MarketScope for Stage 3 Sales and Operations Planning
Sales and operations planning is a critical process to help businesses become more demand-driven. More specialized sales and operations planning solutions have been emerging to better serve those companies with more mature S&OP requirements.
This document was revised on 10 September 2012. The document you are viewing is the corrected version. For more information, see the Corrections page on gartner.com.
Some companies are evolving and maturing sales and operations planning (S&OP) from an operation-driven process to a truly business-driven, business-integrated process that supports stronger and more strategic value generation across the supply chain. The strategic alignment of S&OP involves comparing (and eventually fully integrating) operational plans with strategic plans and initiatives and driving alignment. However, about 70% of S&OP processes today have little discernible strategic dimension. This is partly due to the inherent difficulty in achieving this alignment and the lack of suitable tools to help support it. Organizations can use this MarketScope when evaluating solutions and vendors that can help S&OP deliver more of its potential for the business.
As companies' S&OP processes develop through the stages of maturity, their demands on technology providers will change as they try to figure out how to support business-orientated global S&OP deployments. This MarketScope focuses on evaluating S&OP solutions in terms of how well they would support a full deployed global Stage 3 S&OP, primarily for large multinational enterprises. It discusses and rates vendors based solely on how well they and their solutions support a mature Stage 3 S&OP process, not just in terms of the technology itself, but also in how the vendor supports its Stage 3 S&OP customers now and in the future.
Before we discuss the vendors offering Stage 3 S&OP solutions, let's understand:
- How the definition of S&OP has evolved
- How S&OP matures in organizations
- How we characterize Stage 3 S&OP
- What technology organizations need at each stage
- What technology organizations need at Stage 3 S&OP
- What you should do next on your journey to S&OP maturity
Sometimes, organizations have understood S&OP to be purely a supply chain process instead of a key business process.
S&OP as a supply chain management (SCM) concept has been around for several decades. Interestingly, the original definition of S&OP in the 1980s included the notion of the alignment of strategic to operational plans, as well as the harmonization of these plans across disparate planning environments/departments. However, this vertical alignment rarely happened, because most S&OP process deployments grew out of operations/supply chains and never evolved to become the key business planning process in a company. The original S&OP concept was purely based on the process itself; there was no S&OP-specific technology involved beyond the prolific use of spreadsheets to present the various plans emanating out of manufacturing resource planning (MRP) systems.
Today, it is probably fair to say that "S&OP" has a rather vague definition, ranging from demand planning to integrated business planning. To help companies understand what S&OP means for them, Gartner uses its S&OP process maturity framework to define each maturity stage more specifically. A company can then plot its journey through the maturity stages, with the majority of companies aiming to move from Stage 2 to Stage 3 S&OP maturity: in other words, establishing a more business-oriented, integrated planning process that successfully connects longer-range planning with shorter-term operational planning and execution — hence, the focus of this MarketScope on Stage 3 S&OP.
Gartner recognizes four stages of S&OP process maturity:
- Stage 1 Process: Operational-Focused S&OP — Reacting
- Stage 2 Process: Planning-Focused S&OP — Anticipating
- Stage 3 Process: Profit-Focused S&OP — Collaborating
- Stage 4 Process: Value-Driven S&OP — Orchestrating
(See "Technology's Role in Supporting Different Levels of S&OP Process Maturity" for a full description of organizational practices at each of these four stages.)
At Stage 3, S&OP is mainly an internal but businesswide process that aligns and reconciles the plans up, down and across all relevant functional groups throughout a business. Companies will also start to extend their S&OP processes by collaborating with some key customers and/or suppliers. The focus of Stage 3 S&OP encompasses operational, tactical and strategic plans across the supply chain with strong alignment to finance plans and budgets over an extended planning horizon.
Let's discuss a few of the characteristics of Stage 3 S&OP:
- Responsibilities: Although the supply chain organization typically orchestrates the S&OP process, the business (specifically the profit and loss [P&L] owner) sponsors and owns it. The business sees S&OP as the "way we do business," where all key business decisions are evaluated and made.
- Alignment: Operational and tactical planning alignment is strong because of the layered and tailored planning processes. A company will align these operational and tactical plans with the long-term corporate finance and strategic plan, and have strong reconciliation with the current financial budget or annual operating plan. The impact of plans and scenarios will be focused increasingly on resulting changes in profitability.
- Output: A key output of the S&OP process is the current version of the budget/annual operating plan, as opposed to a comparison exercise between a separately prepared budget (typically annually) and an S&OP-derived aggregated plan (typically monthly). As a result, the organization can effectively review and revise all its plans monthly. Another key output is a clear understanding of the tactical and strategic options/initiatives that need to be executed to achieve the aligned corporate plan — which Gartner calls "value tradeoffs."
Gartner is increasingly seeing companies that want to evolve to Stage 3 S&OP, and some that have achieved this level of maturity. Many companies have a form of S&OP (typically Stage 2), but are unhappy with its current capability, scope and performance. Gartner research shows that approximately 67% of companies have either a Stage 1 or Stage 2 S&OP process.
The technology requirements change (and build on each other) as the S&OP process moves through the process maturity stages:
Typically, in Stage 1, tools such as ERP and Microsoft Excel dominate. Organizations perform operational planning in the ERP system. They may supplement this by deploying commercial planning tools and/or multiple Excel spreadsheets locally. They use Excel and Microsoft PowerPoint to present their plans at various S&OP review meetings.
The Stage 2 process will usually still rely on spreadsheets to support the S&OP process, displaying aggregated data out of ERP and/or other forecasting or supply chain planning (SCP) applications. Because organizations during Stage 2 require translation across multiple hierarchies and views of data and plans, they often use an integrated SCP application to enable the operational planning processes across a defined supply chain, which includes demand and supply planning. The integrated SCP platform typically feeds aggregate plans into the Excel-based S&OP process, via the inherent aggregation and reporting capabilities of the SCP solutions. Companies without integrated SCP platforms may use their business intelligence (BI) investments to consolidate data from numerous sources to facilitate the aggregation and reporting of plans. Companies having a Stage 2 S&OP process in place for awhile may start to look for more robust tools (other than Excel) to support their process management, simple "what-ifs," and data management and presentation requirements.
In early Stage 3, organizations may still try to use the reporting capabilities of SCP applications, BI and/or spreadsheets to present the plans in the S&OP reviews. As the organization develops its Stage 3 process, it will outgrow this technology fairly quickly and require a more suitable S&OP solution that can support the company-specific S&OP process. (For a full description of the key functional capabilities of a Stage 3 S&OP solution see "Stage 3 S&OP Reference Architecture.")
Few companies have reached this level of process maturity, and as yet there are no fully baked suite-based Stage 4 S&OP solutions available. However, a few vendors are developing capabilities toward this level or have solutions addressing elements of a Stage 4 S&OP process that can be integrated together. Stage 4 technology will likely build on Stage 3, adding much stronger strategic value chain and financial modeling capabilities, and the ability to extend the scope of the planning process fully to the extended value chain.
"Stage 3 S&OP Reference Architecture" details the key functional/technology components of a Stage 3 S&OP solution. Here is a summary of these components:
- Collaboration support: The ability to support a multistakeholder process across a dispersed global organization, with emerging support for external collaboration with key customers and/or suppliers.
- Assumption management: The ability to capture and manage the underlying assumptions used to justify input to plan changes and scenarios.
- Hierarchy management: The ability to translate base planning data into multiple views, aggregations, units (operational and financial) and user-defined segmentations.
- Supply chain modeling: The capability to generate meaningful feasible scenarios, increasingly in the area of examining changes to the future operating model of the business
- Financial impact analysis: The ability to twist scenarios into meaningful financial terms that can help to determine the true profitability implications of the options under consideration, with clear implications as to what can be achieved from an execution perspective. ROI, net present value (NPV), impact on profitability and cash flow are some examples.
- Workflow management: The ability to support the design, development, management, change and control of the business process of S&OP.
- Performance management: The ability to report and view key performance indicators both vertically through the supporting operational processes and, more importantly, horizontally across the end-to-end supply chain to support value trade-offs and root-cause analysis.
- Scenario management: The ability to socialize and version/control/manage the scenarios across the relevant stakeholder community, as well as across different parts of the supply chain and time horizons.
- Integration: Connecting operational planning, execution and financial planning capabilities — ideally at the data and process model level — thus supporting a truly active planning environment that enables decisions to propagate throughout the planning hierarchy.
An integrated SCP environment will typically form the foundation for further S&OP process support technology. This integrated planning environment provides a planning system of record (see "Hype Cycle for Supply Chain Management, 2012"), creating and managing the underlying detailed operational planning data that the organization needs to utilize in the S&OP process. This planning system of record requirement starts to become evident at Stage 2 planning maturity, when organizations use it as the foundation for more-advanced S&OP functionality as they move into Stage 3 S&OP.
