Many vendors are moving their applications to the cloud to capitalize on press opportunities. Recent announcements from EMC, Lawson, and Epicor repeat the same message – don’t upgrade your application, upgrade your infrastructure. At ERP Cloud News, we believe that you need to upgrade your application to take full advantage of all the benefits that cloud technologies can offer.

EMC says private cloud

At EMC World, EMC CEO Joe Tucci explained that businesses will not be willing to give up their existing investments in custom ERP applications. Further, enterprises will not be willing to invest in solutions which could lock them in to a particular vendor or cloud provider. For these reasons, he concludes that the way to the cloud is via a virtualized datacenter. More details are provided by Jason Hiner in his article EMC: Enterprise data centers won’t all flock to the cloud in ZDnet.

EMC’s Market

EMC is targeting large enterprise customers with legacy systems – the same customers that purchase a lot of EMC products today, but might be tempted to move to something different. Unfortunately, the indirect message is keep running your same old applications that are built for the 1990′s in a new data center.

Lawson says public and private cloud

According to David Stodder in Intelligent Enterprise, Lawson Software uses Amazon Web Services to run its suite of enterprise applications so customers can benefit from the cloud. This implementation is similar to the EMC vision, where your existing application is run on a cloud services provider which is managed through virtual private servers.

Lawson’s Market

Lawson is targeting businesses with $50M-$250M in revenue that do not have IT expertise with this offering. For customers in the $250M-$750M range, Lawson offers an internal cloud based on VMware virtualization technologies. These moves preempt customers who may think of moving to an application that was written for the cloud. The message is keep running your same old applications that are built for the 1990′s in a new data center.

Epicor says public and private cloud

According to Chris Kanaracus in PC World, Epicor launched a new multi-tenant SaaS application based on it’s existing Epicor 9 software. The Epicor SaaS version only contains a subset of features available via the on-premise offering in order to simplify implementation. The Epicor press release, stops short of saying that the application has been re-written to eliminate client software and the maintenance hassles associated with it.

Epicor’s Market

Epicor is targeting manufacturers willing to spend $400-$1,000/month with this SaaS offering. In the future, according to Chad Meyer, Epicor’s Director of Product Marketing, Epicor plans to court larger customers with SaaS offerings as well as different verticals. Epicor 9 is a new release, but the indirect message is keep running your same old applications that are built for the 1990′s in a new data center.

Benefits when applications are written for the cloud

Moving ERP to the Cloud

Placing a web and cloud engineered application on the cloud provides benefits which are not available from moving a legacy ERP application to the cloud. Some of these benefits are described in the table below.

Related articles

• It’s time to re-write ERP (ERPcloudNews.com)

SaaS scales applications. In the SaaS world, companies can scale applications. Because SaaS implies outsourcing, this means that the SaaS provider can easily scale application(s) that they manage for customers. Savings are obtained by aggregating computing patterns across multiple customers.

Clouds scale computing resources. In the cloud computing world, companies can scale computing resources. Unlike SaaS, clouds can be managed internally (private clouds), externally (outsourced clouds), or using a combination of internal and external clouds. Savings are obtained in two ways – first by aggregating computing patterns across applications and second by aggregating computing patterns across customers (external clouds).

Relating this to Accounting, ERP, and CRM

When looking at accounting, ERP, and CRM applications, we agree with Larry Augustin, CEO of SugarCRM, who in a recent blog post in SFGate says “the need for data ownership, control, customization, and integration with core systems will drive the need for private clouds.” He goes on to predict that “Cloud computing is obsoleting SaaS as defined by Salesforce, NetSuite, and single-vendor solutions.”

Recommendation

For applications such as ERP which may require customization and compliance with regulations, select an application that is built to be run on internal and external clouds. SaaS is a great option, but make sure that you do not get locked into a single vendor which will limit your options in the long run.

Saving money is a key component of cloud computing.

Cloud computing can be implemented internally or externally. As mentioned in several articles, cloud computing can benefit businesses through rapid scaling, paying for only the services that you use, reducing hardware purchases, and dynamically allocating computing loads.

Running applications on a cloud computing service can save you money – but your needs change over time.  As mentioned by Dennis Quan (Director of Business Development, IBM Software Group) in ITBusinessEdge, it’s critical that you manage and control your applications and deployment so you can balance loads and move them between internal and external clouds.

The Lessons:

Enterprises need to be careful not to purchase applications from a vendor which offers only an external cloud locks. This locks you into a single architecture and prevents you from reaping the benefits of managing your applications across both internal and external networks.  In this scenario, the external-cloud-only vendor saves money, but they are not likely to pass all the savings on to you. Also, if you try to “scale down” your application, you may not be allowed to do it until your 1 year contract is over.