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Will the cloud render much of today's enterprise software obsolete?

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While Marc Benioff, the CEO of Salesforce, has recently declared traditional software dead in this interview (which requires you to subscribe), do you think the cloud will renter much of today's enterprise software obsolete?

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  • According to nearly every market research study, Cloud-based, Software-as-a-Service (SaaS) solutions are already displacing legacy enterprise applications. And, the ability to gain measurable business benefits from SaaS applications quickly is increasingly changing the mindset of IT and corporate decision-makers as they make their enterprise software choices. They are no longer asking, 'why should we adopt Cloud-based applications?' Instead, they are asking, 'why should we continue to put up with the hassles and costs associated with traditional, on-premise software?'

  • Disclaimer: I work for Oracle but I am not speaking for Oracle.

    Comedian Ron White says "you can't fix stupid". Moving to Cloud doesn't fix bad architecture. You just move the problem...

    Advocates of cloud computing posit there are a number of benefits with this approach to computing. I don't think they are wrong. But I don't think its magic. Sure your ERP/CRM/Email may be running in the cloud. But you still have to deal with the other domains of EA. Are your business processes optimized? Is your application portfolio rationalized? Do you have a solid enterprise data model? Oh, and what are you going to do about tying all your enterprise applications together (cloud or not)?

    Frankly, I think how you integrate your apps together impacts business objectives more than whether or not you run them in the cloud. (#CloudHeresy)

  • For commoditized business function-focused software, absolutely. For everything else? Unlikely in the short term and only slightly more likely in the longer term.

    Interestingly, I'm waiting for a longer term study on the adoption and inevitable "we're bringing this in-house" trend that comes as organizations grow beyond the ability of SaaS to provide the level of regulatory compliance heaped upon larger enterprises. GMail is great at small scale e-mail, as is Google Docs, but when you get to the point you have to start worrying about regulations like SOX and HIPAA and the like, that's when "cloud" starts to fall down in its ability to service the enterprise.

    Perhaps that will change in the future, but I see that as likely as banks deciding to use public cloud to store its financial data.

  • Aside from agreeing with the trend, I will comment on some changes on the software business side of things. The licensing models themselves are under duress, regardless of costs being higher or lower; that is part of the business that is being forced to change.
    Also, the way companies evaluate and select vendors and software is changing. For example, on-site sales and support isn't the factor it used to be.

  • Cloud computing will replace a lot of "stand-alone" functions like sales force automation or email. I don't think that it's going to replace 100% of enterprise computing, not because it cannot do them functionally but because of the need to integrate different functional IT components in a company - Manufacturing, Sales, Finance, Warehousing Logistics, etc. This is not to talk about integration of internal company systems with external company systems (like for example, supply chain integration with your outsourced factories and outsourced distribution functions) for example! Sales Force Automation systems stand on their own with may be integration needed with may be email at the most. Extrapolating from its success to the rest of organizational IT is a reach and may not happen that quickly. At the end you will see a lot MORE enterprise IT moving to the cloud but not all. But definitely to private clouds at least even if it is run internally within the company.

  • No. If anything, it's going to make many enterprise software capabilities available to an even much wider user base. We're already seeing instances where small businesses can tap into SAP and Oracle applications -- capabilities that were out of reach and prohibitively expensive before. It's like the mainframe -- the "dinosaur" system now has more end-users worldwide than at any time in its history, because of Web enablement. Those enterprise software vendors that do not use the cloud channel effectively, however, may see business recede.

  • The cloud will render a lot of stand alone software obsolete yes, but only some Enterprise Software. Enterprise software has numerous challenges with it, these include integrating with many other solutions, historical implementations and data, not to mention security and compliance.

    We must remember that business has invested large sums of money in technology to date, so they need very good and compelling reasons to start thinking about mirgrating some of these to the cloud (keep in mind just how many organisations rely heavily on old main frame technologies for many processes).

    The key to how many solutions can be leveraged in the cloud is down to software providers, and their ability to deliver solutions that can be integrated with and tailored to customer needs. If they cannot do that, then those solutions will certainly stay in-house. This is where "App" type scenarios make the cloud far more compelling to businesses....

  • Will the cloud render much of today's enterprise software obsolete? Probably. A much more interesting question is "Is the current generation of SaaS is already legacy?"

