Why cloud computing will grow

cloud computingAn article in the Economist in 2014 noted that the expenditure on cloud applications was small compared to the huge amount business spent on IT as a whole. However, it pointed out that corporate reluctance to cloud computing was starting to be overcome.

Since April when I started my new role at Flowgear, I have become increasingly aware how strong, convincing and valuable it can be for business to embrace the cloud rather than resist it. I also attended the Gartner Application Architecture, Development and Integration Summit in London to help promote Flowgear, and heard senior Gartner analyst Andy Kyte speak on how old applications, i.e., on-premise systems, are being relegated, and even decommissioned, in favour of newer applications, which are increasingly cloud-based. His comment to me about the rate at which cloud computing was replacing some major on-premise systems was startling.

A major reason in my case for my previous ignorance and dismissal of cloud computing came from my work and background. As a baby boomer working in the ERP industry, my whole work experience was around on-premise applications, and I now realise that it was very difficult to see outside that envelope. I think it is also the perspective of many IT people of similar age and experience, and it may mean therefore that until the next generation become the decision makers, cloud computing won’t really take off. This may apply more in large businesses – in smaller ones and start-ups the Generation Xers and Millennials are already in charge.

Two recent articles on the ZDNet site have covered the topic of innovation and why cloud computing will grow. One article discussed how the enterprise technology incumbents were not seen as enabling innovation, and published survey results that showed cloud computing was the main platform for innovation.

innovation-tech-vendors-3
The other article reviewed the drivers that would make businesses move to the cloud. It will boil down to competing in a new world of business. This will mean that companies will be running:

mostly off-the-shelf enterprise software with a handful of custom-developed applications, probably containing core IP.

It’s going to take some time, but:

Enterprises will make increasing use of platform as a service, enabling developers to create web and mobile apps for any platform that integrates easily with software as a service and on-premises applications. Cloud technologies will be pervasive, with all corporate data managed using a cloud-based business model, underpinned by a hybrid cloud infrastructure.

I am now starting to wonder – I got my first experience of the enterprise software industry in the late 1990s, when ERP was beginning to come of age; within five years it was booming. I am now doing a similar thing with enterprise cloud computing; where that will be in 2020?

Leaving the ERP world

changingAfter over 15 years, I will soon be leaving the world of ERP and enterprise software.

It’s been a great time to work in the ERP software field, especially as small- and mid-size (SME) companies started seeing the value and justification for ERP in their businesses. For ERP vendors like my nearly former employer SYSPRO, the growth in the SME market has been wonderful.

For me it’s been a great experience working for a South African software company that is truly global. Having been in the SYSPRO corporate office I have had exposure to how an international software company does strategy and development planning, and been able to interact directly with some of the best developers around. I also got to engage with colleagues in other countries, and learnt a lot about how those countries can be both the same and very different. I could not have done any of that at any other enterprise software company in South Africa.

Now I am moving on, up into the cloud, so to speak. I will be joining a Johannesburg-based software company called Flowgear as head of marketing. This company was founded in 2010 and has been one of  Microsoft’s local stars in the startup space. It has also got onto the Gartner magic quadrant in the sector where it plays – Enterprise Integration Platform as a Service.

I am impressed by what I’ve seen and heard of the company – especially at a recent seminar held at Microsoft. I am also really looking forward to my new role: helping to promote the company and grow the business, not just in this country, but also internationally.

I will keep on blogging here, but I’ve realised I may have to change the top tag line, I will have to drop the “enterprise” part off.

Responsiveness of cloud-based software

Clouds
For a while I have been using a web-based service called Mammoth. Mammoth allows you to save text, images and other online content, as well as notes, into a single place for later use. In my case, I use it when researching issues I need to write about, or reference, for my job as a product marketer.

Mammoth allows you to create ‘boards’ which store the content about a particular subject. Boards can be shared so that people in different locations can edit the content collaboratively. A standard board in Mammoth is ‘Talk to Us’, which is shared with the Mammoth support team, and this allows me to address any issues I have with Mammoth online. Whenever I have logged an issue, I get a response via the board usually in a few hours.

In one case, Mammoth made a change to the user interface (UI) which made it look worse for me, so I logged a note on the Talk to Us board. There was a bit more discussion and clarification about the UI issue on the board, but what interested me was that 24 hour later when I logged on to Mammoth, the UI problem had been addressed. The application was fixed and changed without me having to do a thing.

It made me re-evaluate my view of cloud-based services.

