There are an increasing number of cloud based Supply Chain services, offered as SaaS, appearing on the market. But that is not the subject of this blog entry. Actually the question is way simpler. Are you aware of all the players participating in providing you the latest SaaS service you have bought?

Let me take an example. Amitive is an SaaS provider, delivering Community Supply Chain Management services, or as they call it, "SCM in the Cloud^TM". I don't know the company, it just happened to be one that appeared in Bob Trebilcock's review of SCM software in the Cloud.

Going to Amitive's web page, I tried to understand whether they run their software suite on their own environment, or whether they depend on another provider to do so. Finally on page 7 of their white paper "Amitive SCM in the Cloud^TM: Catalyst for the Great Leap Forward in SCM" I find following phrase "Amitive manages a customer account via our multi‐tenant servers in the secure datacenter of our world class infrastructure partner". No information about who this partner is. Later, back-up, scalability, high availability and disaster recovery are highlighted. Are all these provided by the same infrastructure partner or are other ones involved? No information is provided.

Again, I just picked this company as an example. What I want to highlight is the fact most of the SaaS providers use a supply chain to provide their services to their customers, who most often do not even ask questions about the partners, nor assess the risks associated with these partners.

As in physical supply chains, something going wrong with a supplier may result in major disruptions in the whole Supply Chain. One such examples happened on August 8^th, 2008, when a cloud backup service, called The Linkup ceased operations. The company actually used the services from another company, called Nirvanix. Customer data got lost on the way, resulting in closing the service. I found a good description of the whole story in a Network World blog entry from August 11^th, 2008. Again, my objective here is not to argue about this particular case, but to illustrate the importance of understanding the supply chain one subscribes to when using a cloud based service.

You could argue that, like in the "real" world, there are alternatives. And that is indeed the case, but the lack of standards in the cloud today, mean that moving from one infrastructure, platform or service to another is not an easy task.

It is critical for companies wanting to use the cloud in general and Software as a Service in particular, to understand the players in the service provider supply chain, in the same way as they would do for their physical goods supply chain. Similar tools and techniques should be used during that evaluation. As CIO's and IT teams are less familiar with this than procurement departments, they may want to borrow expertise there for such evaluation.