    There's two interesting trends we're seeing the market. First, the middle of the market – companies which are neither low cost or high quality – is being destroyed. [http://bit.ly/sye2KO] Second, the companies that a thriving in this market are shifting from from acquiring IT to using (external) business services enabled by IT. [http://bit.ly/vWTxXe]

    This makes the whole on-premesis vs. on-demand debate a bit like tilting at windmills. Traditional on-premesis enterprise software looks like it will be replaced by partner and supplier networks rather than SaaS. Contemporary SaaS offerings are not the end-game, they're simply a transition phase: its enterprise software but in the Cloud! Focusing on SaaS is a technology-centric view of the world which is rapidly becoming irrelevent.

    That said, traditional enterprise software (and what we might call "old-skool SaaS") are not going to go away in a hurry. Hey, we still have data centre managers, they just don't have the level of visibility and authority they did in the 70s.

  • There are number of layers to this.

    (1) The cloud is just a different model for acquiring computing power. In the cloud, you rent the computers as you access them, instead of owning systems and keeping them on site. Owning and managing such systems are a pain, and so most companies will move their compute centers out to a cloud provider. But that really says nothing about your choice of software.

    (2) Benioff wants to say that you are going to drop other software and use his. Maybe, but probably not. Salesforce is a good offering, but by no means the only game going. Those systems he says are dead are actually very much alive an moving to the cloud as well. There is a big part of the picture he is leaving out.

    (3) I agree that enterprise systems that fail to move to the cloud are probably doomed. But you know what? Everyone is talking about moving to the cloud. You would have to be out of touch in many ways to be missing this move.

    http://social-biz.org/2011/09/24/bring-your-own-cloud-to-work/

  • There has been a lot of very valid and logical comments so far about why the cloud will chip away at the edges of enterprise software (something I have been called Stealth Cloud http://bit.ly/uWx4TB ) but it not replace all enterprise software.

    But we also need to consider the emotional side. Cloud is software outsourcing by another name, so IT departments are not going to give up their hard-earned roles easily. Which is another compelling reason why core enterprise software will stay in house for the foreseable future.

  • Has any Business Technology change made Accounting obsolete? As is often the case, semantics are important. This is evidenced by the varied nuances of the responses you can read here.

    What do we mean by Enterprise Software – is it the functionality, the technology, or maybe both (a specific application package)? Enterprise software supports Enterprise activities, and as technology evolves so does the software. In that sense, the Cloud is yet another evolution that incrementally affects the software life cycle, of which obsolescence is the final phase.

    The disruptive quality of the Cloud is its enablement new ways to do business and new business altogether – and that is rendering entire enterprises and business models obsolete.

    So my answer tends to be negative – much of today’s enterprise software will continue to evolve and thrive, as long as the enterprise activity it supports remains relevant. History has shown that great enterprise software survives and thrives as technology evolves – just consider where SAP or Oracle began and where they are today.

  • The enterprise software will not be rendered obsolete but it will move to the Cloud.
    The large IT departments in every Enterprise will be rendered obsolete though.

  • I don't think it is the cloud that renders enterprise software obsolete. Enterprise software becomes obsolete mainly because it has outlived it's usefulness, a better product comes along or the company wakes up to the fact that, heck, it's time to admit this isn't working.

    Cloud? Will now just be a scapegoat. Otherwise, it is a precursor to a review of systems, whether things can work more efficiently now that an alternative option exists. While currently, the cloud seems to do much of the wooing of software, it is certain that time will come that the opposite will be more of the norm.

  • no. Applications are usually build for five to ten years Life Cycle until they should become obsolete. However, many applications survive for twenty or even thirty years.
    Old applications Maintenance Costs are a lot higher than newer applications maintenance and their Back Log is a real concern for the Business.
    If a Cloud Computing based model will be dominant in twenty years, the question is meaningless, because anyway most applications should be developed again.
    The current and Mid Term Cloud Computing model is adequate for SMBs not for Large Enteprises. The mixed Cloud and Internal Data center model is adequate for them. Due to Security, Integration, Regulations and Cultural issues the Core Business applications will usually will stay in House.
    To summarize: the anser is yes for SMBs and some less Mission Critical applications for Large Enterprises. The anser is no for most Large Enterprises Core applicaions.

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