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The Connected Web

Phil Wainewright

Why Cloud Apps Must Co-Exist With On-Premise

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Listen to the second part of my conversation with Bruce Richardson, chief strategy officer at enterprise application vendor Infor, and former head of research at analyst firm AMR. In part one, we discussed Why Enterprises Move ERP to the Cloud.

In this podcast, learn about some of the advantages of SaaS for enterprise applications and find out why most companies nevertheless are going to be running hybrid on-premise and cloud environments for a good many years yet.

Listen to or download the 7:12 minute podcast below:



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---Transcript---

PW: Before the break, Bruce, we were talking about software as a service and some of the ways in which companies are adopting SaaS. A lot of the talk about moving to the cloud is all about what can go wrong, but I think that perhaps we should focus more on the benefits. Do you see from Infor's customers what some of the positive elements of moving to the cloud and SaaS actually are?

BR: Sure. Well, I think there's several. The first one that everyone mentions is the fact that there is no cap-ex, or capital expenditures; that you're not having to worry about buying a big enough server, or enough storage, or doing the database provisioning or all of that. You don't have to hire additional IT resources to be able to run that application. Basically, all you need is a browser and a trusted SaaS or cloud provider.

That said, just because you're running the application on the cloud doesn't mean that you start running that application tomorrow. The physics of software still apply. You still have to migrate data from one system to another. You still might want to do some business process reengineering, as you're starting to put the new systems in. There's still a little bit of training, even though most of the cloud apps are designed to be more consumer-like versus the classic enterprise software, where you look at it and say, 'Oh my God, this is not Amazon.com or online banking — I'm going to have to have a PhD to figure this stuff out!'

So while there's the benefits of cap-ex and lower IT cost, I think it's important to point out that you still have to do the traditional things of implementing software, even if it's all running in a data center that's far, far, away.

Right, and particularly when you're talking about these core business systems, where it's vital that the processes are properly checked out and are actually doing the jobs that the company needs doing. But I think the example that you were giving earlier — of a company that wanted to deploy financials to subsidiaries where they didn't necessarily have the staff on-site — that's a great example of where going SaaS and cloud can really be beneficial, because it can cut your costs a lot. And you've also got the standardization, haven't you, across those sites?

Yes — and the best part is they're all running on a single system. So, even though it's six sites, they all look the same, they're all sharing the same approved vendors, they still have all the business processes that you're running at corporate. So you do have a harmonized environment and you're doing it at much lower cost.

And actually one of the things that I think I've seen Infor talking about is reporting. I guess having that single instance that everyone is running from means that you can do quite interesting things on the reporting side.

Right. Well, we have a new product that we announced this summer called Infor ION — and it's hard to describe. We've described it as an integration platform, and that doesn't really describe the architecture or what it supports. But one of the capabilities it has is, it allows you to build a real-time data repository, where what you're doing is managing from business documents that you share between systems.

So, I'll give you a quick example. Imagine that you want to connect your ERP system to a warehouse management system. We provide the ability to configure that: get both systems on an enterprise service bus, arrange the workflow, and configure the documents that these two servers are going to share.

So you may say, well, give an example of that. So look in the ERP system. You're going to buy some additional materials. So you place a purchase order with a supplier, a copy of that document goes to the warehouse management system. The warehouse management system doesn't really care about the financial terms, they want to know the name of the supplier, the quantity, the type of product it is, and when it's to be received. So the documents that are shared between the ERP system and the warehouse management system, a copy of that goes into the repository.

So if you can think about: what percent of my shipments were late this month, what percent of my shipments were partial — meaning I ordered 100 units, I only got 50 or 75 — did the pricing match up? So you have that information available, without having to build a cube to be able to get at that, the data's right there. So we can now start to populate dashboards; we can generate reports and alerts; there's an event management capability to tell you that, by the way, the product that you're waiting on is not going to be here, it hasn't arrived; so there's a lot of intelligence that we're building in, seamlessly.

And I think that's very important, isn't it? That people often think about integration as a data integration issue; but actually there's a lot of process, a lot of collaboration also, that it involves. And if you've got a platform to do that, I think it's going to be very helpful for these companies. All of your customers presumably are going to be in the situation where, even if they're moving some of their systems into the cloud, they're going to inevitably have other systems still on-premise and they hope to link those things together.

Well, I think only purists can say that the world would be 100 percent SaaS. The truth is, as manufacturers — and that's, most of our [customer] base are manufacturers — you never throw anything out. If it's working and it's still delivering results — you'd be surprised, at some of the largest companies in the world, somewhere they're running a 20- or 30-year-old application, probably COBOL-based, and they have no intention of moving off of it. It might be homegrown. So the idea that somehow that's going to be running in the cloud? The CIO would tell you it's on his or her dream list, but they don't really have a path for getting there.

So I think we're always going to have a hybrid environment, where there will be some applications that make obvious sense. Why would you want to have expense management on-premise? If it's an application that you're not banging away at every day; maybe once a week, or every other week, or once a month, depending on your frequency of travel. Likewise, a sales force automation application: you don't live in that all the time. An HR application: how often do you change your beneficiaries, or adjust your benefits, or things like that? That's an occasional app. All of those make perfect sense to be cloud-based.

I think near-term, the vast majority of your ERP systems, your financial applications, I think those will continue to run in your own data center. So what you'll need is a unified environment where someone like you and me — that might want to get access to data from the ERP system for financial performance; might need to get data from a CRM system to see what the pipeline system looks like; might need to approve a new hire, submit an expense report — we'd like to be able to get that from a single integrated environment, without having to log onto five, six, seven different systems. We also don't care where it is. Is it in the data center down the hall or is it being run through a service? So I think a hybrid environment is where we're going to be for a long, long, long time.

Phil Wainewright blogs about how businesses are using the Web to get better plugged into today's fast-moving, digital economy.

Phil Wainewright

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