Capture the Cloud

If you’re like me, you are seeing a lot of advertising on TV and on the radio for the cloud – we’re in the Cloud . . . we’re cool . . . use us!  I think this is a double-edged sword – sure it helps build awareness of the cloud and helps to ease the concern or hesitation for anybody evaluating a cloud strategy.  However, not all of these characters are actually true cloud providers – they are the ‘wanna-bees’ looking to ride the wave.  Sure they have flashy ads and do run in off-site data centers.  Unfortunately, they lack some key benefits that set the true cloud apart from the rest-of-the-pack.

 These ‘kinda-cloud’ apps look great in the marketing promotions but, once you look under the covers, you realize all cloud applications aren’t held to the same standards.  It is important for business and technology business managers to understand these key differences. 

The folks over at WorkDay walk through some very key ingredients to what makes for a very strong cloud vendor. Here’s the link to that paper – be certain to download it as it goes into some great detail on this topic.

In reading that document, there are five major areas that I think are very important items that differentiate ‘true’ vs. ‘partial cloud.’  Although I agree with all of the 10 items that this document outlines, these five are the ones that my clients seem to value the most but sometimes fail to recognize during the evaluation process.

#1 True Multi-Tenancy

 This is probably the biggest item that people should be focused on; multi-tenancy allows for the applications to be upgraded very easily as all the customers on the same version of the software at all times.  It also (if developed correctly) can make the process of customizing the clients environment very easy to manage and upgrade.  Without multi-tenancy you are losing ability to drive innovation and leverage best practices.

#2 Regularly Delivered Updates

We all want to get the latest and greatest – whether it’s a new eBook, new smartphone, or a new car.  Same goes for software – ensure that the vendor provides regular updates – at least twice a year or even quarterly.  These ‘releases’ will keep you up-to-date with new functionality to help streamline business process.

#3 Business Driven Configurability

This is a no-brainer for most of my clients.  They need a solution that they can configure to meet business needs – high cost customization is almost always a reality but if you can minimize the need, you are keeping costs in check.  Ensure that you can make the software meet 90% of what you are looking to do from a business perspective.  If you cannot get to that 90% mark – first look to redesign business process and then at last fail, develop a customization.

#4 Faster Deployment

A true cloud application deployment shouldn’t be like building the pyramids.  These should be quick, relatively painless and more successful than your typical on-premise project. A lot of this comes from the multi-tenant environment that allows for great flexibility on configuration – see above #1 & #3.

#5 Control

Without a doubt, cloud vendors need to give you access to you data.  Yes, it may reside on their servers but it belongs to you.  Check that you can access your data on a regular basis and create a plan on how you will utilize the data should you want to access it outside of the cloud environment.

There have been some interesting shifts occurring in the marketplace in recent months. NetSuite still leads the pack but is getting dogged much more closely by Intacct with record growth, Microsoft has announced that dynamics GP12 will be ‘cloud’ ready, and SAP By Design is beginning to make some noise out there. I say all of this not only by what I see in the media but what I see through conversations with  other practitioners and clients. We can all agree that the  cloud is here.  NetSuite revenue will top $220MM this year – far outpacing any other ERP vendor. Accounting today listed several cloud executives in the top 100 Most Influential Technology Executive, and Microsoft’s big splash that they will be in the cloud from an ERP perspective.

Let’s talk about Microsoft for a moment. I do have to admit that I am more thrilled about the messaging and buzz about what they are doing, than I am about what we are
getting in late 2012. Don’t get me wrong, Dynamics GP is evolving nicely and
our client base loves the product.  We recently hosted a GP Summit in our offices to get the word out  Although, the new release of Dynamics GP12 will look drastically difference, provide improved functionality and reporting, it isn’t a public cloud competitor just yet. True, it will be web enabled (bravo for that), eliminating the tedious and costly desktop installs. Users can access the systems much more easily via the web.  Unfortunately, they are still accessing hosted servers with installs on Dynamics. It will be up to the group of Gold Partners (McGladrey being one of them) to truly turn this into a public model.
It is great to see the Microsoft engine ramp this up; it is long overdue. They can catch up it’s just a matter of what they want to catch up with.

