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Nigel Montgomery

Research Director, ERP and Business Applications

Cloud ERP on the Horizon? How SMBs Can Ensure It's Right For Them

Cloud ERP

Cloud Changes Everything, And Other MythsCloud Changes Everything, And Other Myths

ERP Disillusionment Drives InterestERP Disillusionment Drives Interest

Cloud ERP AdoptionCloud ERP Adoption

‖‖PremissyPremissy‖, ―Cloudy‖ or ―‖, ―Cloudy‖ or ―SaaSySaaSy‖‖

Considerations & RecommendationsConsiderations & Recommendations

Cloud Changes Everything

Applications, ERP or

Enterprise Suite

New Cloud

Processes

Augmentation Augmentation Cloud

Applications

Cloud Information

Services

Cloud Replacement Functionality

Cloud

ERP/Suite

Replacement?

What is Cloud Computing?

Gartner defines cloud computing as "a style of computing where scalable and elastic IT-related capabilities are provided 'as a service' to customers using Internet technologies."

The value of a cloud computing service is in the outcomes

it enables, just as the value of a treadmill is in building heart

health or losing weight.

Slicing the Cloud Vertically: Cloud Service Layers

Note: Cloud services are software services

System Infrastructure Services

Business Process Services

Information Services

Application Services

App. Infrastructure Services Cloud Enablers

Mg

mt. a

nd

Se

cu

rity

Clo

ud

Bro

ke

rag

e

SaaS

IaaS

"PaaS"

vCloud

Different To Hosted

All Enterprise Vendors Are Engaged in Cloud Computing — Who to Choose?

Hardware

CSP

Open Source

Personal Cloud

Software

Service Providers

Beware!

With more perspectives comes both opportunity

and confusion

Gartner ERP Hype Cycle

8

Published: 31st July 2013

Authors: Denise Ganly & Nigel Montgomery

10

11

Or, Is This More Reminiscent Of Your ERP Environment?

Today: ERP Spiraling to Irrelevance

Very few organizations have content ERP users

Most organizations seek to reduce ERP costs

Users are dictating IT

• Departmental budget level, - Signing up for SaaS

• Hardware device level, - Smartphone, Tablet, ByoD

• Apps level, e.g., using "app store― provided applications

www.explodingdog.com

Interest/Need Differs Across the Organisation

CEO CEO

Should We Go

"Cloud" for

Business

Applications

Supply Chain Supply Chain

HR HR

Finance Finance

CIO CIO

Procurement Procurement

Sales Sales

Industry-Specific Industry-Specific

Customer Service Customer Service

Marketing Marketing

COO COO

We already have

No Way!

We plan to do more

Maybe

We have to, to a degree

We have for new apps, maybe more?

What is it really costing us?

Maybe? Is my IT plan up to date?

I read a lot about cloud — what are we doing about it?

In An SMB This Whole Team Might Comprise

Three People

14

Cloud Impacts All Key Priorities

15

Who Platform Is Going To Help ME?

16

Cloud ERP Adoption Plans By Region

17

Cloud ERP Adoption By Industry

18

Poll: Cloud ERP Plans

Q: When do you expect your organisation to move to Cloud ERP?

Already Done so

Within the next 3 years

Between 3 to 5 years

Between 5 to 10 years

Unlikely to happen; we will keep the majority of our ERP systems on-premises for the foreseeable future

19

Cloud ERP Adoption By Organisation Size

High-Level Heat Map: Today and Opportunities

Impact of Cloud on: SaaS

Heat

Level

PaaS

Heat

Level

IaaS

Heat

Level

Marketing

Sales

E-Commerce

Customer Service

Financial Management

Human Capital Management

Procurement

Supply Chain Management

Order Management

• Enables new ways of performing horizontal or vertical processes that will result in significantly increased revenue or cost savings for an enterprise. High

• Provides incremental improvements to established processes that will result in increased revenue or cost savings for an enterprise. Moderate

• Slightly improves processes (for example, improved user experience) that will be difficult to translate into increased revenue or cost savings. Low

Read the

drill-down

analysis.

Heat Map

Varies by

subdomain,

company

size, etc.

