Why are Organizations Still Reluctant to Move to the Cloud and What It Costs Them?
While scouring the internet, there are mind numbing figures and stats that point out that adoption of cloud technologies by successful organizations is high and the trend is expected to continue in the upward direction going forward. However, every so often one comes across an example of a company that is absolutely averse to cloud technologies. Of course, a logical argument is always presented. However, as one digs deeper some reasons become apparent.
Here are the most common ones:-
Risk: It's never about the money. It's always about the risk!! "Unreliable internet connections" (gimme a break) or the fact that "a third party manages my I.T. infrastructure and data" are still considerations. Well, how about we consider the fact that we are actually transferring the risk to the vendor now thanks to Cloud technology. In an On-Premise system scenario, the risk is with the customer organization. If one has a disruption in this scenario for any reason, the risk and responsibility of bringing everything back up lies with the customer organization. Consider SLA's provided by cloud applications and this will be a different conversation. Here is my favorite: https://status.netsuite.com
Haven't considered that their competition is on the Cloud: Established companies sometimes don't consider the fact that their competition is switching to the cloud and are now in a position to divert their saving's and efficiency towards what matters most – the business. I love this analogy, does one buy an entire power plant so they can use electricity…No! One simply gets a connection and leaves the business of generating electricity to the experts.
If it ain't broke, don't fix it: There are some businesses that have the right attitude, "We know our business. Technology simply provides us with the tools to do our work." However, legacy systems may be holding them back and they don't even know it. Simply because..well it works doesn't it? My question to the business leaders is "Sir/Ma'am, are you performing your duty to your stakeholders by not evaluating what may benefit your business?"
Reluctant to change (every management consultant's favorite): Since there is already a significant investment made towards legacy systems, it makes it harder to look at alternatives. On Premise solutions were a great choice in the last century. Yes there are some suitable uses for them still. However, any stock broker or fund manager will tell you to cut a losing bet as soon as possible. Just because one has made a choice doesn't mean one has to stick to it even if it isn't the best for your business.
Initial investment is high but it pays off over time: No it doesn't. Please consider that obviously there is a high initial investment but have you considered that throughout the lifetime of an On-Premise solution, you will be paying for upgrades, the hassle of implementing them. Some have said that implementing an ERP is like performing open heart surgery. Well, with the above sighted example of managing an upgrade, you are subjecting yourself to an open heart surgery on a regular basis. Consider this, when was the last time you checked on what version of Facebook or LinkedIn you were on? Do you care? That's the power of the Cloud. Let's also consider the investment on I.T Infrastructure and the fact that it is a depreciating asset. It's time for businesses to consider opex vs capex.
Implementation Timeline: Touching back on the "open heart surgery" analogy earlier, organizational leaders are wary of the painful process of ERP implementation. Part of the pain is in the fact that ERP implementations suck up organizational resources for an extended period of time. The good news is, with the cloud this period is measured in weeks and months as opposed to months and years with traditional On-Premise solutions.
It is no wonder that this is a technology shift. This shift is a game changer. As with all technology shifts that have been witnessed in the past, there are winners and losers. Folks not on the cloud band wagon have to choose soon as this is not a passing fad. It's here to stay and shape the way companies will do business going forward.
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