Who will deliver Cloud ERP? – Part II

January 26, 2010
By manchester

Last week Thomas Wailgum explored why Sage and Oracle might have trouble being nimble enough to get to the cloud. This week Dennis Howlett explores how Sage may or may not get to the cloud in his ZDNet post Sage launches X3 but to barely a cloud in the sky.

Dennis makes a lot of good points in his article, including:

  • 50% of businesses are moving financial applications to the cloud in 12 months or less. Saugateck Research
  • 35% of traditional ISVs have begun transitioning to SaaS.
  • Sage has a SaaS strategy with significant R&D, but it has not been formally announced.

So according to this information – demand for SaaS is real (first bullet), vendors have started transitioning to SaaS (second bullet), and legacy vendors are working on, but not making money from SaaS (last bullet).

Legacy ERP issues

We share Dennis’s conclusion that “vendors like Sage are battling with acquired legacy code.” Vendors with market power have a large installed base of customers which are running on legacy code. The decision to move to SaaS, although easy to make in the boardroom, is difficult to make in the code.

I’ve heard several people such as David Chappell describe cloud technologies as a major change in architecture that occurs infrequently and is similar to the shift from mainframes to mini computers and desktops.

The facts above support the conclusion that the switch to the cloud is significant. Companies are making announcements, but the actual re-write of the code requires new skills and new ways of thinking. In addition, the path to cloud is hampered by the complexities of moving clients and partners to a new architecture.

Cloud ERP will happen for all vendors

Eventually all legacy vendors will be able to build a cloud/SaaS solution. However, the path to SaaS/cloud, will be faster for those who acquire the technology instead of trying to change the culture and skill sets of their existing development teams and partners.

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2 Responses to “ Who will deliver Cloud ERP? – Part II ”

  1. Ian Smith on February 3, 2010 at 8:11 am

    The point about cloud ERP is not just a shift of infrastructure. It’s a radical change in culture and that’s what will screw-up the dinosaurs. Design-led, Simple Cloud Apps don’t feed enough people in the bloatware firms.

  2. Manufacturer on November 12, 2010 at 4:23 pm

    ERP consumers may not rush to put their valuable information assets such as product structure, customer lists and sensitive financial information out somewhere on the internet. While I am a big fan of leasing server horsepower, such as in the amazon model, I see a healthy future for applications based on in-house servers.

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