EVOLVING CLOUD STRATEGIES
Attitudes towards cloud and Software as a Service (SaaS) have changed dramatically over the past few years, particularly with respect to software that runs your business. Earlier, “cloud” was yet to become a part of the business vernacular and “SaaS” was still a relatively new and poorly understood concept. In addition, entrusting the transactional system of record of business to the cloud requires a higher level of trust than required for other applications, including those which are often referred to as “systems of engagement.”
But today, the majority of businesses have cloud strategies and the shift to cloud has definitely begun.
This article is an excerpt from a series of full reports on cloud. Here we investigate preferences and plans based on data collected in the Mint Jutras 2015 Enterprise Solution Study.
But before we report on these most recent results, we want to clarify some terminologies.
DEFINING THE OPTIONS: “SAAS” AND “CLOUD”
Because of huge volume of discussion around SaaS and cloud computing, there remains much confusion over the terminology. Many use the terms “cloud” and “SaaS” interchangeably, but there are some important differences:
•Cloud refers to access to computing, software, storage of data over a network (generally the Internet.) You may have purchased a license for the software and installed it on your computers, but your access is through the Internet and therefore through the “cloud,” whether private or public.
•SaaS is exactly what is implied by the acronym. Software is delivered only as a service. It is not delivered on a CD or other media to be loaded on your computer. It is paid for on a subscription basis and does not reside on your computers at all.
All SaaS is cloud computing, but not all cloud computing is SaaS. Traditional on-premise or hosted solutions might (or might not) be accessed via the cloud, although this is more likely to be a private cloud.
To get a clear picture of how cloud strategies have developed and evolved, we turn to two specific questions in our 2015 Enterprise Solution Study.
WHAT’S YOUR CLOUD STRATEGY?
The majority (84 percent) has a cloud strategy, even if that strategy is to not go there (8percent). Given all the hype over cloud, this is not particularly surprising.
We phrased “no cloud strategy” option as: “We don’t have a cloud strategy. Cloud is just one of many factors we consider.”
We phrased it that way because for years we have been capturing priorities for selection criteria for ERP. This year, we broadened from “ERP” to “the software you use to run your business” because not everyone has what we define as ERP. Over the years, we have always included some reference to deployment option and it has consistently been ranked close to the bottom of the list of criteria. So we assumed deployment option was not the overriding factor in selecting these solutions. And yet here we have only 16percent confirming that assumption. Moreover, a significant percentage (23percent) of respondents claims to operate predominantly in the cloud today.
But cloud deployments will not dominate immediately, largely because of the predominance of existing non-cloud solutions currently installed. Implementing a solution that runs your business is not a small undertaking and most will not abandon their current solutions without a very good reason and an expected ROI. So in that respect, it is not surprising that the most likely strategy is to surround the existing systems with cloud-based solutions. One in five (20percent) will seek to replace existing on-premise solutions with cloud-based alternatives and another 8percent are taking specific action to do just that.
BUT WHAT IF YOU ARE SHOPPING FOR A NEW SOLUTION?
The question we have been asking for years now is: “If you were to select a solution today, which deployment options would you consider?” In the early days of this question, those that would consider SaaS were definitely in the minority and almost everyone would, consider on-premise solutions. That landscape has shifted dramatically.
“All SaaS is cloud computing, but not all cloud computing is SaaS”
SaaS is currently the option most likely to be considered (participants are allowed to select as many options they want). For the past few years “SaaS” and “hosted and managed by your solution vendor” have run neck and neck. Perhaps one of the reasons is because the difference between these two options is often blurry and survey respondents don’t necessarily understand the difference. This was substantiated in prior years by a significant percentage of participants running solutions that are SaaS-only, but choose this hosted option instead of SaaS.
But now, not only are more participants actually running SaaS solutions, but also the preference for SaaS is starting to pull away from hosted solutions.
We also added an option for hybrid solutions this year and we see a good portion (21percent) willing to consider this choice. Given cloud strategies developing, this is not surprising, although these hybrid solutions are more likely to be viewed as temporary options and not necessarily the desired final destination. So it will be interesting to watch to see if interest in these hybrid solutions continues to grow or decline.