Without this foundational planning system of record, the maturing S&OP process tends to lose connectivity with the detailed operational planning and execution processes — a concern increasingly raised by practitioners. This is why companies tend to carefully evaluate the S&OP technology from their incumbent SCP providers first when looking to invest further in S&OP technology. If a company is evaluating SCP vendors for a deployment of an integrated SCP capability (which will become their planning system of record in effect), and S&OP is not on their radars today, it will likely be in the future. Therefore, companies should consider the strength of the SCP vendor's S&OP capability for their future requirements. Failure to do could substantially weaken the potential integration between the S&OP planning layer and the operational planning layer, when the company eventually chooses to deploy Stage 3 S&OP and it ends up needing a third-party S&OP solution. This scenario will increase the risk of misalignment across the planning processes.
Companies working to mature their S&OP processes should:
- Identify their specific requirements for S&OP, and recognize that these are not the same at the different maturity stages.
- Plan the development of their S&OP processes and identify the right technology to support these different planning processes at the right time.
- Understand that technology plays a supporting role in helping a company move through the maturity levels of S&OP (see "Technology's Role in Supporting Different Levels of S&OP Process Maturity" and "Conquering the Seven Deadly Challenges of Sales and Operations Planning"). A company cannot achieve Stage 3 S&OP through technology alone.
- Recognize that each new S&OP technology addition will build on previous investments and ensure that this and specific process road maps are taken into account when making any S&OP technology decisions.
- Use this MarketScope to better understand the market for Stage 3 S&OP solutions, as well as the advantages and limitations of the different categories of S&OP technology providers.
This MarketScope evaluates solutions that specifically support Stage 3 S&OP process maturity, primarily for large enterprises implementing S&OP. Gartner defines a Stage 3 S&OP software application as a discrete set of capabilities that can support the key steps and requirements of an integrated, increasingly global Stage 3 S&OP process. We have used "Stage 3 S&OP Reference Architecture" to assess the product capabilities of the various S&OP solutions evaluated in this MarketScope. This reference architecture helps assess how these vendors' current capabilities and product road maps and vision relate to Gartner's Stage 3 S&OP definition. We also hope that some of these vendors will mature their offering to further support users that will want to move to Stage 4 S&OP.
Beyond the use of spreadsheets, S&OP capabilities initially emerged from ERP or SCP functionality that supported operational planning processes via aggregation and reports. Some enterprises have also leveraged their BI investments to provide data, aggregation and reports. Regardless of the technology supporting data aggregation, companies have typically presented plans in the various S&OP reviews using a combination of Excel and PowerPoint. However, this technology mix causes issues, including:
- Latency of data
- Different plan versions
- A lack of collaboration
- Data quality degradation
- The lack of linking summary plans back into detailed plans
- The inability to produce and evaluate scenarios for alternative courses of action, or support and manage the process itself
These issues have driven the market for more specific, dedicated S&OP capabilities, especially as companies try to mature Excel-based S&OP processes and require more targeted technology.
Specific S&OP solutions (as opposed to add-on reporting to operational or transaction systems), which more closely match the needs of more-mature S&OP processes, will be the fastest growing S&OP technology category over the next five years. The key factors that will drive growth in the Stage 3 S&OP market are:
Growth and expansion:
- Continuing globalization of operations
- Increasing complexity of supply chains (such as offshoring, new markets)
- Increasing supply chain risk (such as supplier, currency, geographical, political, and natural disasters).
- Expanding product portfolios
Continuing pressures on total supply chain costs, such as:
- Economic uncertainty
- Fuel and other transportation costs
- Currency and interest rate considerations
- More attention to profit optimization opportunities and trade-offs
- The need for a better understanding of the full financial impact of alternative plans or options
The need for increased value:
- Increasing customer service requirements
- Strategic diversity — the need for the company to run several concurrent business strategies, and, hence, the need for concurrent supply chain strategies and a mechanism to manage these
- An increasing need to link strategies to operational plans to drive closed-loop performance
- Significant improvements required in supply chain performance through a better/different balance between customer service and total delivered cost
- Stronger value-oriented orchestration across extended global supply chains
To support these requirements, more-mature S&OP practitioners will require strategic alignment and financial impact analysis tied to their strategic planning and budgeting processes as they look at how to link the different planning domains in the enterprise. To be effective in connecting strategy to operations, companies will need both an operational S&OP layer and business S&OP layer.
Historically, the majority of S&OP capabilities have tended to be extensions of existing SCP, ERP or BI applications mainly capable of supporting the reporting requirements of a Stage 1 or Stage 2 S&OP process. During the past few years, numerous vendors have strengthened their S&OP capabilities to support, at least in part, a more mature S&OP process (late Stage 2 and into Stage 3).
Solutions are emerging that have tight integration between the operational planning capability and the S&OP capability. These solutions enable organizations to put a fully active decision-making process in place across the different planning horizons and levels of aggregation. Vendors that already have a solution set that provides a credible planning system of record can more easily provide such a tightly integrated solution.
Vendors are increasingly likely to add more advanced financial analysis, scenario management and value chain modeling to their S&OP solutions —natively or as additional integrated modules — to help support users moving toward Stage 4 S&OP. Gartner also expects to see some SCP vendors offer solutions that enable much closer alignment of operational and business planning within the same process and data model. Stand-alone business modeling solutions will continue to evolve, focused on helping companies develop and compare financially aware scenarios, and some of these may well be consolidated back into the more process-management-oriented S&OP solutions —through acquisition or partnerships. Finally, some corporate performance management (CPM) vendors may evolve their financial planning solutions to incorporate value chain modeling in an effort to provide some form of S&OP support.
A vendor's heritage will often heavily influence how it "sees" S&OP and the relative strengths and weaknesses of its offerings. Let's look at the different categories of vendors:
- Pure-play S&OP vendors: They have tended to focus on supporting the process of S&OP, which is a legacy from companies starting S&OP efforts using Excel and subsequently needing more integrated process management support as their processes mature.
- SCP vendors: They have tended to focus on building out their underlying SCP capabilities, which often results in a more operationally planning-based solution, but often in tandem with relatively weaker process management support.
- Broader suite vendors: They are likely to try to integrate separate modules of functionality to form "composite" S&OP solutions.
- Business modeling vendors: They have tended to focus on business and financial modeling, providing strong capabilities in this area, but have weaker S&OP process support and weak or nonexistent operational planning support.
These different categories of vendors will take different approaches to developing their S&OP capabilities:
- Pure-play S&OP vendors: They will have to develop, acquire or partner so that they can make up for their missing components in areas such as operational planning support, strategic supply chain modeling and financial impact analysis.
- SCP vendors: They will likely evolve their solution architectures to converge the various moving parts together within the context of a planning system of record environment that supports the coalescing of data and process across planning processes, layers and horizons. They will often have to invest in stronger supply chain and financial modeling to support future-oriented what-ifs.
- Broader-suite vendors: These full-suite vendors with extensive planning solution portfolios will likely propose multiple integrated solutions that together provide the necessary components of a mature S&OP solution. They will have to focus on ease of use and integration across disparate solutions.
- Business modeling vendors: These vendors will build out their process management and operational planning capabilities (natively or through stronger integration with third-party SCP tools) or partner(or be acquired) by one of the other vendor categories looking for access to stronger supply chain, business and financial modeling, and scenario management capabilities.
To be included in this S&OP market analysis, a vendor required:
- A customer base: A minimum of 15 live or implementing customers for their specific S&OP applications, and strong evidence of deployments of Stage 3 S&OP in a global setting, for large enterprises
- Support capabilities: The ability to support the key elements of a global Stage 3 S&OP process, from a process and services perspective
- Clearly identifiable S&OP functionality: The S&OP capability had to extend beyond reporting capabilities out of operational planning applications or business intelligence platforms
- Global coverage: At least 5% of S&OP license revenue reported outside the headquartered region (that is, North America; South America; Central America; EMEA; or Asia/Pacific)
- Minimum functionality: Aggregate demand and supply planning (at an appropriate product family level), workflow/approval processes/process management, support for key performance indicators (KPIs) and performance management, collaborative capability, support for the multiple reviews of a "top to bottom" S&OP process, scenario modeling and financial impact analysis, hierarchy management, and translation capability
Overall Market Rating: Strong Positive
We have rated the market for Stage 3 S&OP solutions as Strong Positive. While the SCP market is forecast to grow at around 7.7% compound annual growth rate (CAGR) through 2016 (see "Forecast: Enterprise Software Markets, Worldwide, 2011-2016, 2Q12 Update"), the market for Stage 3 S&OP solutions looks set to grow by at least 15% year for the next few years.
Increasingly, companies will look to establish well-designed and effective Stage 3 S&OP processes to help manage more-global and unpredictable operations, as well as revisiting existing, lower-level maturity S&OP processes in a bid to improve their effectiveness. As companies find that their operating environments become more complex and unpredictable, the need for superior supply chain performance increases. They will also look for ways to leverage their investments in operational planning and performance management applications, as well as the means to model and evaluate strategic options and alternatives. This will include analyzing the potential financial impact on their corporate performance by increasingly adding Stage 3 and Stage 4 S&OP processes and capabilities.
