Enterprise applications has started moving to a new concept of cloud computing more than a couple of years back and though unfortunately this could not pick up immediately after come to fore, due to recession but as the economic situation is becoming better, they are sure to grab a large pie of enterprise applications. The current scenario is such that the top management is still insisting on justifying new IT investments in terms of return on investment and total cost of ownership and that is completely fare. We still have to weigh a proposed solution’s advantages and disadvantages and convert them, where possible, into quantifiable benefits and costs and in the process need to evaluate on premise application services versus cloud based application services.
I am a big fan of cloud computing and one of my strongest feelings is that the time is not far when all on premise applications will start moving to clouds and will in turn bring the clouds down to earth. I am not saying that clouds only have advantages and are a sure shot case for everybody to start moving towards them as soon as possible. Looking at the current scenario, there seems to be more than handful advantages that on premise applications hold over clouds so it is a fair game where each technology style will strive for improvement and evolution in next years (or shall I say quarters?). Let me list down the major advantages that cloud offer over on-premise or applications:
- No Capex: The most obvious one is zero capital expenditure in clouds as compared to heavy capex in on-premise applications. With clouds you pay a monthly fee to the service provider and you need not buy expensive servers, earmark space for keeping the servers, hire database administrators to maintain servers etc.
- Move from License to Subscription: With clouds, you do not need to buy expensive licenses from enterprise product vendors as it is normally done by your service provider and hence the ROI increases for you. It is seen multiple times that even after buying licensing for multiple modules, organizations are not able to use all of them due to multiple reasons and that license cost becomes an overhead for the organization. Whereas, in clouds you subscribe the service as you subscribe to a magazine or a cell phone service which can be started anytime and can be stopped anytime
- Flexibility of change: How many times, it happened that you thought of shifting to another ERP because it offered a few functionalities that have become critical to your business but these are not available in your current ERP? In my experience, I have seen this more often than not but since it is not easy & cost economical to move towards the other ERP, we keep on sticking to the existing one and instead work with the product vendor for fixing the issues which either include customization or workarounds or changing the process. Sometimes, this takes you away from the best practices in those areas and hence reduces the organizational efficiencies. Clouds ensure that you do not have to worry about this any more and if you want to shift to a new and better product from another vendor, just close your subscription and move to the new one almost immediately
- Full functionality available: Unlike on-premise application where you need to buy separate licenses for modules and functionalities which you want to use, you get the full functionality available to you by most service providers in case of clouds. Then, it does not depend on whether you have just 20 users or 200 users. Not only this, you organizational size does not decide the level of scalability, reliability and the performance. You get the same features. You get the same features and the same global solution that the larger organizations get
- More data security: Yes, contrary to the myth that your data will not be safe in case of clouds, it is in much more safer hands most of the times. All organizations are not experts in safeguarding their data. If you think that since it is sitting in your servers, it is safer than sitting in somebody else’s servers – you might be wrong. In today’s world when hacking is not a new word, data security and storage expertise is something that is best left at the experts. The on demand service providers ensure that they follows the highest safety standards on data security and storage and hence you can rest easier knowing that your data is in the cloud and well protected
- No support infrastructure required: Normally, after ERP implementation at your premise, you would engage a product support team that will help resolving the bugs in the application and helps users to get over them. This incurs lot of cost and often it is difficult to retain the talent in this high demand category. If you engage a vendor’s team for this purpose, even then you will to bear huge cost in this area. In the case of clouds, the service provider will not only provide you all the functionality but also will support your application so that the operations are seamless and without break. Your expenditure on business continuity and disaster recovery moves to the service providers and you just a monthly fee to them for ensuring this for you. You will be least worried about any unscheduled outages that can hamper your business as major service providers are experts in managing these on their own
- Ease of implementation: On-premise implementations take long time and involve the business as well as IT resources completely for a substantial period. In addition, the customizations those creep in after the discussions on the requirements and subsequent fit gap analysis, consume decent size of resources. With clouds, the level of difficulty as well as period of deployment is reduced considerably and the main thing is that the pain that business goes through while on-premise application implementation is missing in case of on demand application based on clouds.
The list is not exhaustive and I am sure that entry of world class service providers in this area will bring more and more benefits and the clouds will come down to earth.