Nearly all cloud ERP projects will 'fail' by 2018, reckons Gartner Anybody who thinks cloud ERP is the answer to their monolithic, on-premises vendor pain is wrong – according to Gartner, anyway. Gartner has projected a near 100 per cent fail rate for cloud ERP projects by 2018. Ninety per cent of those rolling out what the mega-analyst has defined as “post-modern ERP” will succumb to the …
Have you ever noticed that most of these Gartner analysts are just regular folks? You can check out their bios online. When these rando IT Directors put on their Gartner analyst hat though, people take it as though it is some sort of objective fact handed down from on high.
The irony is rich when Gartner writes papers about other vendors ripping people off. "Yeah, look out for those cloud ERP providers. It could be a scam.... This session will cost you $12,000 by the way." Phew, good thing you're around, Gartner. People could have really been hosed.
"....Money for the bleeding obvious" A lot of advising work is stating the bleeding obvious because it needs to be stated. All too often the obvious is overlooked or assumed not to be an issue, creating expensive pitfalls such as not asking about how you will integrate applications with your cloud-based ERP.
Recent case of this was a company that had a perceived privacy issue and wanted to restrict access to customer data to only those employees whose role meant they had completed a privacy training course (30 mins) and signed a disclaimer. The projected costs of implementing such controls with identity management, changes to databases, rewritten processes, etc., was breaching seven figures and looking like a twelve-month implementation if all went well. At which point a consultant pointed out it would be much, much cheaper, simpler and quicker just to make it mandatory for all employees to do the privacy course and sign the disclaimer.....
"...implementing such controls....seven figures....twelve-month..."
We have a medium size, high complexity online database with web access. It's custom, not ERP. Sometimes I walk over to request a minor change, and then walk the 10m back my desk. When I get there, there's an email from the guy I was just speaking to. The email is informing me that it's done already. Coded and fielded. Less than a minute.
Other times it takes much longer, like ten minutes.
the real big question is: how many company failures is this going to produce?
How many small to medium companies are going to be seduced by the siren salesman into placing their business into the hands of incompetent inadequate cloud CRM systems that are just going to destroy the company operations?
The trouble is that there just aren't the range of cloud application vendors out there. Take ERP, for on-site deployment there are multiple tiers of product offerings: enterprise, mid-size, SME etc. but cloud offerings?
So Gartner can make money by rating the on-site products, but not from the cloud offerings...
I just disagree with this whole thing. Yes, there will be more complex application integration when you use cloud best of breeds than say SAP. Stick that in your 'Gartner obvious facts' file. The likelihood of a project failing and the magnitude of that failure almost by definition, not quite, go down when you decrease the scope and size though. If you try to implement Workday for HCM and it goes sideways, not great, but it is limited to HCM and you can buy in smaller increments. Likewise with SFDC or Microsoft for CRM... and on down the chain. You are also going to have a lower risk of failure because these are best of breed apps, maybe designed for your industry or even specific org, as opposed to whatever SAP vanilla happens to be for this module. This is much better from a risk perspective than the traditional SAP approach (or Oracle, I suppose) where you are trying to big bang every process in your company at the same time. There is also the cloud pricing model. If you have a SaaS model and it goes sideways in six months, you are out six months worth of service. If you pre-buy $12m worth of SAP and it goes sideways in six months, you are out the whole nut.... The other irony here is that SAP on prem projects fail often, so it isn't as though this new "cloud ERP" category is really risky as compared to the standard, can't miss, simple as falling out of bed SAP on prem approach..... If you were to look at how many SAP projects were *actually* successes, meaning they hit the milestones and ROI metrics detailed in the buying process, you would find very few which were successes. The thing about SAP or Oracle ERP big bangs is that after the execs have spent $12m on licenses and twice that much on consulting, they are not ever going to declare the ERP project a failure as their reputations are wrapped up in it.
I think the biggest value of the cloud, SaaS approach is the pay as you go model. If you buy a SaaS app with monthly user billing and it doesn't get off the ground, that SaaS company makes almost nothing and probably has considerable expense in the sales process. It is very much in their interest to make you successful. If you don't succeed, they don't succeed. The traditional licensing ERP vendors win as soon as the contracts are signed.
Agreed, its down to organisations starting with a massive functional requirements list that means an off the shelf solution needs installing/configuring/maintaining all in a big bang approach and takes 2 years before everyone realises it isn't going to deliver what was needed in the first place.
Then of course there's the migration of existing data from the current system. I think every ERP upgrade/downgrade project I have been on has been 18 months minimum, big old job you ain't gonna do in a few weeks.