  1. A problem with an on-premise application always requires the user to do something to fix it, usually download and install a software patch. With a cloud service, the problem is fixed once in the cloud, everyone gets it at the same time, and new software has to be installed.
  2. A problem with on-premise software is reported either by a phone call or an email, which then has to be discussed and confirmed before it can be transcribed and referred to the software development team. With a cloud service, you log an issue online in one place, the issue can be quickly confirmed and then be relayed speedily to developers.

Imagine if you could do that with enterprise software – ERP, CRM, warehouse management.

  • Customers could report problems so much quicker, and probably have a better support experience
  • No need for each customer to update the software with maintenance releases to fix bugs
  • Customer could log enhancement requests in a more effective way, and perhaps even get previews of enhancements before they go live
  • The development team work on supporting one codebase, in one location, for everyone
  • No need to ship CDs of software around the world

Wouldn’t that world be better? Oh wait, it’s called Software-as-a-Service and it’s here already.

The problem is that while the promise sounds simple and wonderful, the realities of transforming to that promise require major changes in thought, approach and practice – and moreover, for traditional software vendors, major investment expense.

The response to SAP’s Business ByDesign decision

softwareThe recent report that SAP was cutting back on development of Business By Design was widely reported. Here are some comments about it.

ZDNet

ByDesign is intended to serve “mid-market” companies …At launch, executives projected that the $4 billion software suite would generate $1 billion in annual revenue. Yet it is expected to generate no more than $35 million this year… Only a small team in India will take care of the maintenance of the software 

Forbes

SAP has been guilty of trying to own the entire ERP market by itself, rather than building a broad ecosystem which they are a part of – mid sized customers weren’t keen to be customers of SAP and by failing to embrace a more vibrant industry where small organizations could use third party products but would have a logical migration path as they grew or were acquired, SAP has done both its own business, and the market as a whole, a disservice.

PCWorld

Developed at reportedly great expense, the product was initially expected to have 10,000 customers by 2010 and be generating €1 billion (US$1.4 billion) in revenue for SAP. Instead, ByDesign has about 1,100 customers today

And from a SAP partner trying to do some repair work

SAP Business ByDesign, and its users, will in fact benefit from this leading technology [SAP HANA]… especially as SAP refactors parts of the SAP Business ByDesign platorm, so to take maximum advantage of SAP’s HANA breakthrough capabilities as well as dramatically improve speed and usability. As part of this, all of the know-how of SAP Business ByDesign is being preserved, and likewise is brought forward to benefit your business.

Of course, a cloud ERP vendor had to put the knife in. 

There was a major brouhaha when word leaked out that SAP was finally burying its ill-fated cloud-based ERP system, Business ByDesign. I assume it must have been a slow news week because no one could really have been surprised.

In my opinion, it is a sign of something happening in the cloud ERP space – maybe that the demand isn’t as great as the big vendors originally anticipated. Or it’s another failed attempt by SAP to penetrate the mid-market. What’s your view?

SYSPRO’s cloud strategy and journey

This is an interview that Dennis Howlett of Diginomica did with me about SYSPRO‘s approach and implementation of a cloud solution for its ERP software.

The accompanying article can found here.

Enterprise software is not a commodity

This post was prompted by a recent blog I read – Refuse to be a Cloud data hostage. The point of this article is that businesses should treat their cloud software like a commodity and be able to switch as they please. This stems from the argument by the Chief Technology Officer of Amazon, Werner Vogels, that:

“You should keep your providers on their toes every day. If we are not delivering the right quality of services, you should be able to walk away. You, the consumer of these services, should be in full control. That is core to our philosophy.”

When I read this, the word that stood out was “consumer”, not business. Consumers may have the privilege of being able to jump whenever they want, but my view is that businesses do not, and perhaps should not.

If you’ve ever worked in a manufacturing organisation, you will know that they invest in machinery only after a long evaluation process. Why? Because it is expensive, they may have to make changes to their processes in order to benefit from it, and they have to train staff to use. Then, if they want to keep getting benefit, they partner with the machinery manufacturer to maintain and improve it.

That is what should happen with enterprise software, whether it is in the cloud or not. Enterprise software is not a commodity, it is likely expensive machinery, and should be treated as such. If you think enterprise software is a commodity, then you are going to get very little benefit and far less than you had expected.

where is Dynamics in the cloud?

Jason Hiner at Tech Republic published the PowerPoint slide from TechEd 2010 that showed Microsoft’s strategy for private and public clouds. I think there is something missing from that picture – on the private side you can see Dynamics, but it is not on he public side. So my questions are: where is Microsoft Dynamics, and especially the ERP component, in Microsoft’s cloud strategy? What does this say about Microsoft’s plan for ERP Software-as-a-Service?