Choosing between the need for SCP process automation or process innovation is driven in large part by the maturity of a company's SCP processes (now and in the future) and whether or not (and where) it sees the supply chain bestowing competitive advantage. SCP technology often supports automation or innovation well (but not both), hence the choice. Companies often have a process automation foundation, with process innovation capabilities layered in where appropriate, in support of a specific competitive advantage.

• Different SCP vendors offer different levels of capability between SCP process automation and process innovation.
• There are multiple sources of SCP process innovation, ranging from point applications, to process templates, to entire SCP innovation platforms.
• Vendors good at supporting SCP process automation typically aren't good at supporting more than a small element of process innovation.
• Vendors good at supporting SCP process innovation typically aren't good at supporting process automation.

• For users: Understand that business needs sit at different points on the SCP process automation/innovation continuum, much like the vendors that support the two extremes. Assess your company's current position in its supply chain strategy and identify the ideal end state. This will help dictate the areas of SCP process automation and/or innovation needed and the best vendor for the job.
• For SCP vendors: Clearly articulate the type of SCP process support your company offers. The business model for process automation is very different from the one required to support process innovation.

The SCP market consists of a continuum that extends from process automation to process innovation. Process automation sets the fundamentals of integrated supply chain planning in place, typically involving deployment of integrated SCP applications and best-practice processes and approaches. Process innovation, on the other hand, involves deviating from this best-practice foundation to what might be described as a "next practice." The continuum is depicted in Figure 1.

The business needs of SCP application users sit somewhere along this continuum. End users' positions might change as they develop their supply chain strategies, however, leading to different business needs. This development may move a company more toward the right for certain processes or steps in its overall SCP processes, allowing it to focus on areas in which it must be more innovative than the competition.

The key to supporting this innovation is twofold: clearly identify where your company needs to be innovative (remember: it's unlikely a company would want to be, or could even support, being innovative across the broad functional footprint that is supply chain planning), and evaluate the relevant SCP technology providers to see if they can support your organization's innovation journey.

Supply chain management (SCM) is all about business processes. For this reason, being innovative means more than buying the latest and greatest technology. It requires the desire to bring existing business processes to new levels of performance that support competition — unique or otherwise differentiated. In some cases, completely new business processes are introduced.

But not all process innovations will be applicable to every business. The key lies in determining the ones that make a difference and enabling the supply chain strategy to support the business strategy through tight strategic alignment. As such, one organization's definition of process automation might actually be another's process innovation. This highlights how complex technology selection can be — one size does not fit all.

In pursuit of SCP process innovation, Gartner recommends establishing a firm foundation of SCP process automation first. Oftentimes, SCP process innovation projects require that best-practice, integrated SCP processes are in place so that the innovation can effectively be acted upon within the wider context of the supply chain. For example, deploying a sales and operations planning (S&OP) process and application-based innovation will require that the decisions made in the S&OP process are enacted through the operational SCP planning layer and connected through to execution.

There are many categories of potential SCP process innovation:

• Deep, industry-specific functionality (e.g., steel operations scheduling)
• Deep, business-process-specific functionality (e.g., multiechelon inventory optimization and daily or pattern-based forecasting)
• Use of analytics to support end-to-end process performance management
• Use of process templates to help consume innovation and leverage intellectual property (IP) across solutions and processes
• Use of technologies and architectures, such as service-oriented architecture (SOA), business process management (BPM) and master data management (MDM), to provide a highly configurable technology platform to support quick-change business processes
• Deep domain and process expertise to support the development of specific, innovative solutions
• Multienterprise collaboration capabilities that support multienterprise business processes

These underlying capabilities give rise to specific SCP innovation sectors:

• Inventory strategy optimization
• S&OP
• Integrated business planning
• Complex production scheduling
• Multienterprise collaborative planning processes
• Supply chain performance management
• Strategic sourcing optimization

Typically these SCP process innovations are satellites to a capable SCP process automation foundation (see Figure 2).

