As much as IT service providers would prefer to have business just magically occur, more often than not new business opportunities are created by a specific business or IT event. When it comes to cloud computing, the challenge is identifying the types of events that are most likely to drive customers to embrace the cloud.
Speaking at a recent Oracle CloudWorld event in New York, Mike Brown, principal at Deloitte Consulting, LLP, identified 12 signals that IT services firms should be looking out for when it comes to selling ERP applications in the cloud.
The first six are classic IT issues. Aging systems and the imminent loss of vendor support requires an immediate decision about replacing those systems. In addition, Brown notes that given the way enterprise software is priced cloud applications are often more attractive than a costly upgrade. On top of that, organizations can cost justify a large part of the move to the cloud simply by eliminating the maintenance fees associated with custom applications.
Other IT factors driving customers into the cloud, says Brown, include both applications and data center consolidations, as well as the cost of acquiring new infrastructure to support an application on premise.
As compelling as those issues might be from an IT perspective, Brown says that concerns from the chief financial officer are often what tips the balance of favor toward the cloud.
New approaches to ERP
Events such as business unit consolidations, mergers and acquisitions, divestitures, initial public offerings, adoption of new business models, or simply a rapid expansion or contraction of revenues that require a new approach to backend office functions, all signal the need for new approaches to ERP, says Brown.
According to Brown, it’s unlikely that organizations are going to rip and replace entire ERP systems overnight. As a result, he says hybrid cloud computing will become the norm as far as ERP applications are concerned. In fact, Gartner says that over the next two years the majority of ERP applications sold will be in the cloud. The challenge is that given the massive installed base of ERP applications running on premise, most organizations will be looking for some form of managed services to help them make that transition.
Ultimately, the onus for making the business case for transitioning to the cloud is on the IT services provider. In order to make that case, MSPs need to make that suggestion to their customer at the right time. Otherwise, the pitch surrounding the move to the cloud gets drowned out by any number of IT initiatives, which in the absence of any business data to the contrary, can appear to be more strategic. That’s especially true when the general perception surrounding an ERP application might be akin to,“Why fix something that doesn’t appear to be broken?” The challenge facing IT service providers is finding a way to have a higher level conversation about the underlying business function that the ERP application running in the cloud is intended to achieve.