Why Are o9 Solutions Growing So Fast?
Chakri Gottemukkala, CEO and Co-Founding father of o9 Options
There are a number of younger provide chain software program firms which can be unicorns. A unicorn has a valuation of over $1 billion. One of many extra fascinating is o9 Options. In January of 2022, Dallas-based o9 Options was valued at $2.7 billion after a funding spherical. Primarily based on their development, the corporate could also be price much more now. This January the corporate reported that its annual recurring income grew at over 84% year-over-year.
o9 Options has grown from a small firm to a big participant within the provide chain planning (SCP) market in a brief time frame. The corporate launched their platform in 2014. Within the final 3 to 4 years o9 has seen great development. In accordance with Chakri Gottemukkala, the co-founder and CEO of o9, the corporate has “subscription income within the 200 hundred million plus vary now.” Primarily based on ARC Advisory Group’s quickly to be launched examine of the market, this places them within the high 5.
How did the corporate develop so quick? Mr. Gottemukkala attributes it to the truth that he and his cofounder are identified entities within the provide chain planning house, buyer centricity, and their know-how platform.
As a result of provide chain planning is present process one thing of a technological revolution, this text will concentrate on o9’s know-how and why their CEO believes it’s differentiated. In enterprise software program markets, there’s a technological revolution each 20 to 30 years that upends the market and creates new winners and losers.
The provision chain planning market obtained began when provide chain fashions have been put into in-memory databases within the early Nineties. In-memory depends on system reminiscence versus disk house. That is a lot quicker. With out this know-how, a sophisticated plan able to accounting for the complicated constraints throughout a provide chain couldn’t be generated rapidly sufficient to be helpful. The corporate that pioneered this was i2 Applied sciences. i2 was later acquired by Blue Yonder and Blue Yonder stays one of many leaders within the SCP market. Chakri’s o9 cofounder, Sanjiv Sidhu, was the CEO at i2. Chakri additionally has roots in i2 the place he held a number of completely different positions.
o9’s development has corresponded with the corporate’s promotion of the graph database as a greater technique to do provide chain planning. “We pioneered (using the graph database) for planning” Mr. Gottemukkala asserts. o9 additionally makes use of in-memory, synthetic intelligence, and different applied sciences in what they name their Digital Mind platform.
A graph database shops nodes and relationships as a substitute of tables, or paperwork. Knowledge is saved identical to you may sketch concepts on a whiteboard. Tech giants like Google
GOOG
PYPL
o9 Options Platform Runs on a Graph Database
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The Energy of Versatile Modeling
Primarily based on their background, o9’s cofounders understood the strengths and weaknesses of present planning know-how. The weaknesses included a scarcity of flexibility. Fashions could be created, however they weren’t residing fashions that modified as an enterprise modified. The shortage of flexibility additionally meant that implementations took too lengthy. And the fashions themselves have been usually not detailed sufficient to create a digital twin that represented how an organization really operated.
“There’s a whole lot of flexibility required to deal with the completely different provide chains inside a enterprise,” Mr. Gottemukkala defined. Planners in China depend on completely different knowledge sources and function with completely different enterprise practices than these in North America. “There’s a whole lot of flexibility required to mannequin the variations and nuances.”
The modeling of demand will be dramatically extra detailed utilizing the graph database know-how. “What are the drivers of demand? Should you take an enormous client items firm, you needn’t simply mannequin merchandise and clients,” o9’s CEO defined. “It’s worthwhile to mannequin the corporate’s opponents, finish customers, and the demographics of shoppers in Texas versus New York.”
On the subject of the constrain-based fashions, Mr. Gottemukkala continued, it isn’t nearly modeling the factories and the distribution facilities. An organization additionally must mannequin their “suppliers and their provider’s suppliers” to know the place issues are occurring within the multi-tier provide chain. “So, how do I mannequin all the best way from my market and customers and clients and opponents to the suppliers within the multi-tier provide chain? A really highly effective modeling framework was required.”
