Global Supply Chain

David Brousell, the editor of Managing Automation, in his July/august editorial A Walk in the Clouds challenges the hype surrounding cloud computing and the significant benefits it supposedly delivers.  After presenting several commonly understood benefits of cloud computing he warns to reader against simply accepting these benefits as truths.

Cloud computing, SaaS models, and other forms of 3rd party solutions for IT solutions have a significant amount of hype liberally sprinkled among the real facts.

The major motivation for going down the path for the 3rd party solutions exists for several reasons.  Firstly, operations has found that it is often easier and faster to get a solutions they require by subscribing to a 3rd party solution rather than waiting for their IT group, who may or may not be able to get the project funded or have the resources to execute it.  Secondly, operations and IT have found that 3rd party subscriptions are an off-balance sheet expense and therefore often escape the regorous scrutinity of the finance group.  Thirdly, operations believes that the best of breed cloud or SaaS solution will be an easier implementation.  Fourthly, operations and IT often mistakenly believe that they can easily enter or exit from a cloud supplier relationship.

Like you intimate, the deliverable is often less than the expectation.  Depending on the requirement of the client, the benefit of the lower cost and complexity of entry for cloud or SaaS computing is often exceeded within 2 years of implementation.  The supposed ease of exit from a supplier is often more complex and inflexible that the contractual terms might imply.

The challenge for the client is to fully understand their requirements and commitments before entering into a cloud or SaaS relationship.  Unfortunately, most clients during the acquisition phase will often maximize the obvious short term benefits and minimize the long term costs.