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Assessing why the A/NZ cloud market is still ‘cloudy’

28 Feb 2018

Article written by Unit4 A/NZ director Daniel Ussher.

The rate of cloud adoption in the A/NZ market has been rising exponentially. Recent research found that the majority of A/NZ IT decision-makers expected the budget for cloud services to increase comparing 2016 and 2017. Moreover, according to a Telsyte survey, more than a third of Australian businesses now have a ‘cloud-first’ policy; this effectively removes various restrictions on cloud use and drives further uptake.

Yet despite the optimism demonstrated by many CIOs, the actual process of cloud adoption among large organisations, in particular, is slow.

How the market has changed in favour of the customer

Today we have entered a new reality where the customer expects and should get more than what they pay for. In today's service economy, world-class technology and platforms are no longer the exclusive domain of a handful of large corporations. The playing field of software and technology has largely been levelled, also giving way to micro-service based applications that are specialised in doing one thing very well, and we will continue on that path.

This means that a company's success will hinge far less on its access to software and technology, and far more on the most effective use and execution of the features that technology provides. In other words, companies that deploy technology in a way that helps their customers succeed will win in the long term.  

This increasingly dramatic shift is also being defined by a revolution in customer knowledge. In many cases, customers are as knowledgeable, or even more knowledgeable about the specific technologies that will deliver the industry value they need.

Companies and developers that are able to produce the deepest understanding of customer needs and expectations -- and subsequently execute on those needs and expectations -- will fare well in the coming years. Moreover, those who are able to quickly and efficiently replicate this process over and over again for multiple customers will lead their respective industries and sectors.

Cloud could free you from your ERP shackles

As an industry, ERP traditionally has a reputation for letting customers down. While the old legacy ERP business model was attractive for vendors, it did not always serve the customer well. They typically bore most of the risk and sometimes waited years for real results to be delivered. Since a handful of very large vendors dominated the ERP market, there wasn’t much competition, which meant that customer service was not their first focus.

In fact, the sentiment from some of these vendors has been more or less, "Take it, or leave it." As more choice becomes available to organisations thanks to cloud, that approach will not be accepted by customers for much longer.

Those days when vendors could make money from customers by resolving complexity they have created in their systems are over. But the problem for a lot of large organisations today is that they are heavily invested in their ERP solutions. ERP is a complex system often consisting of hundreds of thousands of interdependent database tables.

Organisations that rely on complex ERP implementations that meet very specific business requirements need to find a balance between the sector-specific functionality that they need, and the ease of implementation and ongoing access to new innovation the supplier is offering.

Where to from here?

When it comes to ERP systems, cloud has become the go-to for most decision-makers. However, with so many options available in the market, partnering with the right provider can be a daunting task. With an abundance of overhauled projects exposed in the A/NZ media recently, this only reinforces the importance for CIOs to consider carefully what they should look for and avoid when selecting their ERP provider.

It is crucial that CIOs have full visibility of the project they’re aiming to undertake before selecting providers and that they work to reasonable timelines. When it comes to moving ERP to the cloud, a company’s worst nightmare would be to waste thousands (if not millions) of dollars on a project because their IT decision makers took the wrong route.

Unfortunately, this is something that is too familiar in A/NZ. We’ve seen numerous upgrade failures, Proof of Concept’s gone wrong and implementation write-offs in Australia alone.

ERP today is moving away from the one-size-fits-all approach that companies used to accept, and we are seeing a move back to a best-in-class approach to application infrastructures, and the emergence of packaged end-to-end industry-specific cloud solutions.

While there are many benefits to moving applications and data to the cloud, a one-size-fits-all approach to cloud doesn’t exist either. Traditional on-premises ERP systems are not always the most suitable to move to a cloud deployment model, as the architecture may be prohibitive no matter how it is deployed.

If the system can’t adapt to meet changing business requirements easily, and upgradability isn’t significantly improved by moving to the cloud, organisations risk wasting millions of dollars related to business disruption and the cost of change over time. For companies that don’t consider their real present and future needs, the chances of failure are high.

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