Still a tough sell to get larger, established companies in the cloud

Listen to this article

While cloud enterprise resource planning slowly wins converts, Carla Wickoff, a cloud computing practice leader at the Deloitte accounting and consulting firm, said she continues to address the concerns of executives who fear storing information on remote servers could risk the loss of proprietary information that gives their company a competitive…Such enterprise resource planning, called cloud ERP, “is playing best in startups or companies that are ready to grow,” she said. “Those kind of companies are interested in scalable applications, but they may not be interested in or need a full-blown, on-premise system that takes quite a while to implement.”

Wickoff moved over to the cloud ERP side of Deloitte two years ago, after nearly 20 years helping companies manage their traditional on-premise IT systems. In traditional ERP, “you own the hardware, you have to buy (software) to run the system, you have to have all of the building architecture — the air conditioning and the people to run all of the system. Cloud ERP is run by the vendor, and the people needed to keep the system up are miniscule compared to on-premise.”

She said companies have resisted the idea of moving to the cloud, owing largely to concerns of a third party holding data. “But anyone who uses Google anything — whether its e-mail or documents — Google is holding your data. With cloud ERP, the vendor is holding your data on their system, and that sometimes is an emotional and mental hurdle for many IT departments and for CFOs.”

Wickoff said the extended power outages last fall during Sandy are prompting some companies to take another look at the cloud.

“One of my New Jersey clients, who is considering cloud ERP, said Sandy took him down for two days. He has his own hardware and his own data center, and his people have to keep it up, and he was vulnerable because Sandy took it out.”

She said the cloud ERP vendors “either would have had better disaster-recovery capabilities and brought the system up more quickly, or would have basically refunded money” if they could not deliver during a disaster: “Their ability to get back and running is part of the backbone of their business. They have to do that or they will be out of business.”

Along with concerns about data security, some companies are slow to move to the cloud because “they are heavily invested in systems that it would be very expensive to replace. It’s a natural progression, and it will take time.”

She said cloud becomes a viable option when companies face milestones in their traditional systems, such as the need to invest millions in a system upgrade. “If they face a compelling event like that, then they will entertain the idea of cloud.”

She said many companies begin by testing the cloud, first using it for sales force and human resources systems before trusting company financials to the cloud. “That is really what Deloitte recommends: ease into it, think about what pieces of your data you want to test out. You don’t have to go wholesale into the cloud with absolutely everything you have.”