Cloud Computing: Opening new markets for SAP ERP Service Providers
It is important to understand the meaning of the term "Cloud Computing".The term has come to mean that users access business applications using web browser and perform their tasks without the need to know about the related infrastructure details e.g. servers, network details and connectivity, storage data bases, application configuration etcetra.The related and background infrastructure constitue the "Cloud" and is managed by Vendors.The cloud symbol has been used historically to represent complex "all inclusive" understanding of a subject and helps to bring clarity to other related critical objects which are primary focus in a drawing and is still widely used in concept illustration of any kind.
A cloud model of IT services has associated IT infrastructure to support multiple applications and systems which new or existing businesses/organizations can use.The IT infrastructure in the background forms the "Cloud" and is recent offering to Organizations and Companies by the IT and Product Vendors. The Business Organizations does not own and support this IT infrastructure but pay as they use the same. This greatly reduces the IT infrastructure related expenditure for the Organization.This also implies on-demand access of required IT Apllications by business users in the organization to conduct their operational tasks. The concept of use and pay is similar to usage of utilities e.g. Water, Electricity in our houses. The Cloud Vendors offers "metered" use and pay services. The "Cloud" is the single access point for the users. The services are agreed and delivered as per "Service Agreement and SLAs".
As "Cloud Computing" becomes more mature, there will be opportunity for ERP Service Vendors on two fronts. Existing big companies will start migrating to "Cloud" to reduce capital and operational IT expenditure. If they have to scale up existing level of operations because of mergers/acquisitions, use of cloud computing will be a very viable option. Additionally, wherever they do not have infrastructure of their own, say in a new emerging market or territory they will take help of "Cloud Vendors" to keep the costs under control and achieve faster on Go To market strategy.
Other opportunity will be the opening up of Small & Medium Enterprises (SMEs) market for SAP ERP services.The high IT infrastructure and SAP Implementation project costs has acted as entry barrier.The "Cloud Computing" model will offer very economical way to embrace and implement SAP ERP for these companies.SMEs will work with Cloud Vendors and SAP ERP Implementation partners to achieve efficiencies in their operations by implementation of best practices and in turn gain from better decisions due to accurate information flow and integrated reporting.SAP has an on demand service offering "Business by design" for SMEs. The time is right for SAP ERP implementation vendors to target the SMEs for SAP Implementation projects.
The "Cloud" IT Services model has its own challenges posed by Data Privacy and Security, Regulatory Compliances and Legal aspects. The "Cloud Vendors" needs to work and resolve the same. Once these are addressed and managed appropriately, SME market will see the rapid rise in implementation of SAP ERP projects.
