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Wednesday, December 07, 2016

Beyond the hype: A more nuanced look at cloud adoption | IDG Connect

"Why keeping business applications on-premise is not necessarily flying in the face of reason, or even prevailing IT trends" insist Lindsay Clark, freelance journalist.
Photo: IDG Connect

PAL Group, a medium-sized manufacturing firm based in the English midlands, faced a challenge shared with businesses worldwide. It needed to replace ageing business applications which had served their purpose for many years but were now lacking the speed, ease of use and functionality of modern systems. Naturally, the business considered migrating to new applications in the cloud, and benefiting from the rapid upgrade cycles and low capital costs the computing model allows.

Cloud computing has achieved phenomenal growth in recent years. Organisations’ spending on the model for hosting software remotely in virtualised environments will reach 54 percent of their IT budgets next year, according to IDC [PDF]. The market for cloud computing software will be worth more than $75 billion, achieving 22 percent average annual growth rate, the research firm showed.

Given this growth, it would be easy to assume the PAL Group’s decision was a no-brainer. But it was not.

The firm makes plastics and adhesive products and has been using a manufacturing system from Swan Business Solution for more than 20 years, but needed to upgrade, says Ross Herbert, business system manager.

“The way you did things in the software was quite cumbersome and difficult. We want to take orders, push through production planning, control stock, and pick dispatches in the most flexible manner. We were doing that with Swan, but it was quite heavy handed,” he says.  

The company considered a range of ERP alternatives before deciding on Infor, which had bought Swan several years ago. It also considered adopting the system in the cloud, but rejected the idea.

Firstly, PAL Group wanted to tailor Infor’s product to a degree which was not possible in the cloud.

“We realised that to get the best from the product we would need to use ‘personalisations’ developed by our implementation partner Inforlogic, and that could not be achieved via the cloud offering at present,” Herbert says.

Also, the system needed to connect to some legacy workstation technology within the PAL manufacturing plant. Herbert says that going to the cloud might force an upgrade to these systems as connections to them become unsupported.

The evidence of a cautious approach to the cloud for business applications is more than anecdotal. Although the headline growth in cloud adoption seems impressive, research from US IT industry group CompTIA shows that if you speak to users, the trends are much more nuanced.

The study of 500 US businesses in July 2016 found only 26 percent use cloud computing to support core business application such as enterprise resource planning, a fall from 34 percent in 2014. There were similar falls in HR software while finance systems remained steady at 32 percent. In financial applications, 60 percent of businesses still support the software on-premise. The majority of all major enterprise applications continue to be hosted in-house, it found.  

The trends reflect a change in the understanding of the nature of cloud computing, coupled with a long-standing caution when making changes to reliable, trusted business applications, says Seth Robinson, senior director of technology research, CompTIA.
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Source: IDG Connect