Digital Threads | Affordability
Can You Afford the Perfect Supply Chain Management System?
Can You Afford the Perfect Supply Chain Management System?Back
Over the last few weeks, we’ve discussed digital threads, scalability in your supply chain, usability in digital systems, and sustainability of your supply chain management systems. Now we’re going to close things out with what might be the prime consideration for many businesses; affordability.
It doesn’t matter how good a system is, how much it would revolutionise your business, if you can’t afford it then it’s no use.
This topic really touches on a lot of what we’ve already discussed. If your digital solution becomes too expensive as your business scales, that limits your scalability. If your monthly budget can’t cover all of the new users you need to include, your system of choice isn’t sustainable.
So, how do we find a system that’s affordable, now and in the future? Let’s find out.
What pricing models are available?
There are many different pricing models for digital systems, but what are they and how do they shape up?
At the most basic level, we have COTS applications. You buy this, you install it, that’s it. Anyone can log onto the device you have it installed on and use it. This is simple, but it comes with obvious drawbacks.
If you’re a single location business with limited numbers of employees, this approach might not give you any headaches. So long as the system you’ve bought doesn’t need to be used by multiple people at the same time, you’re OK.
The limitations are pretty clear though. Even in a single office, you’ll have multiple people on multiple devices. For more than one location, buying many of the same monolithic applications quickly becomes untenable and even financially irresponsible.
User based pricing
This is your entry level pricing model for web based services and one we are probably all familiar with at this point. You buy digital seats to use an application, either individually or as part of a tiered pricing system where you get X number of allowed users depending on your subscription.
On the face of it, this is a good fit when it comes to scaling. As you grow and employ more people, you can afford a more expensive subscription and more users. Without taking anything into consideration, this covers your scalability concerns.
The drawbacks come when you start thinking about flexibility. Let’s look at our hypothetical baker and a digital solution they may have implemented somewhere along the journey from small business owner to international bread magnate.
To help manage their business processes, our baker implemented a business process management SaaS application. They went for an entry level subscription that allowed for three users. In the beginning that meant the baker, their tech savvy young employee and one spare.
As the business grew, they employed another two people; a new baker and an accountant. Already you can see the problem. They’ve got a spare seat for the new baker but the accountant is left out in the cold. Compounding the problem is that the next subscription level up has seats for ten people. That’s six more than they need and at a price point they can’t afford.
This means a system that may have been instrumental in the growth of their bakery has now become a hindrance. It may have become vital for their day to day operations but financially it’s no longer viable.
Usage based pricing models
This is what we believe in. Premium access to the Atlas Platform is priced specifically based on how much you use it. For mapping processes, we charge by the amount of processes you have published. For our data focused offerings, we charge by how much data is handled using our platform.
We do this because we want our software to be financially accessible whether you’re operating out of your bedroom or running a corporation that spans continents. More importantly, we want to be with you when your bedroom business grows into a household name around the globe.
If we go back to our hypothetical bakery, we can see how this model benefits them. That growth we just discussed doesn’t mean they’re forced into either purchasing a subscription they can’t afford or switching to a system that hasn’t been there to help them develop.
Instead, the platform that enabled their growth grows with them. More sales and a growing customer base means more processes and data handling are needed. But it also means more revenue and bigger budgets. Each side grows simultaneously, scaling without either becoming a burden on the other.
That’s it for this series on supply chain management and the considerations you need to make when adopting digital systems to facilitate it. We hope you’ve enjoyed them and we’ll be back with more informative articles very soon.
Our own Martin Kelman will be giving a talk on the topics raised in these articles at the European Supply Chain Management Summit this week if you’d like to find out more. Be sure to book your digital seat today!