JDA, Logility, Oracle and SAP lead the 14 vendors in Gartner Inc.’s first Magic Quadrant for supply chain planning software for process automation.
Gartner’s ranking mechanism
“It’s like the foundation of a house, from a supply chain perspective,” said Tim Payne, research director and author of the report.
The Stamford, Conn.-based analyst firm ranked vendors along the axis of completeness of vision and ability to execute. The four companies in the Leaders quadrant have the most complete offerings and win a significant number of deals. Infor barely made the Challengers quadrant, which Gartner reserves for companies that win significant business but lack the complete vision of the leaders. It is followed closely by Barloworld Supply Chain Software, Inform, Lawson, Manhattan Associates and Syncron in the Niche Players category.
Gartner named i2 Technologies, OM Partners, Quintiq, and TXT e-solutions as Visionaries with “coherent and compelling” strategies and user-friendly architectures that make processes more visible and easy to change, but lack the mature features or market penetration of leaders. Payne noted the Visionaries quadrant contains mostly small, nimble, European companies that have developed innovative architectures with strong integration to Oracle and SAP transactional systems.
Unlike most software, supply chain planning barely dipped into negative growth during the deep recession of 2008-09, as companies sought cost savings, according to Gartner. It predicts 5.7% growth this year as companies continue to invest in the software and begin to add more sophisticated performance management, optimization and modeling tools.
Best-of-breed supply chain planning software more popular than ERP
In the past two years, Gartner has seen a swing away from ERP vendors toward more specialized, best-of-breed vendors as deployment options like Software as a Service (SaaS) make it easier for manufacturers to add modules, Payne said. The recession also delayed ERP projects, making companies less likely to consider supply chain planning suites from ERP vendors.
Two best-of-breed players joined forces in January when JDA acquired i2, moving into more sophisticated “process innovation,” Payne said. Though JDA might improve some of i2’s user interfaces, Payne wonders whether it will continue i2’s tradition of building innovative, customizable optimization tools. The company must also address overlap with its Manugistics line, he said.
Like JDA, Oracle acquired rather than developed much of its supply chain technology but it has developed impressive features in-house, especially in performance management, Payne said. Its weak spots remain usability and integration.
“Oracle’s one of these vendors that just likes to sell you a lot of stuff,” Payne said. “It can get quite expensive. If you want some of the integration that will connect one dot to another dot, that’s on the price list, as well.”
SAP has a stronger focus than Oracle on business processes and a well-established, capable platform in Advanced Planning and Optimization (APO), which covers all the functional areas of supply chain planning, according to Payne. But SAP APO lacks depth in inventory optimization and production scheduling.
Logility is a “very strong” process-automation vendor that significantly boosted its portfolio by acquiring Optiant, a maker of inventory-optimization software, Payne said. “It’s very hard to find a Voyager user who’s got any bad things to say,” he said, referring to Logility’s flagship suite. But the company doesn’t have the global presence of the other leaders, according to the report.
Moving from process automation to innovation
In a report published last spring, Payne analyzed supply chain planning suites that build on the process automation foundation to support process innovation:, the ability to alter a manufacturer’s supply chain planning process by, for example, evolving from push-based to pull-based response models, or engaging trading partners in collaborative planning. Of those in the process-automation Magic Quadrant, only i2, JDA, Oracle, and Quintiq also qualified as process innovators, joining AspenTech.
But Payne said some process-automation suites have process-innovation features. Some technologies that used to belong on the innovation side, including multi-echelon inventory optimization, have become mainstream planning tools.
Payne advises manufacturers to pick vendors that have enough advanced features to provide an upgrade path if they later decide to adopt multi-echelon inventory optimization or sales and operations planning. Manufacturers should also decide where they are on the automation-innovation continuum and choose software that can address all parts of their demand and supply chains. “The trouble with supply chains is the symptom is often a few links down in the chain,”Payne said. “If you put in a new production-scheduling tool, you also have to look at demand planning. You can’t just drop everything on manufacturing and say, ‘schedule your way out of that.’”