Surprisingly, I’m increasingly hearing this question from many of our clients. Why surprising? Until recently, these same clients offered a slew of arguments against alternative hosted platforms, and were convinced that big applications such as, ERP, HCM and CRM could only run on a traditional data center.
Well, as George Bernard Shaw once said, “Those who cannot change their minds cannot change anything.” The strongest headwinds to change were underpinned by the size of the investment already made in legacy solutions, coupled with the perceived security risks inherent in all publicly hosted systems.
As far as sunk cost goes, adapting legacy solutions to both changing customer taxonomies and emerging markets is hugely expensive in terms of added IP, as well as support and the talent needed to facilitate the transformation. In other words, staying the course on existing technology is increasingly becoming a good money after bad proposition.
With respect to the security objection, the fact is that hosted alternatives running on modern infrastructure are managed to stay abreast of security enhancements and application software updates, making them more secure than most traditional data centers.
Many providers out there are willing to have a cloud discussion with you. Some you know and others you don’t, but they all have one thing in common – they want more than their fair share of your IT wallet for cloud spend. In this environment, businesses looking to manage the big workloads cited earlier have two options. One is to buy from a provider offering a “born in the cloud” solution. The alternative is to go with a provider who has seen the handwriting on the wall and has opted to “matriculate” to the cloud. Determining which path to choose presents a challenge for clients. Further complicating matters is the fact that some of the vendors who have followed the “matriculation” path are also buying separate “born in the cloud” solutions – think Oracle buying NetSuite, or SAP buying Ariba and Concur.
While the speed with which businesses can migrate legacy workloads varies, cloud solutions – whether focused on expansion or migration – are in nearly all instances significantly faster than traditional data center approaches to application modernization.
Given the breadth of cloud options available, clients really need to be clear on their transformation strategy. In many cases, decisions are rooted not in whether the cloud option will be less expensive than the status quo, but rather in how application services can be enhanced to support legacy users as well as extended to increase the accessibility of these solutions to other employees, customers and partners.
Now could be an opportune time to evaluate options and to encourage providers to invest in you in return for securing their fair share of your IT wallet. Clearly, in the technology adoption life cycle, we are moving beyond the “innovators” phase and rapidly heading to the “early adopters” phase, which Gartner has forecasted to be complete by 2019. You don’t want to be late to this evolution, as you will likely find fewer options to keep pace with the competition.
Maybe it’s time to think about planting that “for sale” sign in front of your data center.
About the author
Louis joined the team in early 2014 after nearly 20 years with Microsoft Corporation. Louis has compiled a track record of Enterprise client success underpinned by customer focus, strategic thinking, organizational agility, problem-solving acumen and impactful knowledge transfer which has established his reputation as a Microsoft licensing expert.
About the author
Louis Pellegrino
Louis joined the ISG team in early 2014 after nearly 20 years with Microsoft Corporation. Louis has compiled a track record of Enterprise client success underpinned by customer focus, strategic thinking, organizational agility, problem-solving acumen and impactful knowledge transfer which has established his reputation as a Microsoft licensing expert.
During his time with Microsoft, Louis worked in both the Consulting Service Group as a Practice Manager and in the Worldwide Licensing and Pricing Group as a Director responsible for designing and negotiating Global Volume Licensing relationships. As a highly effective and influential communicator/negotiator, Louis has delivered consistent business results across both revenue and quality of service performance targets.
