General Consultant Discussion

Nutanix CEO: companies are moving back to on-prem http://buff.ly/1fhLawQ You know, I've been saying this since the cloud hype started and have been made to feel like I'm the guy saying that Windows will never overtake DOS. I still feel, outside of large scale consumer services such as gmail, facebook etc, and certain corporate niches where most employees are mobile, like CRM, that the hype of cloud, ESPECIALLY IN ERP, seems to make no sense based on the performance, complexities and current pricing I see out there. The cloud is also great for backup and failover such as http://www-eversafe-backup.com However, when you see a whole industry trying to push to something new like this, you look back and see they aren't being altruistic. They are doing this for their benefit and trying to make buyers think its a good thing. In the past you used to pay for each upgrade, which meant vendors had to justify it with useful functionality. Then they all moved to the 'maintenance' model where they could charge 20% per year but only put 10% of the revenue taken in back into R&D and the rest to pure profit. Now that even that's getting harder to sell, they are pushing cloud and subscription meaning they have no incentive to do much at all because if you stop paying, they can legally just shut you off and the cost of migrating to a new system is huge. Outside of the VC funded tech community who spend other peoples money, I'm not seeing a massive influx of people whipping out their checkbooks to buy cloud ERP.

And this guy sells to on-premise and cloud customers, so unlike the massive bias in most cloud articles, this guy doesn't seem to have a particular horse in the race

I am also one of the few who didn't jump on the cloud bandwagon, and I'm still not jumping. Yes, cloud has is place for certain features such as credit card processing, sales tax, payroll taxes, even shipping.... The reason the IBM PC was so successful was because companies wanted their own processor in house. Before the PC, companies that couldn't afford a mainframe or mini would share processor time by using a service bureau. Service bureaus were ""the cloud"" prior to 1982. IMHO even a hosted solution is better than a pure cloud play as at least you can control the programs and data. After trying a hosted solution for a few years, I am seeing customers moving back to on premise for a variety of reasons. I got a good laugh out of an email I received from an accountant last week who referred me to one of his clients for MAS work. Below is an excerpt of the email from the accountant to his client recommending me: ""Hi XXXXX: Sorry for the delay. I hope all is well with you. After being a 20 year + reseller for MAS90/200, now Sage 100, we have decided to end our ""Reseller"" status with Sage. Although we still have many clients with Sage 100 and still enjoy working with the product, we have decided to focus our IT resources and ""Reseller"" certifications with the new and exciting ""Cloud"" accounting program called xxxxxx and maintaining and growing our ""Reseller"" book of business with xxxxx ERP, a non cloud product. The xxxxxx cloud software and the business world is going to everybody wants to be mobile. We believe is were the future of cloud accounting systems will be xxxxx and our Firm has always been a leader in with new technologies. We do understand that for the over 40 year old people, we find xxxxx to be a better overall non Cloud product that can be customized much easier than Sage 100. And from experience, everybody's accounting flow is a little different."" Now that's funny!

Would be curious to know how much new cloud sales he has with the new solution.

Not sure. I'm supposed to have lunch with him Friday so I will try and find out. What is so funny to me is his statement to his client that he understands that people over age 40 may still want an on premise solution. As if you are over 40 you don't know what's going on in the software world. Apparently, someone convinced him that cloud is where everyone needs to be.

I've been to a number of CPA events and you have a handful of local 'experts' telling everybody they are dead meat if they don't move it all to the cloud. To the point of implying they will be the laughing stock of their peers.

I agree with Mark and I've always felt cloud is an awesome idea for companies in specific situations -- mobile offices, no IT staff, etc. However there's one issue that the on-prem companies have not been able to resolve despite having many years to do so -- and that's the horrific experience many people have with upgrades. I submit the reason most on-prem have not solved this problem is the constant turnover of technical and executive level people. If price is the only problem with cloud then I suspect a price war will remove that objection. However I don't think ti's all about price because if it was Netsuite would have continued slashing $$ instead of moving upstream and leaving behind the entry market (Sage 100 ERP type customer).

Another issue with cloud is that our internet infrastructure is in the hands of people who think like Mr Fucus.

For those members coming to MOTM 2014, Gary Feldman will be heading a session on day 2 - Deployment Options - Cloud vs. Bricks and Mortar. Should be very interesting!!!

Only true multi-tenent saas applications 'auto upgrade'. Putting SAP B1, or MAS in the cloud doesn't solve that problem. And most multi-tenent apps can auto upgrade because they allow for limited end user customizability, or if you can customize, you still have to do things post upgrade to make the customizations work, especially custom reports that relied on data structures that have changed. And even if you look at the MAS world, Sage only releases enough meaningful content to upgrade at most once per year. If your client is keeping current on every version, your upgrade project is 4 to 12 hours per year. Is that so expensive compared to the $150 to $250/month/user that multi-tenent saas in the MAS space costs?