SCP innovation must also be assessed against the maturity of a company's supply chain strategy. The strategy's evolution toward being what Gartner calls ""demand-driven will require innovative capabilities and processes to succeed.

Figure 3 outlines the key maturity stages of SCM strategy.

As a company evolves its supply chain strategy toward Level 4 in support of its journey to establishing a demand-driven value network (DDVN), SCP process innovation capabilities must be developed:

• Performance management becomes more end to end focused and less departmental focused and siloed.
• Planning processes need to be agile (able to change with business need) and multi-enterprise (that is not just internal, but extending across multiple levels of the external supply chain).

Planning processes need to support segmented supply chain response models that are self-aligning with product and customer clusters. These processes also must be dynamic — that is, easily re-evaluated and changed, like when products move along the life-cycle path.

Companies focused on SCP process automation are typically found at Level 2 or below on the DDVN Maturity Matrix — and this isn't necessarily a bad thing. It limits the value that's extracted from a supply chain, which normally means a company at this level is focused more on cost and efficiency, as opposed to seeing its supply chain as a source of competitive advantage. However, if an organization's competitive strategy isn't built on its supply chain capabilities, then a cost-efficient, best-practice supply chain capability may suffice. The supply chain strategy is one of the key determinants of the degree of SCP process innovation needed.

Unlike SCP process automation where there's a concentrated market of vendors that provide integrated suites, SCP process innovation can be sourced from a number of different markets.

To add SCP process innovation capability to process automation, companies must integrate a niche or point application that's focused on the specific innovation required, such as S&OP, inventory strategy optimization, complex production scheduling and complex or daily demand-pattern recognition. There are a range of small vendors that can provide this type of innovation. Because of their size, they recognize the need to coexist with incumbent ERP or SCP suites, and since they're often not in direct competition with most of them, they provide integration into existing business applications.

For some of these innovation categories — inventory strategy optimization, for example — the majority of planners and other SCP/ERP application users won't be directly involved in using the process innovation functionality, which means a restricted user base for the solution as well as a less frequent use cycle. The use of an inventory strategy optimization solution to determine safety stock targets across a multiechelon supply chain network, for instance, most likely will run on a monthly or quarterly basis, as opposed to the replenishment logic in an SCP suite, which will typically run and be used daily. The need for tight and near real-time integration with the core SCP functionality is not essential. The use of point solutions in this type of use case doesn't materially affect the integrity of the underlying operational planning process. It just enhances a specific analytical capability.

Examples of point applications can be found in the "Supply Chain Management Market and Vendor Guide, 2009."

SCP process innovation can be sourced from broad suite vendors that are probably better known for their process automation capabilities. This means they're positioned toward the left of the automation-innovation continuum, but have some innovative capability within their overall SCP functional footprints. These suites have often evolved together or have been closely integrated. As such, they're oriented toward process automation, even though they may have small components that offer process innovation possibilities.

Some examples of SCP Suite vendors include:

JDA offers the Manugistics solutions as its main manufacturing- and distribution-oriented SCP capability. Manugistics was an innovative SCP vendor before its acquisition by JDA, which has a conservative approach to innovation and applies a pragmatic method to its product development, one that's been effective for the company in terms of growth and revenue.

However, there are some pieces of the JDA-Manugistics offering that add substantially to the strong SCP process automation foundations. JDA offers an inventory strategy optimization capability through the Inventory Policy Optimization (IPO) module. Several large consumer packaged goods (CPG) companies use IPO for help with better placement of inventory across multilevel supply chains. The Demand Classification and Dynamic Demand Response solutions are examples of innovations that help improve the effectiveness of the demand-planning and demand management process. In December 2008, JDA launched the Executive S&OP Workbench, which is aimed at complementing the operational S&OP capability its users leveraged from its SCP components. The product helps customers mature their S&OP processes with more executive and financial planning and analysis support.

