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Cloud to make ERP more viable for SME? Sage thinks so

Den Howlett Profile picture for user gonzodaddy May 20, 2014
Summary:
Survey results suggest optimism among CFOs for cloud deployments. But is that misunderstanding what is needed? There are significant hidden risks.

sage HQ newcastle
A recent study compiled by YouGov for Sage suggests that UK finance chiefs are getting more comfortable with cloud options for ERP. According to the survey, 51% of respondents perceive ERP today as too expensive but:

Nearly a third (31%) of respondents surveyed said cloud computing would make ERP a more viable option for businesses and a further 30% agreed cloud would make ERP more affordable. On top of this, 31% said cloud would make ERP more flexible, while 27% of FDs also believed it will improve return on investment.

Those are extraordinary statistics by any measure but I wonder if they mask a misunderstanding around the technology landscape. For example, the way the survey defines ERP includes sales and marketing activities but that ship sailed a long time ago with the emergence of Salesforce as the big dog in the room.

Contrary to findings in this survey, our soundings among customers consistently show that those companies which take an 'all you can eat' approach to Salesforce find the solution to be expensive but vital to their business. The value trade-off is too great for many of those businesses to actively consider alternatives.

Salesforce.com expects $5 billion run rate "any minute"Any minute now Salesforce.co…Feb 28 2014diginomica.com For those businesses using Salesforce that want a well integrated solution, their options are limited. Right now, FinancialForce, Workday and Kenandy are the only real options for getting close to completing the ERP picture. Even then you'd be hard pressed to argue that any of those vendors cover all the bases although each has strengths in certain verticals.

Elsewhere, we learn that SAP is forklifting the Business Suite and Business All In One to the cloud via Microsoft Azure. A viable option? Possibly. We will need to learn more of the details at the upcoming SAPPHIRE Now.

NetSuite of course already provides a near full ERP suite for SMEs wanting to take the cloud route. In its most recently closed quarter, Infor claims 65% year over year growth in SaaS revenue. So where will Sage fit?

That's hard to tell. Other than Sage One, the company doesn't have a native cloud application or suite play although during a CNN interview it proclaimed: 'we love cloud.'

One topic we've not touched upon is integration. That's a whole rats nest in waiting. Just as in the on-premises world, buyers will have to decide whether they want the suite approach or whether they are content with the requirement to take best in class and then integrate as well as consolidate their solution landscape. That won't be an easy call.

Verdict

NetSuite upbeat on Q1 numbers as SAP snaps back at cloud claimsZach Nelson With its annual …Apr 29 2014diginomica.com It seems that with so many vendors reporting strong double digit growth in subscription based models, we may be entering a phase where the early adopters are a done deal and that the emphasis now shifts to the early majority along the bell curve.

How that shakes out is anybody's guess although it is clear that every vendor with skin in the ERP game is positioning to retain or move customers to cloud deployment models. Whether cloud works out to be as flexible and affordable as the survey suggests is very much open to debate.

If anything, I see them as less flexible but with better process and, in the long term, more expensive than on-premises alternatives but better solution management.

In short, there will be trade offs that should lead to better overall outcomes but it is not a done deal.

Featured image: © mtkang - Fotolia.com

Disclosure: Workday, FinancialForce, Workday and Salesforce are all partners at time of writing

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