Some buyers are pursuing this technology because their competitors have purchased it or — more importantly — because their competitors or market leaders have been successful at implementing Stage 3 S&OP capabilities. The benefits that some early adopters have experienced from this technology are impossible to ignore.
S&OP solutions are evolving to meet the requirements of buying organizations, although this is a developing market and solutions continue to improve. Available solutions range from basic to advanced. We expect to see significant investment in the development of Stage 3 S&OP solutions during the next few years as technology providers improve their abilities to support this critical business process as their customers try to mature their S&OP processes.
Source: Gartner (August 2012)
Source: Gartner (August 2012)
Boardwalktech is a U.S.-based vendor founded in 2004, with headquarters in California. It provides a collaboration platform that integrates and automates spreadsheet-based processes. The collaboration-based platform uses a patented positional data management technology running on an industry standard relational database, with Excel as the user interface. The platform is available either as on-premises or software as a service (SaaS).
Boardwalktech is not a business application vendor. However, it provides an environment in which spreadsheet-based applications/processes can be made more enterprise-class. In many companies, S&OP is a spreadsheet-based process, so Boardwalktech is present in the S&OP market. The vendor helps companies to better support their spreadsheet-based S&OP processes. Using Boardwalktech spreadsheets, users can submit changes via an add-in to the central database. Here, they can share them with other users, who can refresh their spreadsheets through another add-in. Because the UI does not change for the users, and the training needs are minimal, enterprises can implement Boardwalktech rapidly, compared with a unique business application. Therefore, Boardwalktech can provide a fast ROI.
Boardwalktech focuses on facilitating spreadsheet-based collaborative processes. As a result, Boardwalktech customers are using it in a number of supply chain application areas, including collaborative demand planning, S&OP, supply planning and vendor-managed inventory (VMI), as well as a host of other process/functional areas, such as sales and marketing, engineering, and finance.
Boardwalktech reports that approximately 70% of its demand is in the S&OP arena, and that it has had about 75 S&OP customers to date. However, there are many definitions of what S&OP is and what it includes. With that in mind, Gartner does not believe that Boardwalktech is a Stage 3 S&OP solution, even though the company is active in the S&OP market, with many of its customers having more than $1 billion in revenue. It is too weak in key functionality elements, such as supply chain modeling, financial impact analysis and process management support, to be viewed as a Stage 3 S&OP solution.
However, the Boardwalk Collaboration Platform (BCP) solution supports and automates a spreadsheet-based Stage 1 or Stage 2 S&OP process, which can be valuable to a company. The extent of modeling and what-if support depends on what a company can achieve in Excel, but for many companies Excel is enough for their early Stage S&OP processes. In addition, the process automation and collaboration capabilities of Boardwalktech could appeal to a company looking to focus on the process of S&OP before determining what its future S&OP technology requirements might be. Boardwalktech is worth considering as a means to support initial S&OP efforts when the organization needs to focus on process and organizational issues to prepare to advance to Stage 3 S&OP in future.
IBM is a U.S.-based global technology and service company that acquired the BI vendor Cognos in 2007. The foundation of Cognos' S&OP capability is its S&OP blueprints — free-of-charge templates that are used in conjunction with IBM Cognos Business Intelligence and IBM Cognos Planning, which are now at version 10.1. Companies may have IBM Cognos in place as part of their BI, CPM, or financial planning and budgeting initiatives (see "Magic Quadrant for Corporate Performance Management Suites" and "Magic Quadrant for Business Intelligence Platforms"). These companies may be interested in leveraging IBM Cognos' S&OP blueprints, at least for Stage 1 or Stage 2 S&OP. It is not unusual for companies to use portions of their BI capabilities to support parts of their early stage S&OP processes.
In the absence of any specific S&OP tools, companies can use BI technology to bring together disparate data sources, produce the necessary reports that feed into certain S&OP reviews, and then provide some performance management capability for review in the S&OP process. However, most BI-led S&OP projects have only progressed as far as providing basic reports and metrics. These solutions typically do not have any process support, specific planning capability or integration into other planning regimes across the user organization.
This is where IBM Cognos starts to diverge from other BI-oriented S&OP technologies. IBM Cognos has been developing a number of what it calls "blueprints" — that is, templates that can be applied over IBM Cognos Planning to support specific analytical requirements. For licensed users of IBM Cognos Planning, these templates are free of charge and users can download them from the IBM Cognos Innovation Center for Performance Management. This means that IBM Cognos has very little data on how many customers are using the S&OP templates and for what type of S&OP processes. These templates are not available for organizations that do not use IBM Cognos Planning.
The IBM Cognos S&OP Blueprint Suite currently contains three templates that can support aspects of an S&OP process. These templates are:
- The S&OP Baseline Module, which covers demand and production planning aggregation, and subsequent balancing
- The S&OP Distribution Module, which analyzes how the capacity of a distribution network can support the overall demand/supply plans (for example, space and capacity utilization reporting for distribution centers)
- The S&OP Executive Review Module, which provides a simple financial view of the plans, as well as providing some basic scenario management capabilities
IBM unveiled a Supply Chain Operations Reference (SCOR) model, Performance Blueprint, in May 2009. Performance Blueprint provides standard Supply Chain Council SCOR metrics and tracks performance against these metrics. Part of the SCOR metrics apply to the operational planning processes supporting an S&OP process, as well as to the S&OP process itself. For an IBM Cognos Planning user, these S&OP blueprints are a cost-effective way to support a less mature S&OP process, and perhaps to move away from a basic spreadsheet-enabled process. The IBM Cognos S&OP templates provide good performance management, planning and reporting capabilities, as well as some workflow for process step alerts and notifications.
The relevant S&OP blueprint can support the executive S&OP review and feeder reviews (for example, demand review and supply review) reasonably well, although only rough-cut capacity planning is available as an option for resolving demand/supply imbalances; there is no optimization capability in the blueprints. For this, companies need to defer to their operational planning systems or look at the IBM Cognos Optimized Sales and Operations Planning Solution. Enterprises usually use the executive S&OP blueprint to prepare the pack of information, including plans, scenarios and KPIs, that the organization users will review. In the lower-level reviews, the ability to drill down from higher-level plans into the underlying data provides a good root-cause analysis feature for planners. However, planners would need to directly access the relevant operational planning systems to make the necessary amendments to the plans, which is a limitation.
A new solution, Optimized Sales and Operations Planning, hit the market in 2011. This solution is broadly based on the existing S&OP blueprints and looks to contain some of the components necessary to support early Stage 3 S&OP. This will need to be proven with initial implementations and references. The solution incorporates the use of LogicTools' network design engine acquired as part of IBM's acquisition of ILOG and SPSS to support enhanced predictive analytics and TM1 to support data scalability.
If IBM Cognos is not the strategic provider of CPM services for a company, or the company is using the integrated BI and CPM offerings of its strategic applications vendor (for example, SAP or Oracle), these templates may be irrelevant or tactical in the short term. The templates provide a starting point, and may require modification to fit a company's specific requirements.
IBM Cognos Planning users seeking S&OP support, typically over an existing operational planning layer, should look at the IBM Cognos S&OP blueprints, because they provide a promising S&OP capability. They are free (to IBM Cognos Planning users), and can support the key reviews of an S&OP process, but offer limited modeling capabilities. For a longer-term solution, the new Optimized Sales and Operations Planning solution is interesting if the promise of the development is borne out in real implementations.
JDA is a U.S.-based, global software vendor that has grown largely through its acquisitions. Based on its acquisitions of Manugistics and i2 Technologies, JDA provides deep and capable operational planning support through its various SCP applications. As a result, it has a prominent role in many customers' overall supply chain strategies and S&OP processes. Many JDA (Manugistics and i2) users leverage the planning capabilities in their current SCP applications to support less mature operationally focused S&OP processes. However, the acquisition of i2 Technologies, in 2010, has allowed JDA to combine the capabilities of the i2 S&OP (Sales and Operations Management) solution with the native JDA S&OP (Executive S&OP Workbench) solution. JDA called the converged product JDA S&OP. This product is based on the i2 solution with a Class A Management module based on the heritage JDA Executive S&OP Workbench capability.
JDA S&OP uses its master data management capabilities and a separate database so that enterprises can deploy it over any set of SCP applications. The JDA S&OP solution stands out functionally because of its Excel user interface, which many users like due to their familiarity with using Excel to support an S&OP process. This solution provides strong collaborative capabilities, workflow and process management, reasonable financial impact analysis, and the ability to run immediate heuristic-based scenarios on the S&OP plans, as well as to write back changes to the aggregate plans made within S&OP to the underlying planning systems. The solution uses a heuristic-based rule engine to provide some immediate integral, constraint-based optimization and planning in the S&OP solution to help with the development of feasible demand and supply plans and what-ifs without reference to underlying operational planning optimization solutions.
New additions to the solution include:
- A Class A management module: The module provides more support for the executive S&OP review processes. It includes support for process workflow and task management, which are key capabilities in supporting an essential business process such as S&OP. Additionally, the module has some built-in KPIs and dashboards, as well as some basic financial simulation. The screens are laid out in accordance with a standard five-step Oliver Wight S&OP process, and incorporate graphical and tabular data. They also support meeting agendas, notes and assumptions management, as well as the ability to critique the process based on the Oliver Wight checklist questions.
