Plex Systems opted to deliver ERP software for manufacturers exclusively through the Software as a Service (SaaS) model in 2001. The company was simply looking for the best means to support the continually changing needs in the customers' businesses.
The traditional approach of sending out periodic releases had failed. With SaaS companies can add features constantly and the customers can implement them when they choose. They are always on the latest version of the software and don't need to worry about costly and disruptive upgrades.
The following is some typical concerns the market had about relying on the Internet for mission critical systems:
- Is my data just "out there" on the Internet? What about security?
- I pay monthly fees, but I don't "own" anything.
- What if the Internet goes down? Will our manufacturing processes grind to a halt?
Some manufacturers, considering questions like these early in the last decade, chose to stay with traditional, on-premise applications. These companies knew they had to hire or retain an IT staff to maintain the software, and install an adequate IT infrastructure to run the system. They still upgrade and maintain hardware, perform and test backups, apply patches and test new versions of the software. Despite these burdens, the manufacturers figure that at least they have kept the data in-house and safely away from prying eyes.
Greater Awareness Today
Cloud computing and SaaS are much more widely understood today. It's proven that business data is actually more likely to be compromised by internal staff than by a third party. Disgruntled employees are more prone to disseminate product information, customer lists and pricing without authorization than is a Cloud computing provider. Also, most mid-sized businesses typically don't invest in the physical and electronic controls that a Cloud provider must.
Mature Delivery Model
Today's data centers have stringent access controls, multiple uninterruptible power supply (UPS) units, sophisticated computer room air conditioners (CRACs) and backup generators. Staff are trained to avoid malware and vigilant to uncover any attempts at social engineering. Industry standards such as SAS 70 and SSAE16 help ensure that data is more secure than on a company's internal network. Most providers employ N+1 redundancy -- components (N) have at least one independent backup component (+1).
This protocol provides a form of resilience that ensures system availability in the event of component failure.
Providers of mission-critical applications like ERP will stream data to a "hot" backup site hundreds of miles away. In the event the primary data center was to be damaged in a natural disaster such as a hurricane or terrorism, the provider should be able to restore data access within two hours. The metrics for this are called RPO and RTO or recovery point objective and recovery time objective respectively. The service level agreements (SLAs) from providers will outline their commitments for uptime and disaster recovery.
Cost Reduction is a Driver
Most CIO's are tasked with "doing more with less." In prior decades, companies needed large IT staffs to create and maintain custom software to run their business. Nowadays, there are purpose-built, comprehensive vertical solutions for many industries. It has become nearly impossible for a manufacturer to be competitive if they have to support, operate and maintain either custom-written or heavily modified package solutions.
The concerns regarding costs, security and maintaining business continuity aren't unique to the private sector either. As the Obama administration's first chief information officer, Vivek Kundra, wrote in a recent New York Times editorial titled, Tight Budget? Look to the 'Cloud', many of the traditional software firms and private consultants "encourage(s) reliance on inefficient software and hardware that is expensive to acquire and to maintain." Kundra ends his thoughtful piece by noting that those who embrace the cloud will "be rewarded with substantial savings and 21st-century jobs."
Cloud Adoption Increasing Rapidly
Gartner Group estimates that worldwide end-to-end Cloud Computing Services Model revenue will reach almost $149 billion by 2015. Gartner notes in the three years since it started measuring the Cloud Computing Services Model, the delivery model has moved from #14 to #1 on the Gartner's list of CIO (Chief Information Officer) priorities.
Our vision for the future of enterprise computing has been validated by the trend of more and more companies -- and governments -- embracing the Cloud for application delivery. The reasons for adopting the Cloud are varied but undeniable. Whether it's freeing IT staff to devote itself to higher value activities, reducing dependence on expensive consultants, minimizing the investment in IT infrastructure, faster deployment or more flexible functionality, the benefits combine to make choosing SaaS/Cloud as the obvious and safe choice for manufacturers.
Many industry pundits have forecast that the manufacturing sector would be the last to embrace the cloud for core business functions. On the contrary, I have found manufacturers to be pragmatic and analytical, not emotional or influenced by the latest trends. When they learn about Cloud computing, they ask "why would I do it any other way"?