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Why Some Firms Are Hesitant to Switch to Cloud for Key Parts of Their Businesses

wsj pic

(Illustration by David Plunkert)


Steven Norton and Clint Boulton, writing for the WSJ
:

While many larger companies have turned to cloud software to manage systems like human-resources management, they are slower to adopt the cloud for applications that handle inventory management, billing and other processes they rely on to run their businesses on a daily basis.

For companies using this type of software to do things like manage the filling, sealing, shipping and billing for thousands of shampoo bottles every hour, there is still too much risk associated with potentially unreliable Internet connections and a dependence on third parties to manage computer servers. The chief information officer of a global consumer packaged-goods company said, “if our [enterprise resource planning system] goes down for five days, we’re out of business.”

This is a trend we hear each and every week: for critical business functions, on-premise software still reigns supreme. Why? Because businesses run on it. If these systems fail, the business stops. Organizations have triage processes and IT teams in place to keep these systems running, and abstracting them away to the cloud – for now – is simply too intimidating.

But as with most technology platforms, there is no black and white. The reality is that for many organizations, cloud and on-premise applications happily co-exist to keep businesses running.

“A lot of our effort has been helping customers pick up new product offerings and modules in the cloud while enabling them to coexist with what a company already has,” said Thomas Kurian, executive vice president of product development at Oracle.

Cloud adoption from large enterprises often comes at the divisional level and through add-on modules. While Oracle offers services to help facilitate the switch to cloud, many core enterprise ERP platforms remain on-premise.

Horses for courses.

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