The ongoing market battle between NetSuite and Intacct continues. We are partners with both and have tremendous success implementing and supporting our clients on these
platforms. We certainly see NetSuite looking over their shoulder. However, they are a machine and will continue to be a dominant players.  They have a strong product, great marketing and a fantastic story to tell.  Not to be left behind, Intacct has increased presence in the marketplace by selling a best of breed model.  Whereas NetSuite is
all-in-one shopping, Intacct touts its friendly ecosystem of tried and true applications that interface nicely into Intacct (Salesforce, Clarizen, etc).

Our clients are looking at all the major players, which give them more options  I don’t think there is an ERP company out there that isn’t trying to make a run at cloud. All in all, the cloud continues to sizzle, vendors are getting off the sidelines and this is now mainstream in the marketplace.

Yes – even Oracle wants into the game.  Good read with this link.

Just back from some great vacation and wanted to get back to the Blog World.  We have had some tremendous movement in our sales pipeline – with some great BPO/VAR deals on the Intacct side and have been working some great leads from NetSuite.  For those of you who may not know, McGladrey is now in a partnership with another cloud ERP – NetSuite.  We are excited about this new relationship and look forward to building our cloud presence in the marketplace with NetSuite.

What is also very exciting is that our discussions with prospects recently have moved into uncharted waters – we no longer have to ‘sell’ the idea that ‘Cloud’ is cheaper.  One of the many things facing customers in the marketplace today is how to best sell a new ERP system within its current organization. As many companies are still very cost-conscious, any new technology initiative (especially ERP) comes under great scrutiny these days.  Thankfully the market is adopting the idea that Cloud will save money in both the short and long runs.

In the article linked here (written by NetSuite), there is some interesting discussion on how cloud computing is able to reduce the upfront cost and overall long-term cost of ERP solutions.   As we all know, ERP implementations can take 6-12-18 months to get up and running. However the cloud is proving that the implementations can be much less disruptive to the organization and very cost beneficial to the bottom line. In fact, our average implementation take between 6-8 weeks.  In the attached picture below we illustrate how the costs of an ERP solution over this four-year period favors the cloud solution.

Although the application cost (i.e. subscriptions) are higher over these four years for Cloud, the amount of consulting and training to get up and running is much less.  In addition, three years into the new ‘cloud’ system, you won’t be staring down a complex and expensive upgrade to get that needed new functionality.  With the cloud, this new functionality is rolled out either quarterly or twice a year.  Not a lot of waiting around for the latest and greatest.

Open up that ‘black box’ and enable the right technology to support the needs of the business.

Many of the IT professionals I come across at clients don’t like to talk about the Cloud. The reaction isn’t as bad as when you talk about IT Outsourcing, but it is still a strained topic of conversation.  Unfortunately, the understanding that the Cloud is going to raise the value and importance of the IT organization is still not an accepted message amongst the typical IT worker – especially the ones who have made a living keeping servers and applications running – who are the keepers of the ‘black box.’

The smart ones are evolving alongside the technology and beginning to get on the train before it leave the station.  These are the folks who will be able to springboard their careers and align themselves with the ‘new look’ IT organization.  No longer the lord of servers, passwords, and power; IT will move to being a “manager of more complex, multiple-platform internal and external services.”  

The interesting nugget here is that this technological shift is being driven by business leadership and not the IT geeks (sorry about that). Here is a link to an analysis of a recent CA Technologies study. As we begin to navigate away from this recession, executive leadership is looking to improve its visibility into data and processes. Below is a slide I have used at several recent events to outline where the business is looking to extract value from the Cloud.

As you can see, business leadership is now looking to better manage performance in the coming months/years.  Of course, reducing costs is always important; however, there is increased value being placed on make the organization operate more effectively and more profitable.  This is where the Cloud comes in . . . the access to data at the decision makers fingertips is paramount to facilitating this mindset.  In addition, IT is going to be looked on to make this happen. 

