After my last post on why Cloud Services are creating
waves in the CIO community in general, I wanted to share my observations on how
customers in the ERP world are reacting to the buzz. SOAIS 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 SOAIS for
example, we adopted a cloud HR solution from Oracle Fusion/Taleo suite for some of our HR processes.
We have been using Paybooks,
a web based Payroll software for payroll processing and a cloud based CRM for a
while. 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 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 Greenfield
opportunities for software vendors are enormous in this space.
SOAIS remains a trusted advisor for
its customers and regularly deals with customers who want to understand their
Enterprise IT Roadmap. “To Cloud or not to Cloud” remains a quandary for a CIO.
In my next blog, I will touch upon how SOAIS helped a customer make decisions
on their cloud journey.