- Rough-cut capacity planning: This addition supports strategic capacity planning scenarios within the S&OP meetings at the product-family level where common resources are used. This addition also helps support longer-term demand shaping activities in constrained supply situations. It helps to identify what type of demand is consuming supply and to identify options for overcoming supply shortfalls.
- Global S&OP support: This addition takes advantage of the JDA platform to push scalability for global S&OP data volumes. Also, enterprises can focus the specific workflows (such as action items, decisions and calendar) locally, regionally, at the business-unit level, or globally. Double-byte language support is included.
Enterprises should consider JDA for the depth of its planning solutions and its platform approach to the integration of these solutions. The inherent capability of the JDA SCP applications — either Manugistics or i2 Technologies — can support the implementation of an operationally oriented S&OP process (Level 2). For support for a Stage 3 S&OP process, users need to focus on the JDA S&OP solution. It is now a capable Stage 3 S&OP solution that supports the planning and process aspects of Stage 3 S&OP to a sufficient extent. However, full financial impact analysis capabilities are still relatively weak. This is the case in the scenario development capability, although JDA is working to strengthen this aspect. From a deployment perspective, JDA is a global vendor with good internal and external consulting services.
Jonova is a U.S.-based software vendor that provides a flexible modeling and reporting environment that can mimic the complexities of real-world business processes. It enables users to develop multiple scenarios, which they can then evaluate with strong financial acuity and performance management capabilities.
Traditionally, Jonova has relied on its modeling/scenario management platform to provide various solutions that make it particularly relevant for longer-term planning, within the context of integrating strategic and financial plans. However, it also does a good job of evaluating shorter-term what-if scenarios at a tactical level.
Jonova's Explorer product suite comprises several modules:
- Option Explorer supports areas such as concurrent planning, versioning of plans, hierarchy management to convert plans into different views/units, and socialization of scenarios.
- Value Chain Explorer contains all the supply chain modeling and simulation capability, including financial modeling and projection. It is driver-based and allows the user to model the extended supply chain to include supplier and customer behavior in the models.
- Task Explorer supports workflow and business process management, with an email notification capability to be added in late 2012.
- Data Set Explorer supports the more-casual user wanting to provide data from Excel, along with documented assumptions underpinning the data.
- Product Portfolio Explorer provides the role-based performance management capability, including KPIs/dashboards/reports in areas such as working capital, inventory turns, P&Ls, balance sheets, cash flow and NPV statements.
Enterprises can deploy the Jonova product set as on-premises, hosted, SaaS or via the cloud. Jonova provides templates that users can run over its modeling and simulation platform. These templates provides solutions in areas such as:
- Strategic planning
- Integrated business planning
- Portfolio profitability optimization
- New product introduction
- Network design and optimization
- Long- and short-range capital planning
During 2010 and 2011, Jonova evaluated partnership opportunities and the option to develop its platform and explore the use of cloud computing to support highly collaborative planning solutions. This resulted in a quiet time in the market for Jonova. Jonova's main value proposition is its capable and collaborative business modeling, financial impact analysis and scenario management capabilities. These are relevant for Stage 3 S&OP, but critical for Stage 4 S&OP. In the past, Jonova has focused less on the business planning process itself but has been addressing this more recently. The latest version of its product set includes enhanced workflow and aligns with the financial reconciliation and executive review steps of the Oliver Wight S&OP framework. This alignment introduces more recognizable S&OP process steps into the templated solution. Jonova scores well against the key architectural blocks of a Stage 3 S&OP solution. However, in the areas identified by users as key for their move into Stage 3 S&OP from Stage 2 (for example, strong S&OP process management across all process steps, and tight alignment with operational planning and execution), Jonova still has work to do. It needs to drive more implementations in recognizable Stage 3 S&OP process deployments, as opposed to strategic and financial business planning or Stage 4 S&OP support.
Jonova does not approach S&OP from the traditional direction of operational planning. It does not focus on harmonizing operational planning processes (as seen in typical Stage 3 S&OP processes). Jonova adds value to a Stage 3 S&OP process through its strong scenario management and what-if capabilities, which are tied to strong financial modeling and performance management. In other words, Jonova is very focused on moving a user from Stage 3 and to Stage 4 S&OP. Therefore, Jonova could easily develop into a solution provider that supports the strategic evaluation of value chain options and alternatives (which is key for a Stage 4 S&OP process). There are three reasons for this:
- Jonova is good at supporting strategic review requirements.
- It has strong strategic modeling capabilities.
- Its strong performance and scenario management capabilities enhance its strategic modeling capabilities.
Jonova-enabled planning processes could be part of a Stage 3 S&OP process. It could be part of the executive S&OP review for scenario evaluations and decisions, and/or part of integrated business planning/financial planning and budgeting processes. Operational issues would need to filter up through the Stage 2 or Stage 3 S&OP process, where users could review them at a relevant meeting or performance management review. Users would need to have prepared and evaluated different alternatives for executive review as part of the longer-term decision-making process. Jonova could be a good fit here.
The ability to run many different options and scenarios across a particular value or supply chain model helps companies identify inherent weaknesses. For example, with Jonova, they can time-phase model parameters to incorporate changes through the modeling horizon. Strong financial impact analysis of these various what-if scenarios helps clarify the impact of potential supply chain disruptions, as well as the investment levels required to mitigate risks. Jonova uses an Excel-like UI to aid scenario socialization in an easy-to-digest way, while proving a strong strategic and profit modeling toolkit that enables users to develop the underlying business models.
Enterprises looking for strong modeling capabilities or more financial impact analysis as part of their Stage 3 S&OP processes should consider Jonova. However, they should perform due diligence to ensure that Jonova is the right fit for their needs and environment, especially in areas such as operational planning alignment and full Stage 3 S&OP process coverage.
Kinaxis is a Canadian-based SCP software vendor. Originally a more traditional SCP vendor, Kinaxis had evolved its application into an analytics- and event-driven SCP solution, typically more focused on the short term. The vendor's primary focus is on the high-tech sector, where it has a number of customers using its RapidResponse platform to quickly evaluate and respond to unplanned execution events in the supply chain, particularly in contract manufacturing and other heavily outsourced environments. Today, RapidResponse is used for both short-term and midterm planning.
The Kinaxis solution includes functionality to cover event management, demand, supply/replenishment and inventory planning, as well as recently added dedicated S&OP capabilities. Kinaxis offers RapidResponse as both an on-demand and on-premises service. However, Kinaxis prefers to sell the SaaS solution set, with the majority of new customers deploying the SaaS solution. Regardless of deployment choice, all customers pay for the solution via a subscription model. Kinaxis claims its customers prefer the SaaS version.
Kinaxis reports that about 80 customers are using RapidResponse to support S&OP, although Gartner believes the majority of these are for Stage 2 S&OP processes. With its strong operational planning and what-if capability, RapidResponse customers are using the solution for supply/demand alignment and a form of material requirements planning/distribution resource planning (DRP) simulation tool across a manufacturing or distribution network, often during a shorter time period. However, some customers are now using it over extended time frames in support of S&OP. The supply/demand alignment can take account of strategic and operational responses across the supply chain, although the focus is often in the operational arena. The solution's ability to analyze aspects of product costs, margins and inventory exposure adds useful financial analysis, and supports the evaluation of different options and alternatives side-by-side in a balanced scorecard.
In 2010, Kinaxis launched S&OP capability for RapidResponse. This was built on the same platform as the base RapidResponse solution, and users can access the additional functionality for an additional fee. With this S&OP capability, Kinaxis is able to deploy key Stage 3 S&OP functionality for users. Kinaxis had added additional capability here to address the lack of forecasting capability in the base RapidResponse. The new S&OP capability supports:
- Statistical and consensus-based demand planning
- Specific S&OP reviews (for example, demand, supply, new product introduction and executive/finance)
- Assumption management
- Scenario planning and what-if analysis
- Some specific S&OP process templates/workflow
RapidResponse also supports an operational S&OP engine that is focused on operational, near-transactional analysis, eliminating the need for much of the labor-intensive and time-consuming data-gathering stage of S&OP. In fact, some customers use Kinaxis to help with the demand and supply data consolidation before feeding the data into another technology to support S&OP.
The platform offers strong collaboration and business activity management capabilities. The solution is configurable in terms of alerts and thresholds, and can drive alerts into Microsoft Office tools such as Outlook. RapidResponse is a single solution supported by a common data model and embedded analytics across time horizons and functions so that users can evaluate changes throughout the demand and supply side of the supply chain, and have the ability for the higher-level S&OP plans and the detailed level operational plans to be completely aligned. The platform also offers useful social networking capability for more ad hoc collaboration.
This makes any S&OP process deployed using Kinaxis highly active in nature and prevents disconnects between S&OP plans or scenarios, and underlying operational plans and capabilities. Several Kinaxis users cite this aspect as considerably valuable to them. The platform also enhances performance management through the use of KPIs, alerts, graphs, drill-down capability, dashboards and scenario comparisons.
