Saturday, September 8, 2012

What's This Cloud Thing Anyway?

Was recently putting some thoughts together on the tipping point for a business to finally make the plunge and replace their ERP system and it seems that many "experts" and "articles" like to include the cloud or "The Cloud" in this discussion. Recalling an event where Oracles' Larry Ellison expressed his opinion of the the cloud.

 "The interesting thing about cloud computing is that we've redefined cloud computing to include everything that we already do. I can't think of anything that isn't cloud computing with all of these announcements. The computer industry is the only industry that is more fashion-driven than women's fashion. Maybe I'm an idiot, but I have no idea what anyone is talking about. What is it? It's complete gibberish. It's insane. When is this idiocy going to stop?" Full remarks

So what is this cloud thing anyway? And specifically related to ERP or business management systems? I think that it breaks down into two simple concepts. The first, my application can be accessed from anywhere and the second, some or all of my software/hardware investments have been outsourced.

Accessed anywhere simply means that if the internet can be accessed, my ERP can be accessed. This is done through a VPN, Citrix, RDP connection; natively through the ERP client or a browser based application with user authentication. Big surprise, nothing really new here. Access of this type has been around certainly longer than "free" internet access at every coffee shop on the planet.

Outsourced software/hardware - certainly a newer concept, but not the outsource part. Businesses have been outsourcing aspects of their operations for as long as there have been businesses. Anybody still doing their office cleaning? So with "cloud ERP" one end of the spectrum would be having a 3rd party facility provide a rack space (no real pun intended) for the ERP server. At the other end of the spectrum is a subscriber relationship where the vendor provides all of the software and all of the hardware. With any outsource relationship, the customer calculates the internal costs and compares them to the outsource price, then picks the one that makes the most business sense. And as anyone who has spent time selling outsourced services can attest - everyone has a different opinion.

Outsource hardware is fairly new, but not so new that it hasn't been commoditized already. Outsourced software, while there certainly has been some enabling technology, is really just a pricing model that's been around since the beginning of time.

Put me in Larry Ellison's camp - "It's compete gibberish".

But if you're wondering if your business has reached the tipping point and its time to consider next generation business management solutions - OpenSurge would be delighted to help.


JBono said...

Correct me if I'm wrong in thinking this way, but here goes; I've always thought of cloud computing is making file locations, apps. and anything else the has to do with storing data oblivious to the enduser as long as they can access it when nessesary, I think this falls in way back when IBM came up with what was called the Andrew File System. Does anyone know what am talking about and am I right?

Bob W said...

With all due respect Mitch, I think that you and Larry miss the point entirely. There are three fundamental characteristics of cloud computing. These are:

1. Cloud computing is based on a consumption model. Organizations don't have to purchase HW/SW to last for a to be determined time into the future, along with hiring staff to administer and maintain it all, plus manage and pay for the classic "pipe, power and space" - none of these typically core to their business. Cloud computing providers create an elastic computing model whereby we can scale our computing resources up and down as we need them.

2. Cloud computing is delivered as a services model. You can use the cloud for different activities up and down the technology stack. And don't forget that a very important part of this is that our computing resources and information can be made available anytime and anywhere.

3. Cloud computing uses a deployment model. That is, not one size fits all. There are almost as many ways to configure and deploy cloud resources as there are applications and systems that run in the cloud.

The cloud isn't for everyone, but there can be significant financial savings realized by moving to the cloud. I read an article recently that claimed that the US government saved $5B, yes that's billion, by taking advantage of cloud computing. However, our government moves very slowly and the estimate was that they could have saved as much as $12B by being more aggressive about moving to the cloud...but that's another story.

Mitch Rushing said...

Bob - great input! And I don't think our views are very different. So maybe its not "complete gibberish"