Cloud ERP - Is Microsoft Just Confusing Everybody?
With the recent announcement that Microsoft is moving its ERP (Dynamics) solution to the cloud - what exactly does that mean?
There have been a lot of confusing terms (intentionally dished out by older vendors I may add) - terms like "Cloud", "SaaS", "On-Demand", "ASP" and "Hosted" to name but a few. Microsoft is just adding fuel to the fire. But at the end of the day what does it mean to customers?
Lets start by taking a layman's view of this:
"The Cloud"
This is means a remote server intended on housing the software you want to run. In other words, anything can be on the cloud so long as its not on your desktop.
"SaaS"
AKA "Software as a Service" - this is nothing but a billing model whereby the customer does not own the software license by purchasing it outright (perpetual license) - but rather rents the software from a provider for a monthly or yearly fee.
"On-premise"
Generally means software that the customer owns.
"ASP or Hosted"
AKA "Application Service Provider", is where a vendor hosts the software on the behalf of the customer. Normally a fee is charged for this service and generally independent of the license billing model.
"On-demand"
This is any software that is available on the internet. It can apply to ASP/Hosted software (or multi-tenant software (see below)) and is completely independent of the billing model.
So when vendors, such as Microsoft, announce that they are making their enterprise ERP applications available in the cloud - what does that really mean?
The short answer is not a lot. Its the same old application that you would buy "on-premise" that is now essentially billed as "software as a service" and is "hosted" in the "cloud".
Are traditional vendors, with their old out-dated software, trying to become trendy by making their applications "cloud-ready"? We think so.
A while back we did a article on Lawson and how they are now in the "cloud". Is this a repeat performance?
Does this mean faster upgrades? no. Does this mean more features? maybe.
Single tenancy
Most of this type of software is what is known as single tenancy. In other words, there is a separate instance of the application, middleware and database for each customer - and if the code base has been modified by the customer or reseller - you still have great challenges to upgrade, have to hire an army of IT staff and are still left with old technology in the process.
Multi tenancy
What separates the modern web 2.0 technology vendors from the rest of the pack is that the fact that their cloud offerings are available in multi-tenancy. In other words, done right, the application, middleware and database are on the same version for all the customers. This leads to rapid innovation, rapid release cycles, rapid bug fixes and ultimate less cost of ownership.
Degree's of multi-tenancy
Now, granted, there are varying degrees of multi-tenancy. The most innovative cloud vendors have gone to the nth degree - the rest have cut corners to try to achieve rapid go to market strategies and see to further confuse customers.
How can you tell the difference?
It is hard for the layman. But here are some guidelines (by no means definitive or absolute).
- Rapid release cycles combined with everyone being on the same version. Highly likely its multi-tenant and to a fairly high degree.
- If you have a unique URL to log in. Unlikely it has a high degree of multi-tenancy.
- If the vendor advertises its available on-premise or in the cloud. Unlikely it has any degree of multi-tenancy.
- If you have access to the source code to make changes versus a meta-layer for integration/customization - unlikely it is multi-tenancy - more importantly - very expensive to make changes.
At the end of the day, the customer's will decide what delivery mechanism and software paradigm is important. If software simplicity, time to value, innovation, ease of use, and integration with new social technologies is high on your list you might want to consider cloud multi-tenant pure-play vendors for your enterprise apps versus traditional apps that are just re-branded under the new wave of the cloud.
Reader Comments (2)
Very good simplistic picture. I particular like the sentence "The short answer is not a lot. Its the same old application that you would buy "on-premise" that is now essentially billed as "software as a service" and is "hosted" in the "cloud".
so true. seems traditional vendors are repackaging their on-prem software to stop losing market share to the multi-tenant players.
SaaS has a good range of benefits.But people failed to recognise and deny to accept it.