In provide chain planning, the fashions that generate demand have been basically completely different from the constraint-based fashions that mannequin what firms can produce and ship to clients. This led to difficulties in doing actually built-in planning. In built-in planning the essential knowledge factors and insights move seamlessly forwards and backwards throughout the demand and provide fashions.
A New Approach to Suppose About Built-in Planning
Planning can be executed in present time buckets. “Each firm has completely different planning cycles. There is a month-to-month cycle. There is a weekly planning cycle. There is a each day planning cycle, a shift degree cycle, and many others. The explanation why these planning cycles exist,” Mr. Gottemukkala defined, is since you’re making completely different choices in every of those.”
“The selections that have to be made within the month-to-month cycle are completely different than the selections that have to be made within the weekly cycle, that are completely different from the selections that have to be made within the each day cycle.” For instance, for a yogurt firm, choice of the place to ship a brief lifecycle product popping out of a manufacturing unit is finished each day as a result of “demand can shift in very quick time frames.” In the meantime choices like how a lot manufacturing capability must be added, or what uncooked supplies have to be bought, don’t change each day. These extra risk-based choices are usually made within the month-to-month built-in enterprise planning course of.
When provide chain professionals talked about built-in planning, they have been traditionally seeking to combine gross sales, advertising, and finance into the month-to-month provide chain decision-making course of. “However the problem with the standard planning programs has been there have been silos” not simply throughout completely different enterprise teams, however silos throughout completely different planning horizons. These completely different planning horizon choices require completely different fashions.
“So, one of many beauties of the o9 platform,” Mr. Gottemukkala continued, “is that the fashions are all related.” Within the month-to-month enterprise planning assembly, a plan will be created, that if executed, will generate a sure revenue, money move, and even maintain greenhouse gasoline emissions beneath a sure focused degree. However, after all, over the course of a month the demand and provide footage change. Thus, the preliminary plan have to be modified. Nonetheless, these plan deviations that happen in weekly or each day buckets move into the month-to-month mannequin. Primarily based on a modified manufacturing unit schedule on Tuesday, the corporate can see what the brand new projections for money available, earnings, and emissions will likely be within the coming month.
Knowledge, Knowledge, and Extra Knowledge
To totally leverage the facility of the present technology of modeling applied sciences would require entry to way more and higher knowledge. o9 has partnered with FourKites, project44, and Shippeo to get real-time visibility to shipments. o9 Options’ purchasers even have entry to their companion PredictHQ’s occasion knowledge, which drives improved forecasting.
Graph Databases Are at their Finest Once they Can Entry Large Quantities of Related Knowledge
To do higher planning, o9’s CEO additionally believes firms want higher entry to real-time threat knowledge on what is occurring within the multi-tier provide chain. There are distributors that offer this knowledge. However in the case of figuring out suppliers two or three tiers upstream from an organization, that is nonetheless a tricky nut to crack.
Lastly, from a knowledge perspective, getting higher environmental, social, and governance (ESG) knowledge is an actual downside. Whereas the o9 know-how may mannequin Scope 3 emission/profitability tradeoffs right down to the product degree, that relies upon upon having good knowledge. “The true influence on water or vitality or greenhouse gases will depend on knowledge” that’s generated outdoors the 4 partitions of an enterprise. However, Mr. Gottemukkala exclaimed, “it’s nonetheless not wealthy sufficient.” There is no such thing as a one supply that may present good sustainability knowledge. The info required will likely be completely different in several industries. Corporations in an business have to collaborate extra successfully to speed up the flexibility to plan based mostly on prime quality ESG knowledge. As soon as the info turns into obtainable, “new sorts of analytics and algorithms could possibly be potential. We’ve got constructed the know-how for that already figuring out that is the place the world goes to go.”
Conclusion
o9’s opponents would definitely disagree with a few of the assertions that Mr. Gottemukkala makes. However o9’s clients are a few of the largest and best-known firms throughout client items, retail, and excessive tech & electronics. These clients have purchased into the concept that new and higher planning is being made potential by a brand new technology of planning know-how.