". . . it’s been the iPad toting, cloud-friendly sales and executive classes who have driven uptake of business software providers such as Salesforce, side-lining the more considered counsel of those in IT who could have taken a more measured approach. . . . However, according to Gartner, vendors are also guilty, putting self-interest ahead of their customers."
Yeah. Just, yeah.
Something, something, something "cloud", something, something, something "complete". (Link)
At last something sensible to come out of Gartner
Cloud is not a nirvana solution to anything not only ERP.
I know that this will anger the Cloud Fanbois but it is not. Once you see through the sales mist and rain there is nothing there. No substance at all. If you bet your business on all things cloud then prepare yourself for a lot of pain. Ok, a different set of pain from before but still a lot of pain.
No longer do you have an IT department to kick when the Server goes down. Instead you have a person somewhere in the world on the end of a phone (if you are lucky) who does not know your business and frankly does not care. All they want to do is get you off the phone ASAP then they can tick the 'call complete NFA' box on their tracking system.
Be gone Cloud. The world will be a better place without the hype.
The arguments against cloud are as nonsensical as arguments against "cloud" networks (aka, networks). If you lose your external network, through AT&T, Verizon, Orange or whoever, you are dead in the water. It doesn't matter if your data center is functioning perfectly if no end user outside of the data center can connect to the apps. People don't realize that they have always had a critical part of their IT infrastructure, network, in the cloud because it is just the way things work. Actually people prefer to have AT&T managing their network as opposed to internal staff because AT&T has a lot more skill and can invest a lot more in resiliency than any individual company. Replace the word network with server though and you have people thinking it is just a wild idea.
Maybe showing my age here - but when I bought a compaq luggable in 83, about the only useful thing it ran was a program called Cardbox. Found myself recently looking at Salesfarce were I struggled to see how it was any more than the infinitely expandable Cardbox of the early 80s (except in the cloud). There is nothing transformational about ERP. Most ERP projects - cloud-based or otherwise, fail as they are focused on creating efficiency. Ultimately, most people dont care about efficiency ...as in they (we) dont come to work for that.
Agree on the failure point, but I would say most ERP projects fail do to rigidity. No two businesses have the same processes and the small differences become major hindrances. Also, when you implement SAP, you had better be sure that those are the business processes you want... basically forever, but at least for many years. That is not how business works. Stuff is constantly changing and the systems need to change with it.... It is never going to be perfect, but a nice first step would be to go to best of breed. It is unlikely that some company in rural Germany has the golden processes for every process from sales to manufacturing in every industry for every country in the world. That is why everything ultimately gets dumped out of your $x million ERP into your $150 copy of Excel for a work around.
Also, who is even implementing cloud ERP? Most people are still working on getting their on prem ERP failure from 2012 to work. Gartner should have just written that "Most ERP project will fail two years after you start implementing them." If Gartner is talking about the SaaS best of breeds, like Workday for HCM or SFDC and Microsoft for CRM, I haven't seen many failures there. Looking at those apps as compared to the traditional on prem providers, the remarkable thing is how successful they have been with implementations. As I mentioned earlier, I think the difference is not whether they run in your data center or the ISV's data center, the difference is in the vastly superior cloud pricing model (superior for customers). If it doesn't work in the SaaS world, you don't pay... so the SaaS providers are going to be sure they don't overpromise in the sales cycle and that they make sure that your implementation is successful instead of throwing it over the fence to a consultant and working on the next deal. Can you imagine if you said to SAP, "Sounds good, but, here's the deal, I will pay per user per module per month of use. If that user group isn't happy and doesn't think the tool adds value, we're not paying next month." SAP wouldn't know what to do with that. ERP providers are just going to have to get used to the idea that these giant deals that rarely work out are a thing of the past.
"Anybody who thinks cloud ERP is the answer to their monolithic, on-premises vendor pain is wrong – according to Gartner, anyway" Well yes and no....!!
MVS Core has managed to get some pretty unique and obscure technology out of the grubby little hands of “Big Business” and is modifying it for SME sector use. A self contained business solutions platform integrates a managed applications layer, No-SQL DBMS, analytics its own API's and dashboards etc...
Designed with millions of users in mind, this fantastically Agile system sits upon Computing as a Service Architecture CaaS. Developers do not have to think about Cloud, as any ERP/MRP/CRM or Epos solution developed... is by default Cloudy. Similar to thin client/terminal computing, data and Apps remain server side accessible by a user control panel embedded into html. Making Core available to any connected device mobile or traditional without needing device specific Apps and eliminating BYOD concerns.
And if this was not enough, its deployable to millions using a mainframe and hundreds from a standard Windows laptop, just add Apache to turn it into a Cloud Server.
The key point here, developers can concentrate upon building business solutions that work without the trauma of agility or migrating systems to Clouds often fixed frameworks.
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