Oracle offers its Value Chain Planning suite as its SCP portfolio. While it provides a strong SCP process automation capability, there are some SCP process innovation capabilities within the suite that, if they match a user's innovation requirements, can provide an upgrade path.

SCP process innovation comes in different flavors from Oracle. For starters, there are the best-of-breed SCP acquisitions the company has in its portfolio. Oracle's Demantra, for example, is a strong demand-planning product that has innovation capabilities for areas such as causal-based forecasting and S&OP.

Second, the company has developed its own SCP innovation components that add to its core SCP functionality:

• Oracle Inventory Optimization is a multiechelon inventory strategy optimization product that allows users to evolve to more effective inventory settings as part of a segmented supply chain or a postponement-based supply chain strategy.
• Oracle Strategic Network Optimization is a supply chain network optimization solution that enables the user to design the most cost-effective supply chains and quickly adjust to supply chain disruptions.
• Oracle Rapid Planning is a new solution that allows users to build what-if scenarios and quickly evaluate changes and alternatives to plans.
• Built using Oracle Business Intelligence Enterprise Edition, Oracle Advanced Planning Command Center is a performance management capability that sits over the various Oracle Value Chain Planning suite modules, providing an interactive, drill-through performance monitoring and management front end.

Oracle provides the necessary integration between the innovation and automation components that support the consumption of these innovations within a strong automation environment. The company also offers other integrations to support processes that span different functional areas. The best example is the integration based on the Application Integration Architecture (AIA) that connects Hyperion Planning, which provides financial forecasting and budgeting, with the Demantra Real-Time Sales and Operations Planning product to offer a financial plan reconciliation capability as part of a mature S&OP process.

"SCP innovation partner" is a term that Gartner uses to describe vendors that focus exclusively on supporting clients with a broad set of SCP innovation requirements. An SCP innovation partner can support more than just point-based innovation by providing a cost-effective and efficient way to develop innovative SCP-process-based solutions for specific customers.

There are key characteristics that single out an SCP innovation partner. For starters, innovation isn't built into an established application stack, as this perpetuates the point-based innovation approach. The vendor will also have a road map for the modularization of innovative functionality and will articulate a business process platform strategy, including any of the following:

• Adpots SOA in its design style — SOA supports the decomposition of business logic and functionality to allow reassembly into specific, innovative solutions.
• Employs an MDM strategy or product road map — The addition of MDM supports the separation of data and business logic necessary to facilitate a flexible and innovative application environment for supply chain innovation support.
• Recognizes it doesn't exist in isolation — The vendor can interoperate with other platforms in the enterprise for data and process management.
• Applies the decomposition approach — It provides a repository of Web services and master data objects enabled via SOA and MDM that can be easily called into new composite applications.
• Provides innovation in the form of templates — This way new customers aren't starting from zero, but have an 80%-plus solution as a starting point from which to configure for their exact requirements, leveraging the flexible architecture of the vendor.

There are a few SCP innovation partners in the market today. The issue with these vendors is they're good at providing SCP process innovation, but not process automation. The architectures, business models and supporting service competencies are different between the two.

Figure 4 contrasts the key differences between a SCP process automation vendor and one focused on process innovation.

JDA acquisition's of i2 Technologies is a good case in point. JDA is strongly oriented toward SCP process automation, with standardized packaged, lower-service ratio solutions. On the other hand, i2 offers nonstandardized, componentized, higher-service ratio solutions. It's difficult to blend these two extremes together successfully in a combined company. SCP process innovation partner vendors typically don't make strong SCP process automation providers.

The following are some of the emerging SCP innovation partners.

Moving down the SCP process innovation path over the last five years, i2 is the most complete SCP innovation partner in the market today. The company was one of the first SCM vendors to apply a service orientation to its solutions and architecture. It has an SCP-focused business process platform with an MDM and BPM capability to help knit functionality components across its full SCP footprint. The company also developed a library of templates for various customers. These templates offer a good starting point for focused solutions and make the consumption of its innovative capability cheaper and quicker.