To support a Stage 3 S&OP process, Kinaxis enables the collaborative nature of the supply-and-demand review processes, and uses alerts and task flows to provide business process management capabilities to support the S&OP process. Users can develop and approve what-if scenarios via the collaboration capabilities across different functions in the business. Kinaxis offers limited strategic supply chain modeling capability in the S&OP functionality to drive these what-if scenarios. For example, there is currently no linear-programming-based optimization capability, although heuristic-based optimization is available. However, RapidResponse emulates the manufacturing requirements planning functionality of ERP systems with strong business rule and heuristic capabilities, and uses this to provide planning and option development at the detailed and aggregate levels in an extremely rapid cycle. The value proposition here is the availability of an "approximate" plan fast enough to be useful, as opposed to a "precise" plan that is out-of-date by the time the planner gets their hands on it.
The user views are Excel-like (but not Excel), and the capability lends itself to supporting a more operationally oriented S&OP process, where the quick evaluation of operational demand/supply imbalances is a key requirement for the business. In addition, fast miniplanning cycles, which are sometimes ad hoc, are needed. For more strategic supply chain analysis (and some aspects of advanced financial modeling), users may need to consider additional analytical tools.
Kinaxis is developing its S&OP capability and sees this as a key market. It has a good framework for supporting S&OP processes, particularly in dynamic supply chain environments. We have seen this particularly in the high-tech industry. The S&OP edition of RapidResponse is showing good support for early Stage 3 S&OP processes. However, despite its capabilities of supporting variable cost analysis, Kinaxis needs to develop deeper financial impact analysis and more strategic supply chain modeling as it evolves to support late Stage 3 and Stage 4 S&OP processes.
Logility, a wholly owned subsidiary of U.S.-based American Software, focuses on SCM and particularly SCP. Its S&OP capability is provided by its Logility Voyager Solutions suite, which currently ships as release 8.0. Voyager Solutions covers the key SCP functional areas of external collaboration, demand planning, inventory, supply and replenishment planning, inventory optimization, manufacturing planning and scheduling, and available-to-promise. The S&OP capability is integrated across the Voyager suite. Voyager Solutions users that employ Voyager Demand Planning as a minimum have access to the foundational S&OP capability and templates. Logility also has a stand-alone S&OP solution called Voyager S&OP that organizations can deploy on top of other vendors' SCP solution. The vast majority of Logility S&OP deployments are made in conjunction with operational planning via Voyager Solutions.
Many Logility users support aspects of their S&OP processes with Voyager Demand Planning and Supply Planning products, which are aligned with the suite's strong collaborative and performance management capabilities to achieve consensus at the operational-plan level. The Voyager S&OP capability supports the various S&OP reviews. Built-in KPIs (more than 120 and based on the SCOR model) and typical S&OP graphs support performance management, which is a key part of S&OP. Leveraging Logility Voyager's performance management Home Page (once called Control Tower) provides additional support. This capability comes as an integral part of all Voyager solutions, and provides a KPI and scorecard environment across multiple Voyager modules. It can also incorporate data from other enterprise systems if required.
Voyager can support the aggregate views required for the different S&OP reviews through templates or user-defined views, as well as what-if capabilities supported either within the S&OP views (rough-cut capacity based) or through the solver-based optimization enabled SCP solutions or even the acquired multiechelon inventory optimization (MEIO) solution Voyager Inventory Optimization. Various standard application features and multiple units of measure enable users to convert unit forecasts into revenue or margin forecasts. Users have access to 100 user-defined arrays to leverage external data and custom calculations, such as budget, price, cost and margin, to support the "financialization" of the operational plan and use it to translate plans for different S&OP stakeholders. Users can also import financial budgets and compare them with the S&OP-derived budgets. The solution does not support more-advanced financial modeling and impact analysis, although the use of the Inventory Optimization module can help here to some degree in establishing strategic and tactical scenarios for a variety of business scenarios. The latest version of Voyager Solutions is Web-based and provides an enhanced user interface, more user configuration, enhanced graphics and stronger workflow capabilities.
Logility's acquisition of Optiant strengthens its supply chain modeling through MEIO and network design capability. In addition, the recent integration to Voyager IO can pull scenarios developed in IO and monitor and track them in performance management Home Page. It is unlikely that a non-Voyager SCP user would implement Voyager S&OP as a stand-alone Stage 3 S&OP solution. However, many new Logility customers are implementing Voyager Solutions to integrate and improve their operational planning processes, while helping to automate their S&OP process. Voyager is a very strong solution for supporting a mature Stage 2 S&OP process, and it has strong capabilities in all relevant areas for a Stage 3 S&OP solution. Future developments (in areas such as enhanced visualization of S&OP plans and scenarios) should make Voyager Solutions a stronger contender for current Voyager users to mature their S&OP process to late Stage 3. The ability for Voyager to support Stage 4 S&OP will require more development in areas such as strategic supply chain modeling and financial impact analysis.
Enterprises should consider Logility Voyager Solutions for S&OP when they are or will be using Voyager Solutions as the underlying integrated SCP environment. Logility continues to move in the right direction to support a robust Stage 3 S&OP process. However, Gartner has found a limited number of users demonstrating the use of Logility in a strong Stage 3 S&OP environment, although this is not so much an issue with the software per se, but probably has more to do with the current process maturity of the users themselves.
OM Partners is a European SCP vendor that specializes in complex, process-oriented vertical industries, such as chemicals, metals and paper. During the last few years, OM Partners has integrated its separate planning products into an integrated solution called OMP Plus. This solution has single data and process model integration across the different modules, as well as in-memory processing. Users install the complete solution and then license the specific functionality they require. OMP Plus covers most SCP functional areas, including:
- Demand planning
- Supply planning
- Detailed manufacturing planning
- Scheduling capabilities
Support for a strong S&OP process is inherent across the planning functionality in OMP Plus. This is the result of tight integration across the different planning regimes (especially at an operational-planning level) and the good aggregation capability of OMP Plus to represent plans into the S&OP process for the various review stages. Although, in theory, organizations can use the OMP Planner functionality to implement OMP Plus as a stand-alone S&OP solution that sits above an incumbent operational planning layer, they rarely do. OM Partners appeals to process industry users because of its complete, integrated OMP Plus solution. OM Partners' ability to support S&OP is another good reason to consider OM Partners as a planning system of record with functionality to support more mature levels of planning processes.
Once implemented, the vast majority of OM Partners' customers are using the long-term, higher-level planning functionality of OMP Plus, along with the relatively new demand planning module, to support various S&OP efforts. However, the vendor's customer base practices a broad range of different types of S&OP processes. Companies using OM Partners across their operational planning processes can support a Stage 3 S&OP process as long as they implement OMP Plus across the supply chain. OMP Plus provides tight integration between the different planning environments, capable collaborative capabilities and some process management/workflow support for the S&OP process.
However, OMP Plus offers weaker support for predefined S&OP process steps. It does not apply a recognizable best-practice process model, such as the Oliver Wight framework, which several other vendors use. In addition, OMP Plus' calendaring of the process cycle is limited compared with some other solutions. Users can resolve supply/demand conflicts manually or through an optimized capability. For this reason, some customers report using the solution live in their executive S&OP reviews. Export capabilities into Excel and PowerPoint support customers that still use Microsoft Office to present plans in S&OP reviews. Users can pass higher-level plan changes back down into the underlying operational plans by virtue of the single database.
OMP Plus supports scenario planning well (from a development perspective), as enterprises can use the various optimization engines built into OMP Plus at different levels of aggregation to provide operationally feasible alternatives for evaluation. The inclusion of and optimization around costs helps support reasonable financial analysis of alternative plans and strategies. Network design capabilities now included in the latest version of OMP Plus and additional inventory optimization capability in the OM Partners portfolio, but not yet in OMP Plus, provide options concerning supply chain design decisions being evaluated in the S&OP process.
Overall, OM Partners' S&OP capability is tightly linked to its operational planning. Consequently, the majority of its users take advantage of OM Partners to support both operational and S&OP planning. Financial planning in OMP Plus is mostly bottom-up (a legacy from its heritage as a detailed operational planning vendor). However, users can import financial budgets into OMP Plus and aggregate/disaggregate them up and down the flexible hierarchies within the solution. They can also drive financial plans from the operational plans. Progressively, we expect to see more users of OM Partners evolving their S&OP processes to Stage 3. They should have few issues supporting this level of S&OP with OMP Plus.
Oracle is a global, U.S.-based, software and technology vendor. Its S&OP capabilities come under the Oracle Value Chain Planning (VCP) product set. Oracle has a number of VCP products that should be considered when selecting a S&OP solution. In Gartner's opinion, the best way to think about how Oracle supports S&OP is to align the various Oracle VCP solutions with the different maturity stages of S&OP.
