Most organizations settled on the oligopoly of Oracle, SAP or Infor for their enterprise business systems over the last several years. These systems have permeated the crux of business operations ranging from Order to Cash, Procure to Pay, and Revenue to Record processes. Most companies have further extended their business processes by providing point and extended solutions through cloud or in house built applications.
Early Cloud and SaaS players have seized opportunities in the enterprise vacuum of big players by providing a few incredibly focused applications. Most of them bypassed IT, though it is now common for SFDC or Workday to find support in most IT organizations. As this rush to move to the cloud accelerates amongst businesses, an increasing number of functions and businesses processes are migrating to the cloud. There are three challenges IT organizations must consider and tackle in order to smoothly transition to a hybrid or all-cloud environment.
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All three have an impact on how we can be a good service provider as IT to the business:
- Architecture
- Integration & Workflow
- Business Operations
Architecture:
While it was easy to address issues when you had a single ERP vendor; things have gotten murkier with each of the big players acquiring different cloud solutions providers. These acquired entities themselves do not have a single platform; some prime examples would be Ariba, Successfactors and GLog. That being said, standardization on a vendor or technology basis is not going to work as vendors themselves are being rationalized. Architecture groups that IT operations eliminated in their rush to perform cost arbitrage and outsource, all of it needs to be put back together. Technologies are changing faster than ever, especially in the cloud space. A technical purist will not be effective, but rather what we need today are technologists and business analysts who understand application provisioning across multiple systems.
Key Points On Architecture:
- Create a state of the landscape and a point of view before your business goes AWOL on IT.
- Derive a reference business architecture based on application segmentation (cloud/premise/service), as well as on technology and talent needs.
- Staff up with innovative thinkers and adopt early technologies.
Integration & Workflow:
Most of the IT team in today’s enterprise environment is driven by technologies with very minimal applications crossing boundaries. Cloud applications tend to reside in environments that are ‘siloed.’ Companies are using multiple cloud solutions intermingled across their landscape. While SFDC has provided the platform to build more components, we see clients are asking how to integrate SFDC (sales), Workday (Compensation), and ERP (Payments). The new buzzword in IT departments is the API manager, but this alone does not resolve the integration challenge. A well thought out integration model with a business architected workflow that protects the data in a cloud hybrid environment is necessary to complement the ideas of the reference architecture you create. This approach takes time, research and perseverance.
Key Points On Integration:
- There is no silver bullet when you mix apps on the cloud and on premise. They are ‘siloed’ and do not share the same data models amongst themselves or with one another.
- BI is not a vehicle for business integration as transactions are the core of the business needs.
- A multi-purpose technology using both cloud and on premise connectivity with an API manager is a must. Trying to connect with an old EAI or an ERP connectivity tool will leave corporations short from the business perspective.
Budgets & Execution:
Most clients have been rolling in cloud applications to support businesses have landed in a strange circumstance this past winter. A large majority of IT departments had CAPEX available, but they ran out of OPEX. Whilst this is not uncommon, during the last couple of years this phenomenon has become more pronounced across most organizations. Budgeting in finance organizations and IT departments did not plan an increase in OPEX, as this was traditionally equated with headcount. A more prudent approach would be to calculate a capability cost increase in OPEX for 3 years and capitalize the integration and data harmonization parts. IT must think before producing a budget in clear terms on OPEX vs. CAPEX before defining a strategic capability plan.
Most IT projects use the waterfall method that tends to be long and drawn out while creating tons of work. Given that most companies have designed a basic ERP/SCM/CRM environment, the new areas being provided in the cloud like procurement and opportunity management should move to a rapid model and tried methodology. Whether one uses Agile or Waterfall, the expectation of functionality available is measured in weeks and that goes to all types of projects. IT project managers are not geared up to operate in two environments. A company can establish a standard methodology for each type of delivery and govern as needed. On premise clients trying a cloud application the first time tend to underestimate the extraction of data and integration of process chains across systems.
Key Points On Business Operations Of IT:
- Increase the scrutiny given to budget classification by educating your finance folks – software is now rented vs. purchased.
- Project execution has changed and you need three methodologies – cloud, on premise and hybrid standardized processes for security, blackout and other protocols.
- Ease into the cloud option with the idea of terminating if specific requirements are not met.
Paying attention to planning and execution components in the running of the organization will produce organizations with a better success rate, instead of just asking for money to adjust for budget shortfalls year over year. IT organizations in companies are trying to get ahead of their business needs at a rapid pace. An approach rooted in enterprise architecture and integration principles as opposed to pure application focus will enable service of customers better, faster, and in a cost efficient manner.
Padman Ramankutty is Founder and CEO of Intrigo Systems.
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