Is anyone in this group from a world where one solution fits all? Why does the discussion always trend towards a cloud vs. non-cloud world? I never even liked the nebulous term cloud because it describes nothing and means nothing. The reality is that cloud offers benefits for some companies, but not all. Cloud is not a monolithic thing and to my belief there is no such thing as 100% cloud because there is always a local device. The extent a company moves to the cloud is based upon so many factors no-one has a foolproof formula to say what is the optimal % a company should be ""in the cloud."" All the nay sayers in this group are using Social Cast, a cloud based application to bash the cloud. Mark pitches ever-safe, his cloud application and Phil sells xTuple which is offered in the cloud. As a person over 40 who makes his living in the cloud, I must admit that different generations do view the cloud differently. Although my kids are not growing up in a generation where it is a slam dunk that they will have things better than their parents, they do assume that they will have immediate access to any information that they want delivered onto their mobile phone. They actually also expect to pay for data services, apps and downloaded music. Although our experience is still applicable and relevant to their reality, they think differently than we do. The question is not whether you should be in the cloud or not, or whether the cloud will succeed or not. It is not going anywhere and its eventual market penetration is still unknown. The question is where do you want to focus your business. There is a market for both cloud, hybrid cloud and on-premises. What is your target market, how does it view the cloud, and what do you want to sell? Do you want to specialize or go vertical or be a generalist? Do you want to focus on one product or offer alternatives?

@GaryFeldman I think you misread my response. I clearly said things like Socialcast and other 'mass' type consumer apps like gmail or apps that bring many people together from many different geographies such as social media will definitely be cloud services as its a many to one type situation. My statement is that ERP, the market we are primarily in, is, in most cases, not a massively diverse set of users. In our segment, most are at one or at most a small group of locations so the benefit of a solution centrally located for people to use on iphones isn't necessarily compelling enough to deal with the difficulty of interoperability of multiple hosted solutions from multiple hosting companies and the generally 2 to 3x cost difference when looked at over a 10 year period. I also said EverSafe is a cloud 'timeshare' and a hybrid cloud solution. One benefit that many like to proclaim about the cloud is the disaster recovery aspects. If your building burns down, your systems still work in the cloud. EverSafe uses the cloud only in an emergency for that few days per year that statistically every business won't be able to operate due to various problems within their premises. That's why its far cheaper to use EverSafe than say move all your servers to the cloud because we can put say 100 customers on a server in the cloud because at any given time, only a few will actually be running. In a permanent cloud hosting, you have to scale your hardware to assume all the servers are running all the time. It's like buying a vacation vista in the bahamas for 3 million bucks on the beach or buying a timeshare for $50k because you only really need to use it 2 weeks out of the year. I'm an avid gamer. When you look at PC Gaming, or Xbox, they use the cloud to keep track of scores, to connect multiple users together, to push down patches etc, but the games run locally. Companies have tried hosting games in the cloud and the latency and speed is just not going to cut it. In addition, the company couldn't make money because they had to stay competitive with on-premise games. The current cloud ERP vendors think they can charge large premiums because they try and differentiate their solution from premise just because its in the cloud. It reminds me of the way Sage used to sell Acuity (mas500) merely because it was all Microsoft technology, not because it offered functional or business advantages over previous solutions. As you say, the cloud isn't going anywhere and honestly data centers have been around since the 60's and aren't going anywhere. But this marketing hype of this 'shiny new toy' of cloud branding and marketing I think has gotten way ahead of the realistic market. Again, is there anyone here who has embraced a SaaS solution doing well with net new sales to new customers that you are finding? I don't count vendors who hand you projects to implement as a version of a contract employee.

@MarkChinsky - Yes, we are doing very well.

@GaryFeldman Let me clarify. You are a provider. One of a limited number. Netsuite is a provider and supposedly doing well based on their insane stock valuation. But are the partners who bring you the deals doing well or are they doing mediocre but multiplied by dozens or more that adds up to a nice business situation for you. I still think the problem is that net new ERP sales are still in the crapper, hosted or on premise, but since hosted is starting from such a low number, any results from players like Netsuite or Xero look great. There are regional and industry exceptions. For example, Washington DC has no recession thanks to runaway government spending. Much of Texas is doing great thanks to the energy boon (and no thanks to Washington DC currently), Silicon Valley is doing well thanks to investors currently in .com 2.0 bubble mode, but the rest of the country, especially the northeast, is very sluggish.

We do a good number of direct deals since we got a sales person. Our start & grow program is opening doors we previously could not get through. We sold deals in almost every region last year with >50% in the cloud. I spoke with several partners of NetSuite and as a group we spoke to one while at ITA who said that they are doing well with NetSuite. I know two SAP Partners who specialized by industry and now have more work for their industry solutions than they can handle. Orchestrated Beer in the cloud has a waiting list. I believe AchieveIT in your neck of the woods had a phenomenal year. B1 overall grew by over 20% again last year. It is not that hard to find people doing well almost everywhere.

Most of the folks I know doing well, including Achieve and Orchestrated have built substantial IP and sell their own vertical system. I know RMS and others do well at that and I wish we had the development chops ourselves to be a true publisher. But those that resell other people's verticals don't seem to be doing as well.