For Stages 1 and 2 S&OP, organizations can use the detailed operational planning capability of Oracle Demantra Demand Management and Oracle Advanced Supply Chain Planning (ASCP) in a similar manner to other SCP vendors. For a solid Stage 2 and early Stage 3 S&OP process, the relevant solution is Oracle Demantra Real-time Sales & Operations Planning (RT S&OP), which is based on the Demantra platform. The acquisition of Demantra has provided best-of-breed demand planning functionality, which now forms the de facto demand planning solution for all Oracle supply chain applications.
RT S&OP leverages enterprise-centric collaborative capabilities, and delivers the ability to manage and share aggregated plans across the organization. RT S&OP also provides various templates (for the different S&OP reviews) and workflow management capabilities, as well as the ability to support some performance management (via preconfigured and user-defined KPIs) and what-if analysis. For example, RT S&OP provides rough-cut capacity planning so that users can evaluate aggregate supply plans in different scenarios.
RT S&OP also offers financial modeling and metrics through the aggregation of detailed forecasts into revenue, cost and cash flow projections, which enables comparisons with imported financial budgets. Oracle provides this via an integration between RT S&OP and Oracle Hyperion Planning. This integration, which enables tighter harmonization between aggregate operational plans and financial budgets for Hyperion Planning users, comes in the form of Oracle's Application Integration Architecture (AIA), and is priced separately. Alternatively, RT S&OP users can import financial budgets directly for comparison purposes.
Users that want even more support for a Stage 3 S&OP process, such as stronger scenario development, more extensive performance management, more strategic-oriented planning capabilities and/or more support for executive reviews, should consider acquiring other components from the VCP suite, such as Oracle Inventory Optimization (IO), Oracle Strategic Network Optimization (SNO, and/or Oracle Advanced Planning Command Center [APCC]). For example, APCC enables supply chain performance management capabilities across the main components of the VCP suite. As part of the preconfigured templates, APCC provides more executive-oriented views for the executive S&OP review.
Within an S&OP process, we believe that that RT S&OP is more focused on operational/tactical planning, whereas APCC is focused more on supporting tactical/strategic planning. Customer references for APCC are smaller in number but growing, while Oracle has many RT S&OP customer references. In terms of references, Gartner believes that Oracle's challenge is to demonstrate mature Stage 3 S&OP support when the majority of its users are still at Stage 2 S&OP — albeit often with a strong/mature Stage 2 S&OP process.
Users must carefully consider which parts of the VCP offering they need to support current and future maturity levels of their S&OP processes. For instance, the offering could be built on the operational SCP and S&OP components, and possibly include some of the scenario planning offerings that Oracle also includes in its portfolio. A major benefit is that Oracle continues to integrate a number of these SCP components and provides these integrations as part of the licensed application upgrades. ASCP, SNO and IO are all integrated with RT S&OP and APCC to provide additional capabilities in scenario development and socialization. ASCP provides the detailed supply planning capability; SNO provides network design and higher-level, optimized supply/demand scenarios; and IO provides more detailed multiechelon inventory optimization (typically sitting between ASCP and SNO). This level of packaged integration of supply chain design tools in support of scenario development is unusual for an S&OP solution, but is a good addition and adds value in S&OP scenario analysis. To strengthen the process orientation of its S&OP solutions, Oracle has built process management capabilities into RT S&OP and APCC. In addition, Oracle has partnered with Oliver Wight, which lends additional credibility to the overall Oracle S&OP go-to-market process message.
Enterprises should consider Oracle for their S&OP needs whether or not they are Oracle ERP and/or Oracle VCP customers, as organizations can deploy RT S&OP and APCC as stand-alone solutions. However, it would be unusual to implement APCC as a single stand-alone S&OP solution. It is much more likely that RT S&OP will be seen as a strong candidate for stand-alone S&OP solution. Where an organization has implemented RT S&OP, it may subsequently implement APCC to support the evolution to an even more mature Stage 3 S&OP process. Further, Oracle provides the flexibility for a company to evolve its planning processes incrementally, rather than employing a rip-and-replace approach at each evolution stage. Enterprises can derive further value from Oracle's off-the-shelf integrations between RT S&OP and various SCP and ERP solutions that support integrated planning and execution processes.
European-based Quintiq is a best-of-breed SCP software vendor with a strong focus on the transportation and complex process industries (such as metals, chemicals and packaging). Its SCP solutions focus on the process industry, with specific functionality for the different process steps (for example, melt cast, hot mill and cold mill), as well as functionality to manage order allocation and available-to-promise (ATP) and capable-to-promise (CTP) across a complex supply chain network.
Recently, Quintiq has used its solutions to help customers with longer-term strategic planning problems and to support S&OP processes. Quintiq's planning and optimization capabilities (across all divisions and products) are in the form of a single code base, which also offers industry templates to provide target-industry focus. In this way, Quintiq can use its platform to provide tailored customer solutions with a strong vertical orientation, in addition to its templated products.
The Quintiq portfolio includes several planning solutions that focus on different levels of planning granularity and time horizons. An organization can take all of these to provide an integrated planning suite, or use individual solutions to help solve specific planning problems. For S&OP support, Quintiq positions its Macro Planner solution (which sits on its planning and optimization platform). Macro Planner, which has been available since 2006, was originally designed to provide a long-term planning and what-if capability across a supply chain at a higher level of aggregation. Therefore, it was only a relatively small exercise for Quintiq to reposition Macro Planner to support S&OP.
About 20 Quintiq customers use Macro Planner to support S&OP processes at various levels of maturity. Some of these customers have invested in Macro Planner as a stand-alone S&OP solution (without any other Quintiq solutions in place), while several customers have implemented Macro Planner in addition to other Quintiq planning products, such as Company Planner and scheduling solutions. In all cases, these Macro Planner users load a demand plan into the solution, which enables them to edit the demand plan once it is imported.
In terms of positioning against Gartner's S&OP maturity levels, Company Planner is more akin to an SCP solution, and can support Stage 1 and Stage 2 S&OP. Macro Planner can support a late Stage 2 or early Stage 3 S&OP process. In Europe and the U.S., Macro Planner competes with other acknowledged S&OP solutions, particularly in complex process industries, which is a sweet spot for Quintiq overall. Macro Planner can model complex supply chains, provide good scenario management and what-if capabilities, and reasonable financial impact analysis. The latter is an area where Quintiq has always been strong at the operational level.
However, users should be cautious when considering Quintiq if they require full demand planning to support S&OP. Quintiq did not provide demand planning/forecasting capability until relatively recently, when it decided to develop its own forecasting functionality. As a result, a basic demand plan editing capability has been available in Macro Planner only since 2009. Macro Planner effectively caters to scenario development, but the socialization of scenarios to other stakeholders in a Stage 3 S&OP process is still too centered on users having to log in to Macro Planner. Quintiq could make this easier through other UI formats and/or stronger alternative collaboration capability. Quintiq plans to add mobile support and Web access to scenarios in its 5.0 release, scheduled for general availability at the end of 2012. Quintiq should also enhance the ability to structure a specific Stage 3 S&OP process within Macro Planner and support process management activities.
River Logic is a U.S.-based software vendor whose planning capability comes from its core Enterprise Optimizer product. Enterprise Optimizer is a highly flexible modeling and optimization solution that can simultaneously consider a range of strategic, tactical and operational constraints. Because of the depth of its optimization engines, River Logic can solve various complex planning, scheduling and optimization problems.
Enterprise Optimizer has the added advantage of strong financial planning and impact analysis. For example, the solution can define financial metrics (such as profits and cash flow) as the objective function or as constraints (such as working capital or capital expenditure) in the models. As a result, River Logic is particularly strong in strategic modeling and scenario analysis. Enterprise Optimizer works well for forward-looking activity-based costing and profitability modeling. This can help maximize profitability by customer, product and channel mix, while considering supply-side and policy constraints, as well as financial implications. In addition, Enterprise Optimizer provides a set of marginal opportunity analyses that can be compared to the average forecast unit profitability to help identify opportunities to increase profitability. This feature is particularly useful to enterprises that have thousands of products, enabling the users to quickly identify products that will either make more or less money with the current plan. Enterprise Optimizer also provides this type of analysis for resources that are constrained, and for inventory policy constraints. Additionally, River Logic has been working with select clients to add cost-to-serve capabilities in support of supply chain segmentation studies, even extending the models to cover suppliers and customers.
The technology foundation for Enterprise Optimizer is a proprietary programming language called Constraint Oriented Reasoning, which allows users to configure very complex models in just a few days through natural language interfaces. Process and financial modeling, analytics (such as the financial statement forecasts, activity-based costings and opportunity values) and data checks (mass/energy balances, debit/credit auditing) are provided out of the box, helping to reduce the time to implement. The solution is deployed leveraging Microsoft SQL Server 2008 R2, and River Logic provides tools to generate SQL scripts automatically, manage multiple models and enable Web-based or on-premises multiuser access to the models via APIs and Web services. Enterprise Optimizer can be coupled with SharePoint Server to support collaborative capabilities, integration and workflow, and with multiple BI/reporting engines, including Excel/PowerPivot, Cognos, SAP BusinessObjects, MicroStrategy and Cubeware.
