As finance directors look to achieve best value from their business applications by migrating to the cloud, a primary consideration lies in the route they choose to pursue.
A cloud migration can provide a flexible solution where costs can be shifted, in varying degrees, from capital expenditure to more predictable operational expenses. For businesses this means a reduction in non-business strategic costs, as well as increased agility and efficiency to support growth.
Many of our clients have moved other parts of their IT infrastructure to the cloud but have so far left their core business application on-premises due to the perceived risk of migrating a mission critical system. In other cases, complex ERP (Enterprise Resource Planning) portfolios can make it difficult for organisations to know where to start. Engaging external expertise to help assess the best of the cloud-based options based on the specific needs of a business can help end this paralysis.
The three main cloud choices for consideration are Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). Determining which choice is most suitable will depend on several factors within each business.
A SaaS solution involves companies replacing their entire in-house IT systems with a cloud-based service which is provided through a third-party vendor via a subscription model. It is the modernisation of the business application and as organisations move to standard business processes, often the change management part of the project, that is the most complex. Because SaaS is delivered via the internet there is no need to install applications on individual computers and all technical issues, maintenance, support and upgrades are handled by the service provider. This can create a number of efficiency advantages, enabling in-house IT staff to focus their attention on more strategic business matters.
SaaS can be an ideal solution for many businesses including those with high growth potential that need the ability to scale up quickly. It’s also useful in businesses which want to leverage the benefits of continuously evolving enterprise applications to enable innovation. One of the downsides of SaaS is the rigidity of standard business processes. Businesses often have the need to replicate their USP or that specific industry process that SaaS may not be able to provide. In these instances businesses often look at a hybrid of SaaS and PaaS.
PaaS is similar to SaaS in its delivery model but it allows for greater customisation within a business application, providing a platform for solution creation. This option gives businesses the flexibility to build extensions to the functionality of their systems and allow their in-house developers the freedom to concentrate on building the solution.
Some companies, however, require an even greater level of flexibility through their cloud solution and that’s where IaaS can be a better alternative. With IaaS a cloud provider will manage the key infrastructure and storage layer, while the company can retain control over areas such as the business applications. The move to IaaS for the application user community also becomes less risky as they see no change to the core business applications they use today. IaaS can also be applied as a long-term solution or as part of a hybrid before a company makes a full leap to SaaS.
Given the extent of the benefits and the scalability of this option, it was perhaps unsurprising that recent research conducted by Gartner showed that 77% of businesses expect to be using IaaS within the next three years.
Last year we supported Galliford Try, a FTSE 250 business and one of the UK’s leading housebuilding, regeneration and construction groups, complete a unique IaaS migration to the cloud for its Oracle applications. With its system suffering from frequent performance issues and outages, Galliford Try found its Oracle E-Business Suite (EBS) significantly underperforming. The company was advised to opt for an IaaS-based route where its EBS was transitioned to the Oracle Cloud Platform, a first for any UK company.
The move proved to be highly successful, resulting in a significant reduction in cost compared to running an on-premises solution. Like many other companies which have opted for IaaS, Galliford Try’s cloud platform gives it a future-proofed solution with all of its infrastructure efficiently manged by a single source. Galliford are now considering their longer term plans for cloud adoption and see the move to IaaS as a stepping stone for them to ultimately get to SaaS.
While the above example underlines the benefits of implementing an IaaS solution, the specific needs of a business must be at the heart of deciding which of the cloud-based options is most suitable. Migration to the cloud is, however, the future of business technology so it is important for companies to ensure they are suitably advised and properly informed before making the move. We saw from our own experience with Galliford Try that such a move has the potential to improve application performance, deliver stability improvements and, importantly from the FD’s perspective, generate significant cost savings within a business.