Over the last 30-40 years, businesses have embraced new technologies for deploying their line-of-business applications (L-O-B). By L-O-B, I mean an organization’s ERP system, order processing system, CRM system, patient management system, student management system, etc. – the systems you require to run your business.
The original computing environment was the mainframe which was affordable to only a few. As emerging technologies became more affordable and portable, they were embraced by more organizations. These technologies included mini-computers, personal computers, client/server, web-based, etc.
Although relatively stable web-based applications became feasible in the 1990s, many software vendors migrated their legacy applications slowly to the new browser-based technologies. But now, the majority of those applications are fully available via web technologies. Also, reliable high-speed Internet access is now readily available nationwide.
Although organizations could have had remote applications before with expensive and touchy remote telephone lines leased from phone companies, the Internet as a connectivity backbone has eliminated that need and provided the infrastructure for hosting and accessing L-O-B applications remotely.
As a result, many organizations are faced, for the first time, with the real choice of hosting/maintaining their applications in-house or accessing them via the Cloud (that is, someplace outside of their organizational walls and away from their direct control).
Here are 3 Top reasons that an organization WOULD want to move their L-O-B applications to the Cloud:
A remote data center, especially one that hosts L-O-B applications for many organizations is able to provide an infrastructure that a single organization just can’t. Things like multiple Internet providers, multiple public utility access points, on-going server/platform upgrades, and 24x7 staffing, are just some of the capabilities that ensure the continued availability and security of the L-O-B applications.
A Cloud application provider can staff key resources to serve many customers. This can include network administrators, database administrators, help desk, as well as functional experts in the L-O-B application. More than likely, each of these resources will also have industry-standard certifications. So a small business in middle-America that could not find these resources – or keep them fully utilized if they could find them – is able to have world-class expertise monitoring and maintaining their L-O-B applications.
There is no way that a small or medium business could afford the infrastructure and expertise that a Cloud-based provider can bring to bear to maintain their L-O-B applications. But there are other costs that may also be eliminated. Many large ERP applications have technical certification trainings that can cost many thousands of dollars. If a Cloud provider already has certified staff, that’s a cost the small business doesn’t need to incur. Also, because the Cloud providers have relationships/partnerships with the L-O-B application developers, businesses can often access the L-O-B applications on a pay-as-you go basis rather than the traditional up-front lump-sum license payment model. That helps the business with cash management and introduces a predictable cash flow.
On the other hand, here are 3 Top reasons an organization might choose NOT to move L-O-B applications to the Cloud yet:
When I talk to business leaders, this is the reason they cite most often for not deploying via the Cloud. When the applications are in-house, it’s much quicker (and often easier) to create ad-hoc reports; or to make a configuration change. Also, some Cloud providers will not allow application customizations to the applications that they support. This can frustrate customers who want a different or altered set of functionality. Also, although many application security concerns have been alleviated over the years, many organizations fear that by relinquishing physical control of the application programs and data, they are vulnerable to security issues with their application data.
This is probably the one area that is most immature and thus a constraint against deploying L-O-B to the Cloud. Not all Cloud providers have expertise or experience with all the thousands of L-O-B systems out there. Consequently, an organization might utilize the services of several Cloud providers – one for their ERP system; another for their CRM; yet a third for their HR/Payroll system. The main problem with this type of deployment is the lack of interactivity between the various systems. Some industries have established interface/integration standards (HL7 for healthcare, SIF for education, etc.) that define data interchanges between like systems. When an organization uses multiple Cloud providers, they are at the mercy of each provider to be able to support data interchange/interface with other providers in a secure and timely manner that meets the organization’s needs. Cloud providers have concentrated on their own offerings to-date and are just now branching off to offer ways of integrating with other providers.
Someone once said to me, “When I pick up a phone, I know I’ll hear dial tone. When the Internet gets that dependable, I’ll consider using it for my applications.” That sums up the connectivity argument pretty well. Over the last ten years, there have been huge strides in increasing Internet availability and bandwidth. In some parts of the country, that “dial-tone” reliability has been achieved. But there are enough areas of the country where that dependability is not high enough to give I/T managers confidence in making the switch to full Cloud access for L-O-B applications.
Each organization will have different priorities and resources to assess when this business decision arises. There’s no doubt that some organizations will always have a computer room with their L-O-B applications right there where they can put their hands on them. But it seems like a foregone conclusion that, like other changes in technology, when the costs come down and the capabilities and flexibility increase, more and more organizations will move even their Line-Of-Business applications to the Cloud.