|By JP Morgenthal||
|June 19, 2014 10:00 AM EDT||
Experts say that cloud computing is disruptive and then continue on to discuss how the cloud quickly enables innovation while competition between cloud service providers drive costs down. Both of these scenarios are accurate, but the disruption from cloud has additional shockwaves that only now beginning to be felt. Hardware and software vendors are starting to show signs of wear on their revenue streams due to cloud. Eventually, that wave will begin to impact the ecosystems that includes Value-Added Resellers and professional services firms that implement the products for those vendors. Sometime between these two points another wave of disruption will begin to take hold; the move to multi-vendor solutions.
Multi-vendor solutions have been in place for some time, but typically as an additive effect versus subtractive. For example, a large enterprise will contract with both AT&T and Verizon for telecommunications services to ensure that there’s always one operational path available for transmission of data. The thing that makes the multi-vendor cloud different is the tearing down of the functional barriers of the single in-house managed enterprise applications from a single vendor into a combination of Software-as-a-Service (SaaS) and custom applications running on different cloud service provider’s platforms.
None of this is news, of course, it is the focus of many discussions around the emergence of SaaS. The element that is news here is that this effect is now starting to impact the channel partners for the large enterprise applications’ vendors. The IT professional services firms that grew up around deploying solutions like Oracle E-Business Suite, SAP, Peoplesoft, JD Edwards, etc. continued to see a consistent flow of work regardless that this new cloud platform was emerging around them. Many of these firms may even have been aware of what was occurring, but stymied to do anything about it due to the speed at which solutions have been taking hold.
Competing in the cloud market is significantly more difficult. It’s not enough to have one or two competencies in order to provide a solution. Now professional services firms need to have competency in three or four SaaS platforms, data management and integration. Businesses want to use Workday for Human Resources related activities, Salesforce.com for customer facing activities and Netsuite for financial accounting. Rapidly waning is the appetite of businesses to sustain a one and a half to two year development effort to deliver a consolidated platform. Moreover, recently promoted executive managers have some element of information systems training as part of their education making it difficult to convince them that they need a lot of custom business processes to operate their business. Indeed, they have learned that complexity has a high cost to maintain, operate and audit.
Further complicating this change, the vendors themselves are realizing that they need to transform or die. Hence, many of them are attempting to shift as quickly as possible to provide specialized SaaS applications. As much as they realize the devastating results of doing so, this means that the big enterprise application vendors will eventually begin to cannibalize their own channel. Ultimately, same type of work that used to be required to deploy a multi-module enterprise application is just not required on the SaaS alternatives. Thus, professional services that thrived and were successful being a prized channel partner had better start buddying up to emerging SaaS vendors and learning about IaaS and PaaS if they intend to survive.
The long-term implications of cloud disruption on this aspect of the business are astounding and there has been little discussion in the media or by analysts. Not only does cloud have the capability to reshape enterprise IT, it will have terraforming effects on the entire IT vendor solution ecosystem.
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