Of ERP, washing machines, the cloud and the future: Why cost reduction is a mere by-product of doing business software better
By, Ronald Laxton, MD of Computer Initiatives.
As more services and solutions move into the cloud, much of the information and communication technology industry is focusing on cost reduction as the primary benefit associated with this delivery model.
However, says Ronald Laxton, MD of Computer Initiatives, the lower price of technology services is so small a component of the benefits, that it can be considered a by-product, rather than the primary advantage. And the advent of the humble washing machine helps explain why.
“The focus on cost saving is unfortunate as it is the least value-adding component of cloud computing,” Laxton says.
Rather, he explains, the real potential lies in the ability of the cloud to facilitate new, more efficient and dynamic business models. “Such models will transform how business operates. The rules by which many companies are constrained will be broken by those who embrace the opportunities offered by this new method of delivering technology,” says Laxton.
As company owners realise it is now possible, with little time and cost, to deploy ERP systems that are scaleable, accessible on a worldwide basis, and transformative, an enormous constraint to efficient business is eliminated. Laxton says such solutions are already available online, such as Acumatica, with which Computer Initiatives has partnered.
But what of this reference to the washing machine? It's an analogy that demonstrates the possibilities of the change to cloud, and it is offered by Acumatica's VP of Marketing and Business Development, Douglas Johnson. As unlikely as it sounds, he compares ERP with laundry, explaining that the washing machine didn't just automate the traditional method of washing clothes, but rather introduced a whole new way of doing it.
“Unlike a washboard against which clothes are rubbed, the washing machine uses an electric motor to do the work. It doesn't take a washboard and attach it to a motor, but rather affords a number of new benefits and challenges.”
Instead of just scrubbing, the entire process of laundry is automated; freeing people to spend time previously spent washing clothes either more productively, or at leisure. “The point is that if the washing machine merely mechanised the scrubbing process, then the result would be a new technology with very little benefit outside of easing the task of scrubbing clothes against a washboard.”
This, Johnson explains, would be similar to moving a legacy client-server ERP application to the cloud. “You gain some minor benefits from reduced computing costs and outsourced IT, but the majority of the problems, such as clunky client software, expensive maintenance, cumbersome remote access, and lengthy deployments, would simply transfer to the new technology.”
It is this cluster of problems that still confronts every potential ERP software client as they weigh up the risks and challenges against the potential rewards of spending a lot of time and money on a suitable system. “There are multiple obstacles that must be overcome with traditional ERP architectures,” confirms Laxton as he picks up the story.
“Software developed specifically for cloud computing environments, just like washing machines designed for power, can include new features that were not possible using old technology. A washing machine was never cheaper than a washboard, but the change in lifestyle it enabled was of great value.”
Automatic water shut offs, spin drying, variable size loads, and many more features are included in modern washing machines. If that's impressive for processing the laundry, then the advantages that are possible from cloud ERP applications are surely far greater.
And they are, Laxton says. “Access from anywhere and from any device, enhanced collaboration, advanced security models, and connected/integrated applications are just some of the benefits available from today's cloud ERP.”
But that's just the start, he says. “Because the whole framework of possibility has changed with the cloud model compared with the traditional one, even more features will be coming down the line. Companies like Acumatica are literally in the process of inventing these features, and they will be available only via Web and cloud technology.”
As systems designed for cloud deployment become readily available, he says they will facilitate the emergence and growth of more agile, distributed and integrated businesses. However, just what the landscape will look like in five, 10 or 15 years is very difficult to say, Laxton says.
“Knowing how the company of the future will operate is as difficult to imagine as for a 19th century chef to picture a modern kitchen. Key aspects, though, are certain to include greater responsiveness to customer needs, extensive integration with other parties and systems, and scalability on a global basis,” he concludes.