The question is, "How willing are enterprises to migrate to the cloud?"
While most have clung on the conventional client server architecture, many entrepreneurs today have embraced the cloud. The critics like to believe that only 16% (the innovators and the early adopters in the curve) have been converted yet with little progress forecasted. I would like to argue that this is a good start for any form of 'disruption'.
The business applications was first moved to SaaS / cloud by companies like Salesforce.com and WebEx (Cisco) but the other bigger players like IBM, Oracle and SAP have caught up since. In the last three years of working on this platform I have been able to gather much insight about this issue directly from the horse’s mouth. Here are some reasons why companies will be slow or perhaps not adopt the platform.
SaaS / Cloud computing is still in the adoption phase and as with any other new technology there is a list of issues that need to be addressed first.
Most importantly and indeed the most feared reason is that the companies do not want their proprietary information to sit on someone else’s computers which are outside their firewalls. Especially when these servers are a part of a shared infrastructure that is not under the control of their IT departments. They store data for other companies too and I do now want my information to be available to the masses. The feeling is that data is more vulnerable because in a way it is on the web and hence accessible to the masses. Also, in some cases regulatory requirements prevent such data insecurity.
Another interesting point is that almost all of the providers have a licence fees based subscription to their service. Their subscriptions are mostly contracted for a period of one year (rarely longer in case the client is willing to sign up for longer) with no binding on the future contracts. One fears what the subscriptions are going to cost a few years down the line. Once companies customize the platform and migrate their systems and data, they tend to get used to working like that. But then they suspect that the provider may escalate the license fees in the future. It is like the utilities. You do not own the infrastructure but you get to use them for a rent. You really do not control how the rents look like in future. Can you possibly part with these services even if the subscriptions are doubled next year?
It is also widely said that the SaaS / Cloud in not (yet) equipped for the mainstream companies. One, it still has to prove itself, and two; the current applications do not support the million types of transactions that are captured by the conventional systems. There isn't enough functionality for companies to migrate to the cloud with their complex systems. Further there is a very limited amount of customizations that can be done on the cloud. If it does not fit our business processes that well then it is all in retrospect.
Even if companies were to migrate their systems to SaaS 'in part' to start with, there stands the challenge of integrating it with their current systems that are not migrated. The very purpose of being on a collaborative platform is defeated right there. IT departments are not willing to re-write a major part of the code in their current applications to make it compatible. And then there are partners that we work with where we have no control over their IT policies. If I implement it chances are that I will be the only one implementing it. And that immediately makes me isolated from the partner's who are not willing to migrate. What pinches the most it that a roll-back (if any) in the future is going to be even more painful. If we ever choose to go back to our conventional client-server architecture we will need to undo the entire exercise again and who know what problems may arise then. The other trend that is seen that some companies have moved on from one cloud to another. Even in such cases migrations isn't really straight forward. One could does not accept the data from another unless it is transformed. The IT departments aren't really very familiar with such platforms and migrations are an expensive part of the exercise.
Let’s talk a little about the performance. Since the application sits on the cloud, the performance is largely dictated by the speed of the internet available to the users. Companies adopting the cloud will have to accept the latency that comes with the use of internet. The current market segment consists of majorly SMBs where a lot of them aren't able to provide high speed broadband to all the users. At the same time, who guarantees the availability of the network? Obviously it is out of control of the provider but it still remains the backbone.
Finally, there are issues related to bureaucracy. The bigger the company the longer it will take them to implement a change of this size. Some companies that I worked with had a customized standalone application for each department. That makes it about thousands of applications in companies as big as Accenture and IBM. At the smaller companies on the other hand, it sounds like axing your own feet. If they outsource their IT infrastructure to SaaS provides what’s going to happen to the IT workforce?
So is it really The Next Big Thing in computing? Not qualified until we have looked at the other side of the coin. I will do so in my next post - 'Clicks and Mortar'
