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Cloud vs. Cloudburst: Where Cloud Computing Is, Isn’t and Might Be

Over the past few weeks, several people have asked me about the “cloud” and how I think it will impact the future of ERP.  Well, I’m not an expert in cloud computing, nor do I have a crystal ball.  But what I do have is 20+ years of industry experience.  So, while I can’t give you a definitive answer on the future, I can share with you my observations.

First, people have been talking about the possibility of distributed applications for over a decade.  Remember when Bill Gates said he envisioned a time when people would “rent” Microsoft Office over the web and we all snickered and scoffed?  Well, Mr. Gates, as it turns out, just may have one of those crystal balls.

So the cloud, or distributed processing, has arrived and will more than likely be here for many years.  But even with its many benefits (reduced hardware requirements, limited internal support needs, global availability and other pros listed by specialists of business IT support in London), distributed processing has its limitations.  One can argue that distributed processing is great for user-focused applications like CRM, word processing and logistics because these applications reach a broad range of industries with a minimal amount of customization.  It’s much harder to say the same thing, however, about back-office enterprise systems.

In the world of back-office enterprise software, applications must be configured to meet a wide and growing range of business processes.  Trying to herd all business types into “standard” business processes would keep change management companies busy for the next century and remove competitive advantages that some companies have built their infrastructure to support.  And there’s no way a discreet manufacturer would adopt the business processes of a healthcare provider — or vice versa.

So the next alternative is for enterprise software vendors is to utilize distributed applications to provide multiple “versions” of the application for various industries.  Viable?  Probably not — this alone would drive cost and support models out of control.  And I must admit, in my twenty years in the industry, I’ve never seen two companies attempt to configure the software the same way.  Even in similar industries, there are always differences that need to be addressed.

With all that said, I do think that you will begin to see additional applications being moved to and supported in a cloud environment.  Anytime a software vendor can standardize their product it lowers their support cost and appeals to a wider audience.  So look for the trend to continue.  And by all means, don’t confuse a hosted or managed services offering with a SaaS model.  Hosting and managed services are essentially your custom environment running on someone else’s equipment.  SaaS is a distributed software environment.  Lots of confusion, but the gods live in the details. Maybe I can talk more about that next month!

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