CLOUD – what next for Enterprise Applications?
Cloud Services are have been creating waves in the CIO community in the recent times. I wanted to share my observations on how customers in the Enterprise Software area are reacting to the buzz. Our organization deals with various types of customers i.e. those with large ERP implementations; complex IT landscape and those with small implementations and relatively smaller employee base. Reactions vary depending on the level of maturity their internal systems and size of their operations. I have broadly classified the categories based on the type of implementations.
Early stage organizations: They have no or insignificant legacy system to carry forward and can easily adapt to business processes delivered by cloud ERPs – they are prime candidates to jump on the cloud bandwagon. These organizations tend to be flexible with their business needs and don’t necessarily need rich functionality delivered by traditional on premise ERPs. Internally at our organization for example, we adopted a cloud HR solution from Oracle Fusion/Taleo suite for some of our HR processes. We have been using a web based Payroll software for payroll processing and a cloud based CRM for some time now. I have seen several similar examples across the industry verticals where small and medium organizations have begun their ERP journey with cloud apps not necessarily covering end to end business processes though. Pieces of CRM & select HR modules like Payroll have a clear head-start in this segment.
Organizations with ERP Implementations out-of-the-box: These are organizations which have used their on-premise ERPs as was delivered by the software vendor. They are usually driven by a senior management mandate to adopt global best practices based on business processes delivered out of the box. They are next in the spectrum of organizations who see value in Cloud implementations. Their software vendor would’ve given them an easy path to ‘upgrade’ from their on-premise ERP to a new cloud platform. Adoption is also quicker because their management teams are committed to ‘not customize’ while they may not have too many downstream or upstream applications to integrate. They see value in the ability to stop worrying about hardware / software / upgrades / skilled IT Support personnel.
Organizations with large ERP Implementations & customizations: Large organizations typically need rich functionality, have high levels of customizations specific to their business, have several complex applications to integrate and have low risk tolerance to move data to an external entity on shared infrastructure. Though sales brochures of popular cloud software vendors indicate otherwise, large organizations have been slow to move to the cloud for their end to end application needs. While few of them have taken tentative steps, all their core applications and business critical apps remain on-premise. Pricing models of Cloud app service providers are evolving and at times doesn’t make financial sense for organizations with large employee base or running high volumes of financial transactions. But several large organizations in this category are definitely considering the Private Cloud option i.e. moving all their applications to a third party infrastructure who are experts in running datacenters, maintain hardware, have economies of scale with hosting & security.
The enterprise applications in general is on the cusp of a technology evolution searching for answers. Cloud has enabled smaller organizations (compared to before) to afford world class ERP products – bottom of the pyramid as CK Prahlad said and hence green-field opportunities for software vendors are enormous in this space.
Contributed by Prashant