I have been watching the continuing push to move applications “to the cloud” and the newest technology advance. It tickles me to know that this is a return to a computing paradigm, yes using newer technology, that was abandoned about 30 years ago.
During that time in our industry when main frames, those giant collections of electronic equipment required to perform computations and store information, costs hundreds of thousands or even millions of dollars, larger firms looked for ways to spread their investment in the equipment while smaller firms (not small firms but firms that could not afford the total investment) looked for ways to “get their foot in the door”. Data centers were formed.
In a data center operation, one firm made a major investment in hardware and software and leased time on their system to other users. Those firms that could not invest big bucks in computer equipment used the hardware of the data center and depended on the staff of the data center to host their software and data.
In today’s paradigm, the communications costs are lower, the hardware costs are lower, and more and more hosting services can be found. Once again, small firms (now the really small firms) that cannot afford their own hardware and support teams can subscribe to the hosting service provider and get instant access to high end software features.
The question is: is this a sustainable paradigm?
In the data center age, issues included communication costs, subscription costs, data security, and customization of the installation. Today, communication and subscription costs are down and more and more hosting providers are making customizations of various types available. The issue of “who owns/holds/has access to my data” still exists and the hosting service has physical if not legal ownership of the data.
The major issue to cloud computing is cost. While costs are down, they are not at this point insignificant. At an cost of $50 to $150 per user per month (depending on features needed), the cost of operating an IT departmet over the cloud can quickly exceed the costs of an internal implementation. The cost battle will not be quickly settled as hosting providers lower costs, the cost of internal implementations continues to drop. Which paradigm wins is till “up in the air”.
The strangest thing I have read recently on the progress of cloud computing is an article asking “will cloud computing kill ERP?” That’s kind of like asking “will TV kill acting?” One is a set of features or skills while the other is a delivery method. I was wondering whether the author thought that cloud service delivery would prevent ERP services from being delivered? This will not happen as firms that need ERP (full accounting plus product management and planning) will always need ERP. More and more full ERP systems, including manufacturing and project management are being delivered across the cloud.
I am beginning to believe that the concept of cloud computing, at least in the short term, is a great marketing tool for firms like Microsoft. Products like GP, AX, and NAV require a significant investment to install locally. While in my opinion, local is the best installation, where the owners of the data are the holders of the data, use of the cloud concept allows smaller firms to bring up an AX, GP, NAV, CRM installation at a significantly lower initial investment. Later, as the firm grows and economies of scale allow, an internal installation/conversion can be performed, reducing costs and increasing data security. But until the firm gets to that point, they can still enjoy the benefits of large system software that is needed by their firm.