Managing Supply Chains in the Cloud

In a recent study, we have interviewed a number of senior executives about their thoughts on the cloud….There is no question that Oracle and/or SAP has a dominant position in the enterprise. It is not like ANYONE is going to be able to dismantle their ERP structure. Anytime it is already in a corporation it is going to stick. The basic strategy is to start with the legacy database product, and then start tucking in acquisitions to add capabilities, in terms of analytics, and functionality. Most Oracle or SAP sales people know that once you sell the enterprise system – it is usually a given that you can sell add on functionality. Of course, the position is that if you don’t offer a particular functional feature, “it’s in the next release….” will usually keep the customer at bay. However, if they really push for something from a specialty vendor, you could extend that functionality with a lot of added custom integration billing…

And then along came the Cloud. Larry Ellison was one of the first to dismiss the Cloud as a joke….but he’s not laughing now. More and more organizations are seriously studying the investment in ERP systems (or at least MRP systems) that have variable billing contracts (as opposed to the fixed cost of investing in an ERP system with all the add-on maintenance agreements, etc.).

With the Cloud the number one concern is security. For example, one executive noted that he was at a conference and there was someone there from a large non-profit cancer charity. Their head of marketing who is a Salesforce.com user announced to the audience that “I have all my donor information on Salesforce, complete with credit card numbers!” There was a collective gasp from the audience! People couldn’t believe this and were immediately gossiping!!

There is a concern in the general public about the security of the Cloud. It’s like you ask the old Willie Dutton question: “Why do you rob banks? Because that is where the money is.” Once there is a critical mass of information, it becomes a target for sophisticated users to hack into, and this is a genuine concern. I would like to think that the cloud business has advanced security techniques, and I am sure they do. But have they convinced the market?