Putting cost aside, the decision makers don’t really care about what happens behind the curtain (i.e. cloud vs on-premise) to get this data; only that they have access to it.  IT will need to find better and faster ways to meet these requirements – this is how an IT group can transform itself in this new world.  Show the business how to get at the information, reduce the barrier to use technologies, and make it cost-effective.  Herein likes the key to delivering meaningful results to the folks in the corner offices.

As you can see, this is going to create a new look IT function for some organizations. Within IT management, there is going to be a need for more of a business background rather than a series of technological certifications.

Here’s a blog that I have been reading in recent months. And generally speaking, I have agreed with the author on many of his topics. However, in reading one of his latest posts, he states that he feels that cloud storage is the first failure in the Cloud. I find this to be jumping to conclusions.  I agree that there are early adopters waiting in the wings to see how this shakes out.  However, this is an area which I believe will continued to expand and has tremendous upside for enterprise-level businesses all the way down to the mom-and-pop grocery stores.  Poeple don’t want to be in charge of data; IT people don’t want to be in charge of data.

Yes, there are many organizations are a little bit timid when it comes to putting all their data into the cloud. In addition, many of these organizations have extremely large amounts of data which makes it very difficult to manage any Cloud option. However, these hurdles are easily overcome using a variety of different technologies (i.e.encrypting your data, utilizing incremental backup, and other services) to access your data in smaller packets if the need arises. 

I certainly agree that there are hurdles out there with respect to financial and healthcare organizations; as currently there are strict regulations around these industries and how data is owned and managed. Therefore, entry of some of these players into the marketplace will surely lag behind everybody else. And it will be up to the cloud providers to determine how best to manage the current compliance that is out there that surround these types of organizations.

Last week, I spoke at the AICPA CFO Conference here in Boston – I sat on a panel which was titled ‘Moving Your Solutions to the Cloud’. This session was intended to illustrate the value of using the cloud for business applications, specifically to the decision maker (e.g. CFO).  The session was very well attended and what was striking was that folks weren’t there to simply learn what the cloud was . . . they understand that now.  Rather, they wanted to know more about how the cloud can help their organization from a cost perspective.

We had a very lively question-and-answer session which focused around two things (1) the security of data in the cloud and (2) the cost and complexity of an implementation.  In recent years CFOs were more concerned about functionality and scalability of these applications. Whereas today, I believe there is a general acceptance that these applications are able to support the organizational needs of a complex business model. However, one of the big questions that still has yet to settle the stomach’s of the financial community is how safe is your data.

Data Security: One of the topics we discussed in great detail is whether your data is safer in your own data center run by your own employees or buy an organization whose reputation and livelihood is on the line.  The finance executives all agreed that internal IT organizations are not set up or incented to protect data in the way in the fashion that is needed today.  On the other hand, the cloud providers work tirelessly to keep data secure.  Here is a good article that discusses this in greater depth.

Cost & Complexity of Implementation: Another interesting discussion topics centered around the cost of the implementation. The execs were delighted to learn that Cloud solutions are inherently cheaper to implement and much less complex than on-premise.  In my history some larger scale on-premise ERP projects were generally 2x-3x software cost. With cloud solutions, the complexity is reduced, hardware issues are non-existent and configuration on a multi-tenant environment is seamless.  In addition, we are able to utilize templates for industry specific solutions.  All of this lends itself to a lower cost.  We generally are at 1x the cost of subscription – sometimes 0.8x and sometimes 1.2x. In any event, a client can reap the benefits much faster and at a lower cost than with an on-premise competitor.

As I’ve mentioned before the cloud is here and I can see in this discussion that the evolution of concern amongst his decision-makers has now moved from ’does it have the functionality’ to ”how much money can I save and will my data be safe?’  All legitimate questions that the industry is in the process of addressing.