Enterprise-App Woes Could Drive Customers to the Cloud

Matthew McKenzie, Senior Editor / Community Editor | 3/9/2010 | 6 comments
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A lot of companies are less than thrilled with their enterprise applications. Their reasons should give cloud-computing vendors plenty to smile about.

Forrester Research Inc. recently asked more than 100 IT professionals to rate a list of the top problems they encounter with their enterprise apps. Forrester's findings aren't exactly shocking, but a closer look reveals some interesting insights.

More than 90 percent of companies, for example, cite "high cost of ownership" as a significant problem. The real story, however, is the underlying cause: According to Forrester, "internal support requirements and vendor maintenance contracts" are the most serious TCO pain points. It's a burden that imposes direct costs, and it also imposes an opportunity cost on IT shops forced to back-burner other projects.

Upgrades are also causing a lot of headaches. Quite a few companies apparently aren't willing to deal with the expense and disruption required to upgrade their enterprise apps, even when they're up against vendor support deadlines. But putting off upgrades also means living without desirable new features, including beefed-up process management and collaboration tools.

If you follow the cloud-computing bandwagon, these tunes should all sound familiar by now. Cloud-based enterprise app vendors don't just want to cut enterprises' internal support and vendor maintenance costs; they want to eliminate those costs entirely. And of course, living in the cloud means never having to suffer through another upgrade cycle.

The news for the cloud crowd isn't all good. About 80 percent of the companies surveyed deal with a mismatch between their business requirements and enterprise app capabilities. Traditional enterprise software vendors and VARs earn their keep with custom code designed to plug these gaps. Some cloud vendors, especially those in the platform-as-a-service market, can offer similar custom functionality. Others still cannot -- it's a mixed bag at best.

Maybe all of this simply confirms the conventional wisdom that cloud vendors are still getting fat by grabbing the low-hanging fruit among dissatisfied enterprise app customers. But the concerns over upgrade costs suggest that many, many enterprises fit that description.

So, what ticks you off about enterprise applications?
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phil_ayres   Enterprise-App Woes Could Drive Customers to the Cloud   3/10/2010 3:23:47 PM
The cloud is for developers
The way I see things going, the cloud is not likely to offer organizations any benefit over their enterprise apps. Unless they want to develop those applications from the ground up (this is why Microsoft is so interested in the cloud in my opinion).

Software as a Service (SaaS) on the other hand seems better positioned to give organizations an option over on premises installation of enterprise applications. There are a range of SaaS options out there for every type, and level of requirement. Now I understand that integration of these applications remains an outstanding issue, but it seems to me that this is no worse than we see inside the firewall currently.

I'll admit that I have a bias, as a provider of SaaS workflow and process improvement solutions. Though the appeal for my customers has been the ability to use a solution that fits their needs, rather than paying for all the bells and whistles that enterprise vendors felt they had to include to check the boxes. Customers don't need half that stuff, and really resent having to pay for it. Right-sized SaaS solutions give them that option.

Nice article by the way!

Thanks

Phil

http://blog.consected.com
Matthew McKenzie   Enterprise-App Woes Could Drive Customers to the Cloud   3/10/2010 12:36:37 PM
Re: Ability to customize enterprise apps ticks me off
I sort of touch on this topic in my latest blog post that deals with a related issue: data integration. Seems to me to be one of those dirty little secrets that the initial cloud hype overlooks -- and then the specialists show up when an IT department realizes that it simply moved an existing problem to a different platform.
vnewman   Enterprise-App Woes Could Drive Customers to the Cloud   3/10/2010 2:58:33 AM
Ability to customize enterprise apps ticks me off
Yes, even though it has kept me gainfully employed for many years, I have a love-hate relationship with it.  Why?  Because it makes upgrading ANYTHING a nightmare.  The litany of complaints I've endured is endless:  What happened to my special macro/template/button/plug-in/wallpaper/other thing we allowed you to customize and had no idea you did.  Now it is a. gone, b. doesn't work, c. makes the new stuff not work."

Sigh - It stymies the firm's ability to be flexible and is an obstacle to timely enterprise change.

Ah, the joy the cloud could bring in this respect - so much time and resources could be freed up for other things.  Except the masses know too much - none of my clients would go for it coming from where they've already been.  Blast!  Foiled again.
Paul Bonner   Enterprise-App Woes Could Drive Customers to the Cloud   3/9/2010 11:51:06 PM
Re: Low Hanging Fruit
Great article Matt, and I'm sure the trend is real. There are enough poisonously-bad aspects to internally-managed enterprise applications to leave a bad taste in anyone's mouth.

Of course, hosted enterprise applications (and I mean this literally--someone else hosting the same ERP, for instance, that you could have installed on your own servers, as opposed to salesforce.com style software as a service)  aren't a panacea. For one thing, they really don't let you escape upgrade cycles. You might not have to plan and execute the upgrade  yourself, but your hosting partner needs to do the upgrade, and you still suffer if something goes wrong. And hosted applications usually still entail significant maintenance fees. 

On the other hand, the great thing about a hosted application as opposed to an internally manged one is that you've got a single phone number you can call whenever anything goes wrong. Figuring out whether it's a network issue or a storage issue or a bad LDAP server is somebody else's problem--all you have to do is call that one golden number and demand that it be fixed.

 

 

 

 
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Rex Baldazo   Enterprise-App Woes Could Drive Customers to the Cloud   3/9/2010 9:11:30 PM
Amazing how poorly internally-hosted apps integrate
To me the thing that has always amazed me is how poorly internally-hosted apps integrate.  For example, you'd think single-sign-on had been licked -- if Google and Facebook can make it possible for people to integrate into their sign-on systems then why can't an enterprise app integrate smoothly into the sign-on solution?

It turns out a lot of the hosted app vendors, precisely because they are hosted outside the company, have tools to make the single-sign-on a lot simpler to accomplish.  Still too difficult but in many ways easier than when you have to host the app internally.

I remember working on an Oracle Portal installation -- what a pain it was to get that thing integrated with our LDAP.  Today clouds make that kind of thing fairly straightforward.
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Fredric Paul   Enterprise-App Woes Could Drive Customers to the Cloud   3/9/2010 9:05:08 PM
Low Hanging Fruit
These kinds of enterprise app issues are not new. There have always been problems with large scale implementations, which is one reason that cloud apps have gotten the start that they have.

Ask Salesforce.com's Marc Benioff about it...

But seriously, as cloud apps scale up, they will face the same types of concerns. Enterprise software, no matter what the architecture, is complex beast, forcing inherent compromises.

So, do you think these particular issues will drive cloud adoption, or will the various approaches simply shake out according to what they're best suited to address?

 
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