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Clouding Your Judgment

Published: 3 years, 9 months ago

Common Misconceptions Around Choosing and Implementing Software Solutions

The Source recently implemented a state of the art cloud based CRM system that will contribute profoundly to our ability to continue identifying the brightest minds in procurement for our clients.
There are many unfounded concerns tabled when choosing a cloud based system as you may have experienced during your interactions with key stakeholders.  To help with your own discussions we caught up with James Leathem, Founder and CEO of Magnetized Markets, a multi-award winning procurement technology company, to discuss the common misconceptions when choosing and implementing a cloud based system.

Procurement teams are increasingly involved in making decisions about cloud based technology, both for the business, and for their own requirements.  Software-as-a-Service (SaaS) is the most common of these cloud solutions, and it would be hard to find any organisation that isn’t using at least a couple of SaaS solutions somewhere in their operations.  Still, it is often misunderstood, and there are some common questions and misconceptions that frequently come up.

Are "Cloud" and "SaaS" the same thing?

Not really.   The term 'Cloud' has been embraced by marketers and its meaning has been diluted over time.  It is now just a catch phrase for any application that's externally hosted and managed on servers in a service provider's datacentre that you can access using a browser and an internet link. 
SaaS (Software as a Service) is the most common form of cloud computing.  SaaS solution are hosted "in the cloud" and you can access them via the internet.  When people mention on-demand software and hosted apps, they're usually talking about SaaS.  Rather than buying a licence and paying for maintenance as you would with software run on-premise, SaaS is usually paid as a monthly subscription according to how much you use or plan to use.  There is also IaaS (Infrastructure), Platform (Platform) and an ever increasing list of other "as-a-service" offerings (a recent being idea being spouted is "cognition-as-a-service").

Is "cloud" just a new name for the old ASP?

Not really. ASPs, or application service providers, typically ran individual instances of others vendors' software for specific users. But with SaaS, users share instances of the provider's own software but keep data and any configuration separate — in other words, multi-tenancy.
Everything in the cloud automatically integrates and talks to our own systems… right?
Not necessarily.  Most SaaS providers will provide some sort of API or integration.  It sounds wonderful and simple, and from the side of the SaaS provider it usually is.  But, before you get too excited, you need to consider the implications on your side of the firewall.  Just integrating for integration sake doesn't achieve much.  You need to have a good think about what data you actually want, why you want it, when you want it, and what you will do with it.  Then, assuming it is available in a format that can be digested, you need to work out how to get your existing systems (such as your ERP or CRM) to take this and do something useful.  The costs for integrating can quickly escalate when you consider the time and effort to make any necessary changes to your internal systems. Integration is one of those things you really need to do a proper cost-benefit analysis on.  It’s not the SaaS costs you need to worry about, you need to fully understand your costs internally, and compare this what benefit it will actually provide.  There are a lot of examples where integration is not necessarily the best value solution.  Having said that, there are now some new breeds of integration-as-a-service platforms, such as (a Dell company), that promise to make it easier.

Is my data in Australia... and is that the right question?

Maybe it is in Australia, but is that answering the question you should be asking?  

Too many procurement buyers focus on "is our data stored in Australia" with little consideration for other factors.   Surprisingly, I am rarely asked, "where else is it?"  If your concern is that foreign governments or organisations can access your data more easily if it is overseas, then you need to find out things like where your backups are stored too.  Unless you ask, they probably won’t volunteer the information.  The other thing to check is whether the production servers are in Australia, but the databases are elsewhere.  There is more than one large company out there that creates an image of data sovereignty, but really just re-routes data from their central servers.  Find out where ALL your data is stored.  There is a good article on ZDNet earlier this year "What Australian businesses need to know about cloud compliance" ( if you want to know more – it basically outlines that it's a new area and nothing is really certain yet, so be smart.
Of course, it is worth asking whether you really care.  Just because your data is outside of Australia doesn't necessarily mean you have an unacceptable risk.  You really need to determine what your risk is, and what cost you’ll place on that risk. 
Even if your data is in Australia, you still need to check the quality, rigor and standards of security provided by the hosting provider they are using - there are some cowboys out there.

Vendor Lock-in… does it still matter?

Absolutely, perhaps more now than ever before.  If you like your data, make sure you can get it back.  Seriously.  And make sure it is in a format, and a timeline that you can work with.  There are plenty of businesses that have a strategy to keep you as a customer by owning (and possibly selling) your data. Read the contract, ask for examples, and plan for separation.

So what are the benefits of SaaS?

There are plenty of benefits to be had from adopting the SaaS model. Not only are their staggering cost savings, but the nature of SaaS also delivers a great leap forward in terms of scalability, accessibility, upgradeability, and resilience. Another great thing is choice.  It has become so easy to find, try and buy technology that our sourcing options have expanded greatly.  So too has the rate of innovation.
Admittedly, all of this can be a headache for CIO’s if it goes unchecked, but as we move toward a culture of best-of-breed technology (rather than the historical addiction of one system for everything), we have an enormous array of possible solutions.  The chance of finding one that will work, for a relatively low cost, is pretty good. 
With all this going on, procurement should continue to focus on their business needs and challenges, and be open minded about looking at new and innovative solutions.