Rubenstein Justman Management Consultants

Cloudy, with a Chance of Saving

Until a few years ago whenever a company implemented new software systems it was assumed that efforts to acquire and support hardware and to install and support software would be major drains on time and resources. In the last five years, with the advent of data centers for hire and service based software, the possibilities for software hosting have burgeoned. This, in turn, has forced businesses to look at the acquisition of new software and hardware through a more refracted lens.

Two developments have contributed to the change in system implementations:

The virtualization of hardware
The commoditization of software

At the outset, companies seeking hosting solutions find themselves faced with a menu that can overwhelm: hosted applications, software service providers , private and public clouds, even metrics specifying the number of armed guards assigned to a data center. Not one shoe fits all. In fact, the analogy with a glove maybe more apt. Each of your strategic software needs could possibly entertain its own hosting possibilities. It is entirely possible that hosting your core ERP that includes accounting, manufacturing, purchasing, and sales will remain an on-site endeavor but your strategic solutions like CRM and Sales Forecasting could be accessed as purely subscription services. Another factor that drives companies to seeking offsite hosting options is the mismatch of IT skill sets and the business needs.

How does a company strike the balance between autonomy and control when it comes to system implementation?

On one end of the spectrum is the pure subscription model . Once you have provided your data to the hosting company, you are off and running. As long as you pay your monthly fees, your users can access the application and no one in your tech support ever gets a call. The downside, if any, could be the lack of a personal touch when it comes to support. In addition, you may have to sacrifice some of the uniqueness of your business functions. This is the truly public cloud. Also known as Software as a Service (SaaS). Salesforice is the leading example of a public cloud.

The private cloud, on the other hand, allows you more visibility into the hosting infrastructure. You license the software, just like you would on-site, and the hosting company provides dedicated support for upgrades and bug fixes. In most cases, you are provided the exact location of the data center where your applications and databases are hosted. This type of setup would be more applicable to critical applications like core ERP. Because the support is dedicated you do pay for exclusivity but, in the long run, this can prove to be cost effective due to reduced in-house support. Currently, such services are offered by vendors themselves like Oracle’s own Oracle on Demand as well as hosting companies like Mercury Technologies whose employees are skilled at supporting Oracle applications.

The two scenarios above could be likened to outsourcing cooking chores. With the public cloud scenario, you order take out off a chain restaurant’s menu. With the private cloud, imagine a restaurant that allows you to set the the menu which they will prepare and deliver.

In both cases, however, you want a guarantee that your “remote” kitchen is hygienic and safe. Translated to software and hardware, this mean asking questions like:

What are fixed and recurring costs?
What is the skill set of the support staff?
What are the disaster recovery plans?
How will your development needs be addressed?
How will the cloud encapsulate interaction with your trading partners?

At RJMC, we are increasingly helping our customers navigate these questions as they seek newer and faster software. We have been engaged in helping companies assess their ERP needs for over twenty five years. With our proven methodologies we have guided clients through assessment, analysis, selection, and implementation of software systems that have served them well and will continue to do so well into the future.


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