Upgrading on-premise apps under threat

Some 18 months ago now, in another place, I wrote about a US company, Host Analytics, that was gaining real traction in the rarefied air of heavyweight Corporate Performance Management systems with a SaaS implementation of this type of application that was starting to eat into the market share of the traditional market leader, Hyperion.

I referred to this issue as an up-coming `Tech-Upgrade Cliff’, where the long period of economic austerity had led many users of large on-premise enterprise applications to defer implementing upgrades until they became essential rather than optional. Only then did they find that they first of all had to install all the missed upgrades, often then charged at full price, before they could get the upgrade that they needed.

As a SaaS provider with a Hyperion-compatible alternative, Host Analytics found it was starting to win a lot of new customers as a direct result.

The Tech-Upgrade Cliff, would, I suggested, become a major issue at the enterprise end of the IT world as the financial verities of upgrading on-premise applications rose to the surface. So it is interesting to see that a recent Vanson Bourne survey of 100 IT directors at UK organisations across multiple business sectors. This has been sponsored by the UK and Ireland end of ICT solutions and services provider, Damovo, and it indicates that the issue is now coming to the surface for IT directors.

The survey has found that some 62 percent of IT directors say that cost reduction is now their main driver behind cloud adoption.

And that is not even the headline finding: 72 percent of them think their on-premise applications are becoming too bloated, with many finding that some functionality of on-premise applications is unnecessary for their needs and only adds to the cost of upgrading to the latest version.

“Organisations are increasingly finding they have a whole host of application functionality that goes unused,” said Alex Williams, Operations Director, Damovo UK & Ireland. “Unfortunately, businesses end up paying for this functionality when they upgrade to the latest version, whether they want it or not.

As a result, they are turning to the cloud in order to regain control over the make-up of the software packages they deploy.

“Cloud services are the natural remedy, giving businesses back control over which functions they buy and cutting down the bloat in on-premise applications,” Williams said. “However, whilst they do offer cost savings and greater flexibility in some respects, the limited ability to customise public cloud services can make them unsuitable for businesses with more specific requirements; leaving them in a position where they’re trying to force a square peg into a round hole.”

This is shown in the survey findings, where 77 percent of the respondents believe that public cloud services can be ‘vanilla’ and don’t offer as much flexibility as they’d like for customising applications.

There is a goodly element of truth in this, of course, for a true public cloud service is then largely whatever the business using it wants to make of it. That can end up costing the equivalent of an upgraded on-premise installation – possibly more because it will invariably need new applications, or the cloud variants of existing ones, as well as staff training to work with the new environment.

This does, however, make the point the SaaS alternatives are now becoming a very serious alternative, and one capable of handling heavyweight enterprise business management responsibilities.

The survey also highlighted another IT director concern, integrating cloud services with existing on-premise applications. Some 60 percent of IT directors claimed that such concerns have delayed their decision to move to the cloud. When asked about which applications they feel most comfortable putting in the cloud, 78 percent pointed to basic office applications such as Microsoft Office and Google Apps; whilst 72 percent indicated email.

The second most highly ranked option was telephony and contact centres, indicated by 73 percent of them; businesses are beginning to feel more comfortable using this deployment model following recent improvements in cloud-based telephony and contact centre technology.

These are, of course, classic examples of SaaS applications that are already widely used by businesses.

However, it would appear that there are lingering concerns over security. Some  60 percent of IT directors indicated payroll as the application they would feel least comfortable putting in the cloud. This is a fascinating finding, as the vast majority of businesses already outsource this function to specialist third party service providers. They are just not cloud service providers.