"The Future of

Cloud Business

Applications"

(G00217771)

Evaluating Cloud Goals and Priorities

Leverage existing investments

Avoid operating expenses,

preserve capital

Deliver new capabilities/ application

modernization

Rapid time to market

Supporting scalability

requirements more cost effectively

Provide access to all users,

all customers, all devices

Free-up data center space

Operational efficiencies

Easier integration with other Web & Cloud apps

IT In

vo

lvem

en

t

New Business Capabilities

Many Core Business Applications Will Not Be Ready for Cloud Before 2015

• Speculative

• Consumer-Centric

• Discretionary

• Time to Cloud: Now

Core Applications

• Sensitive Data

• Deep Integration

• Complex Transactions

• Low Latency

• Regulatory

• Differentiated

Email Productivity

Applications

Dev/Test

Web

Servers

Collaboration

Social

Front

Office

Help

Desk Consumer-

Centric

Product

Design Evaluations

Account

Mgt

High

Control

Prototyping

HR

Mid-Level Applications

• Customer Facing

• Process-Centric

• Hybrid

• Work Tracking

• Approval

• Content-Centric

• Time to Cloud: Now to 3 Yrs

• Varies With Complexity, BoB, Suite and Org Size

Peripheral Applications

• Commoditized

• Collaborative

• Self-Contained

• High Productivity

• Custom

• High Control

• E.g., Big ERP, Industry Transactions Applications

• Time to Cloud: Two to Five Years

• Varies With Complexity, BoB, Suite and Org Size

Now

0-3 yrs

2-5 yrs

23

―Cloud Bus App‖ is a Mix of Characteristics along these Dimensions

Dimension "Premissy" "Cloudy" "SaaSy"

Clo

ud

Internet-based proprietary special infrastructure zero footprint

Scalable and Elastic fixed number of users some flexibility allowed fully elastic

Metered Usage fixed fee flexibility in contract pure pay per use

Shared Technology isolated, dedicated shared infrastructure multi-tenant share of bus logic

Service-based traditional bus. appl. services with minimal config.

predefined services, bus outcome

Dimension "Premissy" "Cloudy" "SaaSy"

Bu

s. A

pp

l.

License Types perpetual leased / financed subscription, cancel anytime

Management Services

no external services appl. management services fully managed by provider

Location of data dedicated, fixed predefined free-floating

Ease of Switching tradit. migration some support for migration fully handled by (new) provider

Influence on Upgrade

fully controlled by user joint decision fully controlled by provider

Control over SW Changes

controlled by user smaller patches automatic entirely managed by provider

24

Determine Your Flavour of Cloud Bus App

Most ―Cloud Biz Apps‖ flavours offered can be mapped along the dimensions. (No scores, just columns!)

End-user organizations need to choose the options that are most

relevant for them, considering the existing dependencies.

0

1

2

3

4

5 Internet-based

Scalable & Elastic

Metered Usage

Shared Technology

Services-based

License Type

Management Services provided

Location of Data

Security

Ease of Switching

Influence on Upgrade Cycle

Control over SW Changes

On-premise Enhanced Hosting Multitenant SaaS Application

Post-Modern ERP – How Life Mimics Art

Cubism, Futurism,

Supremativism,

Constructivism,

(1905–1920)

Abstract

Expressionism

(1940s–1950s) and

Pop Art (1960s)

Postmodernism and

Deconstructivism

(1970– )

Monolithic Monolithic ERPERP

SuitesSuites

Deployment to Deployment to

Tablets & MobileTablets & Mobile PostPost--Modern Modern ERPERP

IT

Command & Control User Enablement User Centricity

Requirement & Budget Control User

Cloud ERP Recommendations

• Do not ―do‖ cloud unless there are clear business objectives. Cloud is not one-dimensional, it involves significant business and IT alignment.

• Understand the continuing development of cloud and its impact on business applications at the SaaS, PaaS and IaaS levels.

• Even within a domain, there are different levels of adoption and benefits for SaaS, PaaS and IaaS.

• Keep pushing established on-premises vendors for their road maps, proofs of viability and case studies.

• Use pace layers to structure the discussion with the business and adjust your application strategy as needed.

• Fuse pace layers with the cloud options available today and in the next three to five years. Generate a workable road map.

27

When Approaching Cloud ERP -

• Whatever your plans, test public cloud quickly and safely to dispel myths and elevate executives' and IT staff's understanding, and to promote internal dialogue to manage internal and external expectations and concerns.

• Understand and communicate your primary goal: Is it innovation, agility, cost or something else?

• If you intend to keep core ERP systems on-premises, plan to meet the integration challenges of a hybrid cloud/on-premises ERP environment as users increasingly adopt cloud solutions for noncore processes.

• Ensure that you have the right partner. Focus on reliability, configurability, granularity of pricing and availability of tools.

• Retain the ability to exit a cloud partnership gracefully, with your data intact!

Nigel Montgomery

Research Director

+44 1784 267577 Direct

+44 7771 850011 Mobile

nigel.montgomery@gartner.com

www.gartner.com

Thank You, and Remember….

It’s only complicated when you make it complicated!!

www.explodingdog.com

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