To support these innovations on the product side, i2 has built up its SCP domain expertise so that it can marry this in-depth knowledge of supply chain processes with the right technology to support specific business processes. The company has focused on its supporting services for innovative solution sets to bolster this approach.

As with most innovation vendors, i2's services-to-software ratio is much higher than the average pure-process automation vendor's solution set. However, JDA's acquisition puts i2's innovation partner status at some risk.

Specializing in the planning and scheduling market for complex process industries, such as steel and aluminum production, Quintiq incorporates two different dimensions of SCP innovation into its products. For starters, it's able to bring deep, optimization-based planning and scheduling solutions to bear on complex SCP problems and environments. To do this successfully, it has proven capabilities in these industries and built up the depth of its domain expertise to fully understand the problem and requirements of these particular challenges and environments. For its chosen target verticals, Quintiq has proven SCP capability and domain expertise in spades.

The second dimension is the company's ability to provide solutions to wide-ranging planning and scheduling problems — from SCP, to logistics, to workforce management — using the same base code aligned with a zero-modification approach. Industry templates are applied to the base code to establish the industry solution, and then customer-specific configurations are added on the top for customer-specific solutions.

AspenTech specializes in a range of software for the complex process industries, such as chemicals and oil refining, with part of its portfolio focused on SCP (other areas include manufacturing execution systems, design and modeling solutions). The company's SCP capability dates back to two acquisitions made in the 1990s, which originally gave it access to production planning and scheduling capability for complex process industry customers. The first was Bechtel's PIMS (Process Industries Modeling System) business in 1997, followed by the purchase of Chesapeake Decision Sciences in 1998, which brought the MIMI solutions on board.

The SCP capability initially came in the form of a highly configurable, tool-box-like, planning and scheduling capability that allowed customers to develop their own custom-made solutions. This was valuable to the more complex process industry scenarios for which AspenTech competed. The company has recently been packaging this flexible functionality using templates for specific industry solutions (e.g., AspenOne Planning & Scheduling for Olefins and Aspen Petroleum Supply Chain Planner) as well as providing a technical layer that supports the integration of the different applications in its portfolio.

The AspenTech platform is Microsoft based and utilizes components such as SharePoint and Windows Communication Foundation. An enterprise service bus is used to integrate disparate applications via loosely coupled, message-based integration, with a propriety MDM solution handling data transformations. Expect AspenTech to make further developments in the process orchestration capabilities of its platform to support more complex and wider-spanning business processes.

Gartner is seeing the evolution of multienterprise business process platforms, or ME-BPPs. It's a conceptual model for a multistakeholder environment where multiple businesses, operational processes and resources are governed.

An ME-BPP consists of a combined set of shared IT and business models that enables enterprises to accommodate rapid but controlled business process change through the use of an integrated composition environment and reusable software services in a shared, multienterprise managed environment. This type of capability will enable process collaboration across supply chains, as opposed to the typical, transaction-based collaboration of old.

The process-oriented collaboration capability will initially be focused on areas such as supply chain visibility, collaborative demand and supply planning, and vendor-managed inventory (VMI), while internal supply chain planning processes remain separate and distinct. Over time, the boundary between internal and external collaboration will break down, and increasingly seamless processes will extend across complete supply chains.

There is no fully-baked ME-BPP product in the market today. However, several vendors are moving in this direction, such as E2open, Wesupply and E-Builder.

ME-BPPs will be offered typically as software-as-a-service (SaaS) deployments. SaaS-based SCP solutions don't offer SCP innovation, per se — it's just another deployment option alongside on-premises and hosted solutions. However, some SaaS SCP solutions, such as ME-BPP, will afford innovation through their abilities to support external and multistakeholder business processes, and it's this ability to support extended, end-to-end business processes from which innovation can be derived.