Business Transformation In Wholesale Distribution: Let Business Strategy Drive Cloud Adoption

The potential benefits of cloud utilization has been less obvious for wholesale distributors than in other industries, which has slowed adoption. But there are indications that this is about to change.

Cloud computing today is about much more than cutting costs or jettisoning servers. It's also about more than anywhere/anytime access to information and applications.

Today's cloud is about matching business strategies and models with what has become a mainstream IT resource. It's about business transformation, and all indications are that companies are eager to transform.

A recent Forbes review of cloud computing forecasts and market estimates suggests that the $70 billion spent on public cloud services in 2015 will more than double to $141 billion by 2019. Forbes also found that spending on public cloud infrastructure-as-a-service hardware and software is expected to reach $173 billion in 10 years, nearly five times the $38 billion that's predicted for this year.

Yet, the stampede these numbers imply shouldn't send cloud latecomers into a tizzy; conversely, the last thing an organization should do is rush headlong into the cloud.

It's All About the Strategy

Whether a company is an established enterprise that's relied on on-premise systems for decades or a cutting-edge startup looking to take the world by storm with its innovative new product, the goal of cloud adoption should be the same: support the business strategy (which, by the way, might change tomorrow).

Doing so, however, means different things to different companies, and for the world of wholesale distributors, the potential benefits have been less obvious. While other sectors have embraced the cloud with gusto, whole distributors have either been slower to recognize the value of the cloud, or have chosen to hold off due to other factors, such as product complexity or an unusually effective network of retailers.

But there are indications that this is about to change. A recent study from Forrester Consulting found that 72 percent of mid-market business-to-business sellers are generating at least 25 percent of their B2B sales online, and that more than four in ten companies report online B2B sales growth of 20 percent. What's more: nearly 59 percent of mid-market B2B sellers say they've established ecommerce technology as an investment priority this year.

Next Stop: The Cloud

The math from there is simple: If mid-market B2B resellers are increasingly being asked to service their customers on the Internet, the next step is to migrate their ecommerce systems to the cloud, and from there continue to expand the cloud footprint where justified.

For a food and beverage distributor, that might mean looking at leveraging the cloud to improve compliance with regulatory requirements. Meanwhile, an industrial supply company may be more focused on transforming its supply chain via the cloud.

Regardless of your industry, being very clear on the needs of the business, as well as what systems and processes are best suited for the cloud, are both complicated but necessary processes that will increase the value that the cloud ultimately delivers.

The Path to Value

That's really the whole point, after all: To view the cloud as a source of value rather than as a technology component. My company, NetSuite, has a long history of helping wholesale distributors of all shapes and sizes realize that value. For example:

  • Health care packaging distributor Action Health turned to NetSuite two years ago looking to transform itself by leveraging cloud-based ERP to get out of IT maintenance, cut costs, and attract better talent. Action Health has since seen sales grow 18 percent in a year, nine times its historical average, and has increased revenue-per-employee by 40 percent and operating income by 200 percent.
  • iAutomation, a supplier of machine automation products, was way ahead of the curve, becoming a NetSuite customer 12 years ago. It has been through 24 upgrades without having to worry about customizations, and steadily transformed its business with benefits ranging from improved inventory management and business forecasting to more efficient order management and dynamic pricing management.
  • SourcingPartner Inc., a provider of product sourcing and logistics services, had been in business for more than 15 years when it deployed NetSuite two years ago to better position itself to capitalize on new opportunities. Since the lightning-quick 95-day deployment, the company has grown 45 percent.

We have many stories like these, but we also know from experience that for each wildly successful cloud deployment, there's another one (most likely with another vendor) that produces fits and starts. That's why it's so important to take stock of your business and determine a path to the cloud that best aligns with it.

Your company has its own story. It has its own strengths, its own challenges, its own opportunities. And, of course, its own strategy. All of that has to come into play as it charts its way into the cloud. And it's critical that you get this right, because as NetSuite CEO Zach Nelson said during his keynote at the most recent SuiteWorld, "This is definitely the last computing architecture, in our lifetimes, and in our children's lifetimes."

Sam Levy brings a successful track record spanning more than 20 years in enterprise software industry in rapidly growing companies. His current role as Vice President of Sales responsible for NetSuite’s North America business, is to build, grow and execute NetSuite to dominate the Mid-Market Industries.  His career involves leading Sales and Platform Strategy in SaaS and traditional legacy ERP Markets. Sam’s career has been leading new business initiatives, partner management and generating Sales & Consulting revenue. He holds a Bachelor’s Degree in Marketing from San Diego State University.

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