Five Obstacles for the Cloud Enterprise

With SaaS pundits and tech-bloggers going bananas over cloud, it can be tempting to see deviceless 100% cloud-enabled enterprise as just around the corner.

There is no question that the cloud is a great place for consumers, small startups, and even SMBs, but once you get into major enterprises, and particularly classic enterprises like FMCGs, where the majority of activities are based on end-to-end processes, and where the large numbers of users are either mobile or without regular device-access, problems start piling up.

This hasn’t stopped major ERP vendors, like SAP and Oracle from starting the cumbersome process of webifying their products, and some of them have even dabbled in providing ERP systems as a service, but before they get too excited, there are at least five major obstacles enterprises will need to overcome before they can fully escape to the clouds:

  1. Unreal identity. A lot see this as just a question of device-management, some DRM, and the right service for managing employee identities through the cloud, but you can’t replace physical and local verification of employee identities without loosing trace-ability, so until they plant a chip in our heads somebody will need to put their feet on the ground and actually talk to people to verify that they are who they log in to be.
  2. Variations in employee buying power. Although things are improving, I’ve heard of cost-to-salary ratios of up to three months in certain areas, so the fancy devices you buy in one country will be out of a reach in another, and unless you’re ok with subsidizing a steady loss of devices – which tax authorities tend to frown upon as it gives unfair advantages and/or creates artificial internal “taxation” – you will have to wait until prices drop or stick to cloud-services that also work over SMS.
  3. Limited off-line features. Even in our post-industrialized nations, a significant percentage of ground is not covered by mobile data-services, and once you go to developing nations the coverage is much worse. Most western companies don’t worry about this, but large parts of the world data-coverage is either monopolized and prohibitively expensive, limited to certain “development zones”, or simply impossible to implement because of the vast areas to cover. For enterprises with roaming employees who need to take orders, register goods, bring back empties, calculate discounts etc. you therefore need something a lot more feature-packed and off-line capable than Citrix and cached html5 to get things to work.
  4. Prohibitive legislation. The legislation in many countries severely limit the use of SaaS. In Europe alone we have personal-data laws, unions, local variations of Eurosox, and language-protection laws generating fines of up to €5000 per-document-per-day (I’m not saying in which country, but you can probably guess) that would make even the most cloud-happy CIO cringe, so until local governments get their heads out their… ears… erh… enterprises will stay behind.
  5. Outdated cost and licensing models. Finally, major vendors – and private-cloud IT departments – are having to turn their traditional cost and licensing models model on their heads to provide a per-user-per-month service-fee that supports variations in buying power, taxation, and all the other things in this list into account. This may sound doable, but never underestimate the complexities of merging the cost/benefits of a gazillion departments, contracts, and licenses into a single fee. I’ve seen more than one cloud-project short-circuit at the finish-line because somebody forgot something that completely blew the business-case or made the whole thing illegal in half the countries involved.

All in all, the 100% cloud-based enterprise is therefore still only a real option if you are small or information-based, and the time when major corporations will join in bulk, probably still some years off.

Now, I’m not saying it wont happen. Data becomes available in new areas every day, the services and devices mature, and there is no question that – with the huge push towards consumerization of traditional IT services and the incredible momentum behind privately owned devices – cloud will be an increasingly important factor even in major business.

What I am saying is that it will take time, and probably be a lot more complicated than it looks when you’re setting up your first few Dropbox accounts, logging into Zoho, and reading up on your favorite tech bloggers.

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