The enterprise roadmap for cloud computing is being drawn by people such as Mark Stone, the CIO of Safety-Kleen Systems, an environmental services company with about 4,200 employees. Stone has moved as many as 15% of his applications to cloud-based providers, mostly as software-as-a-service (SaaS) for CRM, travel and other services. Within the next three years, he expects this percentage may rise to about 35% of his application portfolio and include his general ledger.
"I can go today to a variety of SaaS providers and put in software that's every bit as functionally rich as anything I've developed on-site," said Stone, also less the upkeep of an IT infrastructure for it. For customised software core to his business, he is not ruling out migration to a platform-as-a-service provider (PaaS) .
Stone may be among the more aggressive enterprise adopters of cloud-based services. But cloud service offerings are increasingly becoming a routine alternative for IT managers. Although the overall public cloud services market is growing rapidly (IDC puts it at $23 billion today, and about $55 billion in 2014), the shift by IT may be best told by decisions IT managers are making.
There is a cloud services panoply emerging that is challenging such things as in-house ERP module deployments, or the need for consulting services to solve data integration problems.
Lien Chen, the CIO of RAE Systems, a company that makes multi-sensor chemical and radiation detection monitors, among other products, needed to integrate an Oracle ERP system with Salesforce CRM, synchronising the data between the two systems and eliminating the need for double entries by employees. Chen's options included an integration package for Oracle or on-premise appliances from other vendors. Consulting services would have added to the bill, she said.
Chen decided to use Informatica's cloud-based data integration service, which cost less than those alternatives. But she also saw this decision as best for the long haul. "I think the future lies in the cloud ," she said. But not everything is bound for the cloud. Chen isn't moving her core ERP systems anytime soon because of security concerns.
Robert Scott, managing partner at Scott & Scott, which advises clients on IT contracting issues, says he routinely sees the conflicting forces at work with users. "On the one hand there is this great pull toward cloud offerings and SaaS offerings," Scott said. But when it comes to putting together an actual contract, he said, "there is a lot of anxiety around these risks."
Legal and security issue tracks are now part of any conference that considers cloud, and Scott had no shortage of bullet points of things for users to think about when they start negotiating with a cloud provider. But his guiding principal with a cloud provider is: "You own everything you bring and everything you pay for."
This principal means, for instance, that if the cloud vendor builds integrations and customisations, templates, layouts, users have to be certain they can take that work to another provider, said Scott. "This could have a big impact on your ability to switch," he said.
But managing risks isn't a new discipline for Tom Honan, the senior vice president and CIO of CapitalSource Bank. He sees the cloud as an increasing viable alternative to in-house systems, in some cases.
The bank, for instance, had a choice of adding a module to its existing Oracle ERP system for expense and travel, but decided on cloud-based services from Concur Technologies. Part of the reason Honan rejected the Oracle module is that he would have had to expand his software licences beyond users of the financial system to other employees. "Suddenly, I'm basically looking at having to license our entire workforce," he said.
Honan said about 15% of his application portfolio is in the cloud, and he says he will continue to explore platform and infrastructure cloud services. Honan's cloud adoption has also included a revenue generating system, a loan servicing application, to a SaaS service.
But how much of the future lies in the cloud is a continuing question for enterprise IT. Even ardent supporters of cloud-based services see the legal and security issues as serious concerns. Where the critics and advocates differ is in the length of time it will take to resolve them. Estimates range from a few years to never.
Aside from legal issues, technical issues that are mostly around standards also abound with the cloud, such as ease of migration from vendor to vendor.
"We are lacking standards that are open enough to allow meaningful portability of infrastructure as well as applications," said Marc Lindsey, an attorney at Levine, Blaszak, Block & Boothby, which advises IT clients on contracts.
He urged attendees at the conference to press vendors on their data extraction capabilities, and question them as to whether they have the tools to allow it.