Cloud cuckoo land?

Dennis Keeling provides an overview of technological developments, including cloud computing, along with the potential challenges facing organisations implementing such systems

Over the past two years the UK business software market has changed considerably – two years ago there were nearly 2,000 business software authors, while today there are less than 600. Some business software suppliers sell their products directly but a large number distribute through resellers. Two years ago there were 3,500 resellers, today there are less than 1,000. The technology sector has certainly seen massive consolidation due in part to the impact of the global recession.

These changes have brought about a significant problem for companies looking for business software: there are fewer products available from fewer suppliers. The knock-on effects are even more worrying. What happens if you buy software from an author that subsequently gets taken over, or from a reseller that goes out of business?

Many of the business software products that are available in the UK are in maintenance-mode – the company now owning the product is no longer investing in its development. They will continue to support the product and add some important functionality as government requirements change, such as VAT rate changes, but they will not develop the product any further. This isn’t a problem if the customer’s systems do not change, but can become an issue if the customer wants to expand, change its IT platform, or take advantage of modern IT developments.

Technology change – cloud computing
Over the past 20 years we have seen computing technology change from server-based systems to networks, then to Windows client-server, and now to online (cloud) computing. Few software developers have kept up with these changes. Very often it’s only new entrants that can effectively implement the new technologies as old legacy code rarely converts to modern technology.

At the Softworld Exhibition at ExCel 20101 there were a surprising number of delegates interested in cloud computing. The seminars on the subject were packed and the exhibitors with online applications were inundated with enquiries.

So it looks as though the initial techie-hype has now progressed into consumer interest. It’s no longer a risky decision for early adopters; there are many well-established suppliers of online applications who have reference sites with several years of experience. Salesforce.com and NetSuite have established large satisfied user-bases.

To explain a little about the concept of online applications, of which various types are bundled together in the term cloud computing. The basic difference between online applications and on-premise applications (installed on your local server) is the location of the application. It is often said that bureau applications and outsourcing also fall into this category. The other big difference is cost; online applications are charged on a per-seat per-month basis whereas on-premise applications have an up-front capital charge plus installation, maintenance and upgrade charges.

It’s a bit like power for our homes. A century ago we had to provide our own power from paraffin lamps or coal fires. Today we use the national grid to provide gas and electricity. Is there a need to have an HR application resident on our own computer? Especially as you have to undertake your own back-ups, maintenance and upgrades. Online applications have ‘upgrade fairies’ as an MD of a popular online provider called them, they appear during the night and back-up our files and upgrade the applications; all free of charge.

The scare stories about using the internet for these applications are unfounded. The government has successfully mandated online filing of VAT, PAYE, self assessment and now corporation tax with very few internet hiccups. Many of us use online banking and share dealing – so why not enable our business systems to be hosted online?

There has been extensive take-up of employee self-service, where the employee enters their own time sheets and changes to their personal circumstances (for example, change of address) by using remote access to the system. Applications like employee expense management are ideally suited to internet access – to enable the employee to be able to input their expenses at any time and on any convenient terminal.

So what cloud computing applications are now available? Virtually anything. The complete range of traditional business applications is now available online from an increasing number of suppliers. There are also a wide variety of unusual applications that have been specifically written to take advantage of online technology. These include:

Direct links to recruitment agencies, data banks, insurance and pensions data;
Postcode look-ups that integrate with home addresses;
Employee expenses that can be completed directly by the employee from any Internet connection; and
The ability to enter employee data from a range of manual or electronic devices from multiple points of entry – using the internet as the network infrastructure.

The traditional on-premise application suppliers will of course raise the old chestnuts, such as security of remote data, back-ups, renewal of the contract and integration with on-premise applications. These concerns have all been successfully handled by the responsible online providers. There are international standards for the storing of data remotely, covering security and fail-safe data recovery. Few providers store their own customer’s data; this is usually outsourced to professional storage sites with all the necessary accreditations.

Many online suppliers have an on-premise version that will enable the data to be brought in-house at the end of a contract. Some provide a downloadable file that can be used for on-premise back-ups or to populate a replacement system. Many online providers have the ability to import and export data from their systems for integration with external systems. The online market would not be growing by the predicted 20 per cent year-on-year had it not addressed these obvious issues.

What’s the bad news?
There are very few software developers providing a total enterprise-resource planning (ERP) solution for a particular sector. Most of the software developers are selling specialist, standalone applications. Document management, expense management, membership administration, human resources, payroll, and customer relations management are all modern niche software applications. Some will integrate directly with existing legacy systems, but in the most part they are designed to be standalone, often on different platforms and databases. That can mean duplication of data in different systems, a major problem in HR trying to keep all the various records up to date.

Researching the ideal solution
So how does a responsible organisation find a software solution that will meet its requirements and be around for at least the next five years to enhance and support the product? It’s not easy. However, there is a process of systematically reviewing the products that are available and undertaking due-diligence process to find the most suitable product that will hopefully survive the market changes currently in operation.

It is for this reason that we have developed the UK’s first software comparison website to enable companies to review the vast array of software packages available and compare the product’s functionality against the customer’s system requirements. The website is www.softcomparison.com and it has all of the leading packages plus a wide variety of the specialist packages that are available in the UK today. Unlike many of its competitors, it’s a free service with no customer registration required – you will not be contacted the next morning by software sales people.

Dennis Keeling has been a software analyst for nearly 30 years. He helped found BASDA, the representative body for the software industry in 1993 and acted as its chief executive and president until 2008. He returned to consultancy and set up his own software comparison website. For more details visit www.softcomparison.com

Reference
1. www.softworld.co.uk/af/