Because of the flexibility of River Logic, enterprises can potentially run multiple models, each focused on different time periods (short term, midterm or long term), and apply different degrees of modeling and optimization to each of these models, while linking them together on the same platform. The modeling environment is user-friendly — that is, business users can use the solution to visually create and amend models as required. In addition, Enterprise Optimizer automatically generates and manages all equations, which allows users to quickly add new features to their solutions.
Using its platform, River Logic can add templates over the Enterprise Optimizer core to create more-tailored solutions. Integrated Business Planner (IBP) is one of these. Other Enterprise Optimizer-based solutions developed with partners include Network Design Optimizer, Trade Promotions Optimization Planner and Cost-to-Serve Planner. The IBP template creates an environment in which enterprises can manage and manipulate the underlying Enterprise Optimizer models to support visibility of short-term and long-term scenarios evaluated from a profitability impact as well as an operational planning perspective.
River Logic has provided preconfigured scenarios for the more common evaluations that a company may want to compare. The solution organizes these across several categories, such as operations/supply chain, finance, sales/marketing and policy (for example, terms and conditions and service levels). Through its OEM and consulting partners, River Logic is deploying these capabilities in various industries — including consumer packaged goods, high-tech, healthcare, chemicals, resources and utilities. These capabilities could become the market's first in-depth solution that can handle the strategic modeling and financial evaluation requirements of a mature S&OP process. Reference users will need to assess the true value of the IBP template in action, but it has significant potential. However, it is likely that the River Logic IBP solutions will need to connect into a strong Stage 3 S&OP capability.
River Logic's S&OP focus is more on the strategic analysis of existing operational plans. However, River Logic can, if needed, provide capabilities to help evaluate operational demand and supply plans to maximize financial outcomes. The best fit for River Logic is at the strategic what-if level of a mature S&OP process, especially when an organization needs supply chain optimization and constraint-based plans to build feasible alternative strategies that it can analyze and optimize in depth from a financial perspective. In that respect, River Logic is operating at the boundary of an operational Stage 3 S&OP process and a Stage 4 financially orientated process. Enterprises would do well to consider River Logic as complementary to their existing SCP installation or to an established Stage 3 S&OP process.
Enterprises looking for more financial impact analysis in their Stage 3 S&OP processes (such as capacity planning, policy and tradeoffs between volume, revenue and profitability, as well as financial visibility) should evaluate River Logic. They will have to use SCP investments to support the operational planning processes and any collaborative consensus planning at the operational level, and send these plans to River Logic for evaluation. Because of its focus, River Logic is weaker on Stage 3 S&OP process support versus strategic/financial what-if analysis. Recently, River Logic has changed how it goes to market, and is focusing on finding partners it can work with to leverage its modeling platform through development and partnerships. Unfortunately, this may slow the native development of Enterprise Optimizer for Stage 3 S&OP, but could potentially open up the opportunity of embedding River Logic capabilities into a more process-oriented S&OP provider and/or industry-specific analytical solutions driven by partner service providers.
SAP is a European-based, global software vendor. Its S&OP functionality falls under the SAP SCM suite. Overall, SAP has a broad SCP presence, including demand planning, network planning, and manufacturing planning and scheduling solutions. SAP currently has three offerings for S&OP.
For many years, SAP's has positioned Advanced Planner and Optimizer (APO) for S&OP. This only gives basic support to an operationally oriented S&OP process, and is a standard capability for any other typical SCP product on the market. SAP customers supporting an S&OP process using APO are typically running a more detailed operational Stage 1 or 2 maturity S&OP process. For the aggregate S&OP reviews, users are mainly exporting data out of APO, directly or via a data warehouse, into Excel spreadsheets for data presentation into the relevant S&OP reviews. For the pre-S&OP reviews (for example, demand and supply reviews), some customers are using APO directly by leveraging its ability to provide product family views in a separate planning area. Duet for Demand Planning enables the sharing of, and collaboration around, demand plans outside the usual direct APO user base using Excel.
In 4Q10, SAP launched SAP BusinessObjects Sales and Operations Planning Rapid-Deployment Solution, which is based on SAP BusinessObjects Planning and Consolidation (BPC). With SAP BPC, SAP had an Excel UI-based financial planning solution that some customers started to configure to support their S&OP processes. In early 2010, SAP decided to productize the specific S&OP configuration of SAP BPC. In release 1.0, there is no standard off-the-shelf integration to SAP APO (only to SAP ERP and SAP Business Information Warehouse [BW]). As this is not the go-forward S&OP solution for SAP, there will be no further development. SAP targets this solution solely at existing BPC 7.5 users looking for additional S&OP support.
In 4Q11, SAP delivered its new Hana-based S&OP to pilot customers. The new solution became generally available on 6 May 2012.
The new S&OP solution is one of the first SAP solutions to use the new Hana in-memory database management system (DBMS) appliance, and will be the strategic go-forward S&OP solution for SAP. Features of the new solution include:
- Greater flexibility and speed to support the S&OP process and review meetings, particularly in the creation of plans, what-if analysis and scenarios
- The ability to handle large datasets with fast processing speeds
- The cloud-based Hana platform to handle large datasets, with on-premises data services (SAP Data Integrator) to import/export data to/from the S&OP solution from SAP ERP, APO and BW
- Single in-memory process and data model across demand and supply plans
- Out-of-the-box analytics, dashboards and reports
- Flexible hierarchies and aggregation, with drill-down to the most granular level
- Excel user interface for the planning views, with real-time data consolidation in the data model
- SAP StreamWork capabilities to provide support for social collaboration, process management, alerting, document control and assumption management
SAP S&OP powered by Hana is in release 1, and will see significant enhancements in future releases. In release 1, SAP has concentrated on leveraging the underlying capabilities of Hana and StreamWork, which gives the solution capabilities in S&OP-specific areas such as hierarchy management, assumption management, collaboration, scenario and plan socialization, and process management. SAP will need to further develop the Hana solution in areas such as supply chain modeling (with the capability of the planning/optimization engines used to develop a scenario), and stronger financial impact analysis (for example, the evolution of cost-to-serve-type capability to help orient performance management across an end-to-end supply chain).
The rationale behind Hana S&OP was to develop an S&OP solution from the ground-up and not try to build out from an existing SCP base (as several other vendors have done). Therefore, with this approach SAP, hasn't fully solved the problem of the potential disconnect between operational planning and S&OP (users often regard this disconnect as a problem). Significant potential for SAP Hana in a planning environment exists, but it would require operational planning and S&OP planning to be driven from a single process and data model. SAP says it will be porting APO onto Hana by the end of 2012 as a deployment option, but as of yet is not talking about a combined planning product that would really place the vendor in a very strong competitive position in planning offerings. Currently, SAP has six pilot customers for the Hana S&OP solution.
Steelwedge is a U.S.-based software vendor that provides a dedicated cloud-based S&OP solution, including its integrated business planning capabilities. The solution typically sits over the top of existing SCP applications that provide the foundations for the operational demand and supply planning processes. In addition to offering S&OP functionality, Steelwedge provides support for demand and sales forecasting, financial integration and real-time analytics. This support tends to be underserved in traditional demand planning applications, especially for industries such as high-tech and industrial equipment, where sales opportunity management and attach-rate forecasting for configurable products are important aspects of the overall demand management process. Steelwedge has the capabilities to support a cross-functional, collaborative demand planning process, which can complement traditional demand planning applications.
Steelwedge started life as a vendor of demand planning solutions (using a collaborative platform), and quickly experienced success after adding analytics and performance management capability to its demand planning engine. Around 2005, it repositioned its solution formally as supporting S&OP. To support the sales planning process, Steelwedge integrates with various CRM systems.
Steelwedge was one of the first S&OP vendors to move to the cloud, and today 100% of its customers (mostly large global enterprises) are deploying the S&OP solution on-demand with a subscription model. As part of its investment in cloud infrastructure, Steelwedge has built a user-interface-driven multitenant configuration repository called Service Delivery Platform (SDP) to help reduced implementation times. Its open architecture also allows customers and partners to develop their own lightweight applications in the cloud to add additional value to their implementations.
During the past couple of years, it has started a partnership with SAS, which will enable it to use some of SAS's analytical engines in support of more-powerful scenario development and demand analysis. Steelwedge already partners with ICON-SCM, but has also begun to work with another operational planning vendor, Orchestr8, to provide another set of integrated operational planning capabilities. The Orchestr8 solution offers simple but effective supply chain segmentation capabilities (see "Vendor Guide: Supply Chain Planning Market, 2010"). These SCP partnerships help to address Steelwedge's lack of detailed operational supply-side planning. However, partnering is not as seamless as an inherent capability. Steelwedge has recently added a linear-programming solver on its cloud platform to support optimization for its customers as a native capability.
