Posted by: Christian Verstraete | December 11, 2009

Supply Chains in the Cloud

I don’t know what my customers have these days, but I spent an exhausting week hopping all across Europe to have discussions around the “cloud” subject. It’s the most overhyped subject I have seen in a long time. And many people are lost. They keep hearing these wonderful benefits, not realizing there are a couple things in the fine prints. So, I spent quite some time pointing out the darker side of things. Not that I’m against cloud, I just believe its not mature yet and should be looked at with some caution.

Let me give you an example. You subscribe a cloud service from They deliver this great business process you want to implement, they maintain your data, promise you backup and high availability etc. And all of that for a ridiculously low price. OK, you cannot personalize things, but you know what, for the price you’re OK to use the standard they set up. So, everything is blue sky, isn’t it?

My answer is “maybe, maybe not”. tells you they deliver you all that, but are they the ones who deliver, or are they calling on other people to do this for them? That’s the fundamental question to ask. Unfortunately most of the time you will not find that information on their website. This is what I call the Cloud Supply Chain.

In the cloud we should do what we do in the real world, assess the potential risks related with the suppliers that are part of this supply chain. We first have to know who they are. Asking the question is critical, as the answers will not be provided automatically. Once the partners are known, assessing their quality, their business robustness etc. should happen exactly as in the procurement world. These people are suppliers of your suppliers. They should be included in your list and the risk procedures you have in place should apply to them too.

I have the feeling we are trusting cloud providers way too much,. It looks like they cannot do wrong. We actually shouldn’t.

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  1. I think you words of caution and request for transparency I a virtual world are spot on, however as this is an evolving service, I would see this as an opportunity to build credibility once addressed.

  2. Great article Christian. I think that the issues of archiving (what happens to the data should go belly-up) and security (what guarantees to I have as to the waterproof and airtight security offered on my critical IP data from that are real show-stoppers today.
    That and the relatively heavy infrastructure resources required for modern PLM and ERP deployments. Perhaps the cloud bit are just portlets eventually pointing their way back to a “real” “physical” system and storage?
    Interesting times!

    • Michael, I agree with you. We have actually started experimenting with cloud applications pointing back to physical storage. By doing so, we believe we avoid the location issues (patriot act etc.), data proliferation, data security issues etc. Will keep you posted on progress.

  3. […] when the data resides in the cloud, who actually owns the data. We have already talked about the Cloud Supply Chain. This one can be rather complex, so it becomes very difficult ensure the data is preserved as the […]

  4. […] a lawyer, I discover a whole new world. A couple weeks ago I pointed out, in a blog post, titled “Supply Chains in the Cloud”, the lack of transparency about who actually offers you the […]

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