Role of a systems integrator in a cloudy world
Leading analysts predict that SaaS Enterprise Applications will be a $50B Market By 2018. Demand for SaaS enterprise applications has been accelerating and exceeding the demand for on premise applications by five times. By 2018, analysts predict that more than 25% of all enterprise applications will migrate to PaaS and 30% of service-centric companies will move ERP to cloud.
Years of customization of traditional enterprise resource planning (ERP) systems has severely compromised their agility as well as their ability to catch up with the rapidly changing business needs of digital organizations. This is one of the primary reasons why organizations are increasingly looking at cloud ERPs. While the current ERP systems are not going to disappear overnight, there is an increasing shift towards specialist cloud-based point solutions.
The concept of a single monolithic ERP suite that meets all of the enterprise's needs is no longer the preferred option. Now, the ERP suite is being deconstructed, leading to a more federated and loosely-coupled ERP environment, which combines cloud-based point solutions with a smaller core of on-premise ERP applications. A leading manufacturer we are working with has chosen SFDC as their sales platform, Oracle Sales Cloud for partner relationship management, and Fusion Incentive Compensation for their sales incentive compensation functionalities.
As software and services business models converge, there are several questions being asked about the role of systems integrators (SIs) in the cloud era, and if they will have any at all. Is there enough business for systems integrators?
Is this the end of the road for systems integrators who have earned millions of dollars, over the past two decades, on implementing, customizing, and supporting legacy ERP suites? Fortunately, the answer is no.
The good news is that the ticket size of the cloud deals are also increasing, as cloud products are becoming richer in functionality and more extensible. Our initial cloud deals were in the range of US$100,000-250,000. Now, some of our wins are in the range of US$2 million-3 million. However, SIs also need to look beyond their vanilla implementation / support service offerings to stay relevant in the cloud era, and offer more value added services. I believe the following are the ways SIs can play a pivotal role in the cloud world:
- As organizations start migrating to the cloud, they will need to leverage the consulting capabilities of SIs to help them through this transition. SIs can help define the roadmap to the cloud, and make the cloud migration and deployment process more seamless and customized to meet client-specific requirements.
- As ERPs are being replaced by hybrid solutions that combine cloud-based point solutions with a smaller core of on-premise ERP applications, the provider's role will increasingly shift to that of a solution orchestrator that leverages several partner ecosystems and PaaS technologies to facilitate multi-vendor cloud solutions. SIs will move from the role of a systems integrator to a more critical role of an ecosystem integrator.
- There is a significant opportunity for SIs to finally be able to monetize their IP. With the cloud marketplaces that leading vendors such as Oracle and SFDC offer, SIs can build solutions on top of the cloud stack and deploy it in the marketplace. The marketplace is a great platform, with unlimited reach to a much larger set of potential clients, including the SMB industry - a segment that even leading SIs never had access to. For example, we are currently working with Oracle to build a PaaS solution on partner management (which is a white space in the Oracle Sales Cloud) and deploy it in the Oracle marketplace.
- SIs can provide end-to-end integrated and managed services on top of these cloud offerings. For example, we are currently working on a service offering, where we can help define the marketing and campaign strategies for clients, and implement them on the Oracle Marketing Cloud. BPOs can do the campaign execution and the client can be charged on a per-campaign subscription basis.
- The cloud will completely change the stakeholders that SIs deal with in the client organizations. They will need to connect more with LOB executives than the IT teams. SIs will need to hire, retrain, or re-skill their existing talent, to reorient and learn to connect with these business stakeholders. Their methodologies and approach to implementation should move beyond technology, and be more business process oriented. Clients will expect SIs to be solution providers rather than mere service providers that offer technology services.
In summary, it is an exciting place to be in, and really provides a level playing field for everyone to jump in and make their place in this once-in-a-generation opportunity. To know more, please visit us at Booth # 1101 at Oracle Open World 2015. Infosys is a Diamond Sponsor at the event.