JDA Takes Supply Chain Software to Google Cloud
Software providers say retail customers are reluctant to give business to Google rival Amazon Web Services
JDA Software says it was important that the Google cloud service has no “conflict of interest” with the retail industry customers for JDA supply chain management software. PHOTO: BLOOMBERG NEWS
Amazon Web Services, the cloud-computing arm of Amazon.com Inc., may be paying the price for its parent’s rocky relationship with the retail industry.
JDA Software Group Inc., a leading provider of software that helps companies manage their supply chains, said Wednesday it will offer its services on Google Inc.’s so-called public cloud. Analysts say the agreement is a sign that JDA’s retail industry customers are growing wary about giving business to Amazon, even in an area where they aren’t in competition. The concern is that Amazon’s profits from cloud computing are making it easier for the company to undercut rivals on the price of shoes, televisions and other consumer goods.
“Retailers…see Amazon Web Services as essentially subsidizing the low prices Amazon is able to offer on products,” said Nikki Baird, managing partner at research firm Retail Systems Research LLC. Many supply chain software companies have used Amazon Web Services but are minimizing their use “because they found retailers grumbling about it,” she said.
Molham Aref, CEO of Predictix LLC, an Atlanta-based cloud-services firm that uses data to predict trends for retailers, said several r of his customers have raised concerns about the company’s use of Amazon Web Services. Vendors of toys, consumer goods and other products sold on Amazon resisted “generally because they prefer that Amazon not profit” off of their business.
‘Retailers see Amazon Web Services as essentially subsidizing the low prices Amazon is able to offer on products.’
Predictix convinced its clients to stick with Amazon because the company believes it continues to have slight advantages in technology and price compared to competing services from Google and Microsoft. Amazon Web Services users also enjoy a larger community of fellow users that can provide technical support.
In the end, the concerns of retailers were “more emotional concerns rather than rational concerns,” Mr. Aref said. But he believes Amazon’s advantages may decrease over time, and for the right price and service, he wouldn’t rule out switching given his clients’ concerns.
An Amazon Web Services spokesman said in a statement that “it would be off-based to argue that AWS is funding the retail business,” adding that cloud computing requires large capital investments that the company’s retail business would not otherwise spend on its own. He said that a substantial amount of the company’s retail competitors use AWS and “are treated every bit as importantly in AWS as Amazon the retailer.”
For its part, Scottsdale, Ariz.-based JDA says it chose Google as its first public cloud provider because crunching massive amounts of data on the company’s cloud infrastructure provided the most consistent results. Previously, JDA’s customers ran its software on their own computers or in private data centers.
“Google came out as not only the most scalable and flexible technology platform…but also with no conflict of interest with our customer base in terms of competitive offerings,” said John Savari, the company’s executive vice president of shared technology.
Cloud-computing is done over networks that store data and host applications. A “public” cloud like that of Google, Amazon or Microsoft is vastly larger than a private data center, enabling much more computing power for a lower price.
Using that shared computing power, companies like JDA and Predictix can run complex analyses on massive quantities of data, such as real-time sales and weather information, social media buzz and other factors without having to invest millions in high-capacity private networks they would only fully utilize some of the time.
With 4.4% of the global market for supply chain software, according to research firmGartner Inc., JDA is an important client for Google as it competes with Amazon Web Services in the booming infrastructure-services market. Research firm IDC said revenue from cloud services doubled to more than $9 billion last year, and will reach $16 billion by 2016.
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According to Synergy Research Group, Amazon had a 29% share of revenue in the market for infrastructure-services, ahead of Microsoft,IBM Inc. and Google, though this number includes private services. Google is trailing behind with 5% of sales, but is growing quickly, with 74% more revenue in the first quarter than a year earlier compared with 49% growth for Amazon.
Meanwhile, sales of supply chain software, which helps companies manage, plan and operate their increasingly complex supply chains, are growing rapidly as well. Gartner says the market grew 10.8% to $9.9 billion last year, with niche vendors providing innovative cloud-based solutions growing the fastest. The demand for data-heavy computing tasks is driving that growth.
In JDA’s case, the company looks at hundreds of millions of unique products at different locations, said Mr. Savari, of JDA. So when it starts to analyze all that data, in terms of when the items are sold and why, “you start multiplying that by factors of hundreds,” he said. “The key area is big data—being able to process large amounts of information.”
