic that would automatically generate all the pick tickets based on what they had in inventory, what they had purchased, and what donations they knew were coming.”

It included replacement logic so if they ran out of bread, for example, they could identify another product, perhaps crackers, that would serve as a substitute. The software would automatically recognize the substitute product so they didn’t have to stop the system and change what was being picked.

“In a typical food distribution centre, that doesn’t happen,” Allwood points out. “If you have to pick product A, you pick product A, that’s it. No substitutes.”

He also recognized that, unlike commercial food distributors, food banks rely on a lot of volunteer help, so tools need to be simple and intuitive.

“We developed a custom sorting application to help them sort the big gaylords of food that come in,” he says. “With a Motorola MC17 device, the kind that is often used in retail shopping environments because it only has a couple of buttons on it, the volunteers can quickly categorize what they’ve sorted. You can teach a volunteer how to scan food into the system in about five minutes.”

The more powerful MC9000 devices are used further down the chain by warehouse staffers to generate the pick orders.

“One of the ways we tested our application was to send our staff in for a full day to do some food sorting. It was a great team-building exercise for us and we also got to see, in real life, how it’s all going to work itself out.”

The project was a business venture for Systems Logic, for sure, but as community minded people, Allwood and his partner Rob Simmons, the vice president of research and development, donated some of their services, licenses, and consulting.

“We gave them some considerations,” he says. “We still have to be solid from a business perspective, but we also wanted to help them out, respecting the kind of organization they are.”

They’re now talking to other food banks to see if they could benefit from the same system.

Katharine Schmidt, executive director of Food Banks Canada, says even the country’s largest food banks are still using spreadsheets as a way of tracking their inventories, despite having fairly complex logistics needs.

“Logistics is critical to what we do,” she says. “Acquiring and distributing food is the core work of food banks. Being able to track the food they’re acquiring and distributing, and understanding what’s in their inventory is very important.”

She believes warehouse management systems not only bring efficiencies but can help with organizational effectiveness.

“Food banks and their agencies serve families with specific needs. If they had systems that were more sophisticated, they’d be able to service their communities in more efficient and effective ways,” she says.

Food banking is a relatively new phenomenon, she points out. They were thought to be a short-term solution to extraordinary needs in the early 1980s.

“That, unfortunately, and sadly, has not happened. So it’s probably time to have a conversation with supply chain professionals and government about the work that we’re doing, and how can we be better at this while at the same time trying to eliminate the need for the work we do.”

Andre Persaud, production manager at The Daily Bread Food Bank, says there are definitely advantages to having full transparency throughout the facility.

“This system makes it a lot easier to find product that has to come out of the system,” he says. “We have a better idea of the companies we purchase food from, the donors we associate ourselves with, and the movement of goods within our pipeline. We can quickly qualify and quantify where our finished goods are going to, so all of the agencies that are receiving our donations and the foods, we can track it all to home base.”

Any agency asking David Carroll what he thinks of warehouse management systems will get a ringing endorsement. Not only has it allowed the food bank to capture elusive efficiencies, but it has given donors from the food industry greater confidence that tainted or spoiled food will never reach consumers.

“They want to know their product is being handled safely, is properly controlled, and that we know where it’s going. They don’t want their product to be shipped out when it’s been damaged, to harm their brand name or injure people. We can assure them that we ship those products by their best-before dates. We ship things out FIFO, so they know that we’re going to handle their food properly, and we’re not going to damage their brand reputation,” he says. “If you can demonstrate that you’re looking after their interests then that’s a huge obstacle that’s removed to them agreeing to give their food to you.”

Ultimately, a modern warehouse management system has allowed the food bank to save money, but he insists that was not the primary motivator. Their real concern was customer service.

“We have a philosophy of being fair to all our agencies and responsible to our donors, and those were the main things we’ve gained from this system,” he says. “It has allowed us to offer a better quality of service to those who rely on us.”

Systems Logic welcomes TDS Trucking

May 2009 – Systems Logic would like to welcome TDS Trucking (http://www.tdstrucking.ca/) to our family. TDS Trucking is a fully equipped LTL carrier with a full complement of straight trucks and a growing fleet of LTL dedicated tractor-trailers. TDS Trucking choose Systems Logic’s Wireless Warehouse In A Box WMS Solution to help manage their growing business, and growth into the Third Party Logistics Market.

Systems Logic welcomes D+S Distribution of Ohio

May 2009 – Systems Logic would like to welcome D+S Distribution (http://www.dsdistribution.com/) of Wooster, Ohio to our family. D+S Distribution is a leading provider of strategic Supply Chain Management in the north eastern United States, including Inventory Management, Audit and Product Testing, Order Fulfilment and Product Distribution. D+S Distribution chose Systems Logic as their technology partner for our innovative approach and agile technology solutions, allowing D+S Distribution to continue to be a leader in Supply Chain industry to their Fortune 100 customers.

Systems Logic demos at SCL Annual Canadian Conference

April 2009 – Systems Logic demonstrated our solutions at the Supply Chain Logistics Annual Canadian Conference in Toronto, Ontario (http://www.sclcanada.org/index.php?id=200) .

Systems Logic welcomes the Daily Bread Food Bank

April 2009 - Systems Logic would like to welcome the Daily Bread Food Bank (http://www.dailybread.ca) of Toronto to our family. Systems Logic will be working closely with the Daily Bread to help better utilize the food resources available, with our Wireless Warehouse In A Box WMS product. As well, Systems Logic will be developing new tools that will assist the Daily Bread Food Bank with their planning and sorting needs.

Systems Logic welcomes Arctic Distribution and Storage

April 2009 – Systems Logic would like to Welcome Arctic Distribution and Storage to our family of clients. Arctic provides Third Party Logistics and Reefer Freight services in Southern Ontario. Arctic chose our Wireless Warehouse In A Box LITE Edition to help them continue to provide high levels of service and visibility to their clients.

Systems Logic sponsors IWLA Canadian Council Spring Conference

March 2009 – Systems Logic was the proud title sponsor of the International Warehousing and Logistics Association Canadian Council Spring Conference (http://www.iwla.com/) . This event was well attended by many Canadian industry practitioners. Stay tuned for the Fall Conference (details to follow).

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