Steelwedge currently supports financial-value-based planning. To support even more mature S&OP processes, Steelwedge needs to strengthen its capabilities in financial impact analysis. Its capabilities are adequate for most Stage 3 S&OP users today with financial roll-ups into revenue and margin plans. Gartner believes that Steelwedge is looking to partner to fill these gaps and help build its capability in functional areas that are required for full Stage 4 S&OP. Steelwedge is likely to partner with SaaS-based providers, which will help in terms of integration. Although few companies are ready for Stage 4 S&OP, Steelwedge sees this stage as an opportunity to be a leader in this segment and seems committed to developing its solution to achieve that goal.
For companies that require support for a late Stage 2 and/or Stage 3 S&OP process, Steelwedge's inherent capabilities are strong. Steelwedge can transform unit forecasts and plans into financial projections for revenue and margin analysis. Operational supply plans need to be uploaded from other SCP applications (unless ICON-SCM or Orchestr8 are being used here where standard integration to Steelwedge is available). For companies with basic requirements that do not wish to have separate SCP applications to support their supply planning requirements, Steelwedge has inventory, sourcing and a rough-cut capacity planning capability. Steelwedge has also developed a cloud-based solver solution to support supply chain modeling. For users that need deeper supply planning functionality, Steelwedge can interface with most SCP applications. It has standard integrations for SAP APO and SAP ERP users. Steelwedge provides performance management through dashboards that users can also email to relevant stakeholders. It also provides process workflow capabilities to control and monitor the various steps of an S&OP process. Alternative scenarios can be created by Steelwedge for evaluation and approval in the relevant S&OP review. The UI for Steelwedge is Excel-like, which minimizes end-user training and is readily accepted by casual users.
Steelwedge has grown into one of the market's leading S&OP solutions. It scores well against all the key capability criteria for Stage 3 S&OP and has an open and forward-looking product development road map to help evolve the solution further. Enterprises looking for a strong Stage 3 S&OP solution should consider Steelwedge. Enterprises that require deep supply planning capabilities will need to team Steelwedge up with another vendor's SCP application, or use one of Steelwedge's SCP partners. Steelwedge has proven that it provides a capable and scalable Stage 3 S&OP solution suitable for global deployments. It provides a strong collaborative platform for consensus planning and has a credible product road map that should enable it to develop into a fully capable Stage 4 S&OP solution at some point, although it already does provide several elements required for Stage 4 S&OP.
TXT e-solutions is a European software vendor headquartered in Milan, Italy, that has a strong presence in Europe. TXT has been recently expanding its global reach with the acquisition of Maple Lake, a Canadian solution provider focused on assortment planning and allocation, which will give TXT immediate presence in North America and Australia. TXT has a significant customer base in the luxury goods, fashion and apparel industries. The vendor also delivers offerings into the consumer packaged goods and food and beverage sectors. Around 75% of TXT's users are in consumer-driven markets.
Until the launch of its new integrated product TXT S&OP (formerly called TXTPerform), TXT, like many other SCP vendors, tended to use its SCP planning modules to support its users' S&OP process needs, which were typically at either Stage 1 or Stage 2 S&OP process maturity. This limited users to a more operationally oriented, traditional Stage 2 S&OP process mainly built around the operational demand and supply planning processes.
The introduction of TXT S&OP more closely supported TXT users' S&OP deployments, especially when users migrated more of the SCP functional areas over to TXT S&OP. Currently, TXT S&OP directly includes demand planning, simplified supply planning and the new S&OP capability including integrated financial planning. Deeper supply-side planning capabilities (using the existing TXTPlan module) are available via an integration between TXT S&OP and TXTPlan.
TXT's product vision is to develop a complete SCP functional footprint within the TXT S&OP solution, using new functionality and reusing existing planning engines. For users wanting strong integration between operational planning (particularly demand planning) and S&OP, TXT S&OP is well worth evaluating. Additionally, organizations can integrate TXT S&OP with other vendor solutions supporting operational supply planning to provide a collaborative, process-based S&OP support tool. However, enterprises do not use this capability often, because it results in a more fragmented planning environment.
The TXT S&OP solution aligns well with Gartner's Stage 3 S&OP architecture, even though there are few real-life examples of TXT customers performing a fully deployed Stage 3 S&OP process — most are examples of a good Stage 2 S&OP process. The main mission of TXT S&OP involves optimizing and balancing the current operating model. As yet, the TXT solution focuses less on helping companies to develop new or alternative operating models to support longer-term strategic directions — capabilities that should be part of Stage 3 and Stage 4 S&OP — but TXT has ambitions to move more into this area.
TXT S&OP is based entirely on Microsoft technology. It uses SharePoint Server and Workflow Foundation, and is supported by a single Structured Query Language database. TXT has a strong relationship with Microsoft, and has been successful in leveraging the user friendliness of the Microsoft environment across TXT S&OP, which has received positive feedback from users.
TXT S&OP has brought together supply chain analytics, workflow and process management, and demand/supply planning functionality into one integrated solution. The user interface is Excel-based, which from an S&OP (and consensus forecasting and planning) perspective makes it user-friendly. The data layout is familiar to anyone accustomed to using pivot tables in Excel; the screens are configurable, enabling S&OP stakeholders to view data from their own perspectives — for example, by product category in marketing or by technology in manufacturing. Because TXT S&OP uses the same data cubes for demand planning, simulations and analytics, saving a simulation effectively activates this scenario in the underlying demand planning process. However, if the base supply planning functionality available in TXT S&OP is not sufficient, users need to interface changes to the supply plans into whatever solution they are using for detailed supply planning.
TXT S&OP ships with preconfigured templates and KPIs to help users get started, and is highly configurable so that enterprises can customize it where required. It caters well for the marketing and demand reviews, with a combination of detailed operational processes and aggregated product plans. Users can produce aggregate supply plans in TXT S&OP. However, TXT does not yet provide a real-time link from the aggregate supply plans down to the detailed operational level across a TXT solution landscape. Today, TXT S&OP includes simple supply planning. If enterprises need supply planning that goes beyond this, they should use the planning engines from TXTPlan (or other SCP applications).
TXT enables users to build different scenarios easily and compare them at an aggregate level, committing the chosen scenario back to the next process step. Workflow capability enables users to map out the processes, and monitor and integrate them into Microsoft Office products, which adds a user-oriented event/task management dimension. The availability of Microsoft Office communication capabilities adds a nice touch to support collaboration across process actors. In addition, Microsoft analytics capabilities support performance management well. Predefined KPIs and KPI mapping are available to help visualize the hierarchy and relationship between various metrics. TXT S&OP also offers enough financial impact analysis to support a company moving form Stage 2 to Stage 3 S&OP, but will need to develop this further for Stage 4 support.
Enterprises should consider TXT S&OP if they already use TXT applications, or are looking for a combined demand planning and S&OP solution. Even if an enterprise wants to use an existing demand planning solution for forecasting, TXT S&OP is a capable S&OP solution in its own right. The Excel-based UI, strong workflow, scenario management, collaboration and analytics make TXT a Stage 3 S&OP solution contender, particularly for enterprises committed to using TXT for their operational planning and demand planning requirements. TXT's use of Microsoft technology, and its highly configurable and easy-to-use user interfaces, makes for a user-friendly S&OP solution. To aid its users, TXT has created a dedicated S&OP team to help consolidate S&OP best practices. However, TXT is not as global a vendor as some others in this market, although it is expanding beyond Europe. TXT has recently been more active in the retail sector (a good fit for it at an operational planning level), but this typically means less mature S&OP processes (retail S&OP processes tend to be at Stage 2). In other industries, TXT has limited global Stage 3 S&OP deployments, although that is likely to change fairly quickly.
We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. This may be a reflection of a change in the market and, therefore, changed evaluation criteria, or a change of focus by a vendor.
Gartner's MarketScope provides specific guidance for users who are deploying, or have deployed, products or services. A Gartner MarketScope rating does not imply that the vendor meets all, few or none of the evaluation criteria. The Gartner MarketScope evaluation is based on a weighted evaluation of a vendor's products in comparison with the evaluation criteria. Consider Gartner's criteria as they apply to your specific requirements. Contact Gartner to discuss how this evaluation may affect your specific needs.
The various ratings are defined in the following table:
MarketScope Rating Framework
Is viewed as a provider of strategic products, services or solutions:
- Customers: Continue with planned investments.
- Potential customers: Consider this vendor a strong choice for strategic investments.
Demonstrates strength in specific areas, but execution in one or more areas may still be developing or inconsistent with other areas of performance:
- Customers: Continue planned investments.
- Potential customers: Consider this vendor a viable choice for strategic or tactical investments, while planning for known limitations.
Shows potential in specific areas; however, execution is inconsistent:
- Customers: Consider the short- and long-term impact of possible changes in status.
- Potential customers: Plan for and be aware of issues and opportunities related to the evolution and maturity of this vendor.
Faces challenges in one or more areas.
- Customers: Understand challenges in relevant areas, and develop contingency plans based on risk tolerance and possible business impact.
- Potential customers: Account for the vendor's challenges as part of due diligence.
Has difficulty responding to problems in multiple areas.
- Customers: Execute risk mitigation plans and contingency options.
- Potential customers: Consider this vendor only for tactical investment with short-term, rapid payback.