hype or reality: will enterprise systems as a service become an organizing …

Hype or Reality: Will Enterprise Systems as a Service become an Organizing Vision for Enterprise Cloud Computing in Denmark?

Professor Charles Møller Center for Industrial Production Aalborg University, Denmark

CERES Mission Statement

• The purpose of CERES

Researcher and practitioners

forming a joint academy to

create, explore and disseminate

knowledge on the analysis,

design and management of

integrated enterprise systems

• The origin of CERES

Ceres was the Roman goddess

of agriculture, grain, and the

love a mother bears for her

child

Vision: Harvesting the benefits

2

Center for Education and Research

in Enterprise Systems - C E R E S

Hype or Reality: Will Enterprise Systems as a Service become an

Organizing Vision for Enterprise Cloud Computing in Denmark?

• Co-Authors Per Svejvig, Aarhus University

Torben Storgaard, HerbertNathan & Co

• Agenda Introduction to the Study

Cloud Computing and Enterprise Systems as a Service

ESaaS in a Danish Contect

Perspectives

Conclusions

3 © Charles Møller

“The cloud is mostly hot air”

Henrik Amsinck, CIO LEGO

Cloud Computing has Reached the Trough of Disillusionment

Larry Ellison, the CEO of Oracle (2008)

• The interesting thing about cloud computing is that we’ve redefined cloud computing to include everything that we already do.

• I can’t think of anything that isn’t cloud computing with all of these announcements.

• The computer industry is the only industry that is more fashion-driven than women’s fashion.

• Maybe I’m an idiot, but I have no idea what anyone is talking about. What is it? It’s complete gibberish. It’s insane.

• When is this idiocy going to stop?

Cloud Computing According to NIST

• Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction

NIST (2011)

Cloud Computing has Many Faces

Enterprise Systems as a Service (ESaaS) in Denmark

• Database

HerbertNathan & Co. (HNCO)

Top 1000 companies in DK (1150 entries)

• Results

Zero cloud related entries (2011 and 2012)

Now entries are beginning to emerge…

• Validation

Vendors (Salesforce.com and Oracle CRM On Demand)

50 references

• Ad Hoc Search

Several ESaaS were identified

Corners of the systems landscape

Experiences?

Svejvig, Storgaard, Møller, 2012

Experiences with ESaaS in Denmark

• DSV

Large logistics provider

Early adaptor

Salesforce, Memnon and D&B

Nothing new

• YouSee

Part of TDC

Largest telecommunication provider in DK

Salesforce

Integration

• Aarhus Municipalities

Shared framework for all Danish municipalities

SAP solution (Opus) developed by former IT organization

Implementation


Institutional production of organizing visions


Swanson and Ramiller

(1997)

Findings on Organizing Vision


Institutional

forces

Global Context Local Context

Community

discourse

Cloud computing has been

named by Gartner “as the number

one priority for CIOs in 2011”

[3]

Gartner position cloud computing

at the “peak of inflated

expectations” at the Gartner

Hype Cycle predicting 2 to 5

years to mainstream adoption [4]

Aberdeen survey and Panorama

Consulting Group report shows a

big jump in interest in ESaaS /

SaaS [11, 12]

Amazon had an outage of their

cloud services lasting for several

days and affecting a large

number of customers [9]. This

case received very much press

coverage and it would be natural

to expect it to have a negative

impact on the perception of cloud

computing

The global discourse are part of

the local Danish discourse, but

local stories does also shape the

local context

Denmark has a lot of small and

medium sized organizations

(SME’s) which are expected to

be more willing to adapt ESaaS

[8]. That might fertilize the

ground for faster adoption of

ESaaS

The Local Government Denmark

(LGDK) tried to implement a

driving license booking system

based on Microsoft’s Azure

PaaS, but ran into technical and

juridical problems [24]. The legal

issue was more serious as LGDK

(and the municipalities) was

accused to break the act on

processing of personal data,

especially about location of data

[25]

The CIO from “The LEGO

Group” stated in news media that

“cloud is mostly hot air”. Cloud

can only deliver a small fraction

of the services that LEGO need

LEGO are using cloud to specific

point solutions but “[t]o put our

enterprise-platform on the public

cloud is Utopia” [26]

Community

structure and

commerce

Computer press, newspaper

articles, white papers, websites,

technology vendors, consultants,

industry analysts, IT

management books, trade

publications, trade shows etc.

There is no big difference in

the community structure at global

and local level

Business

problematic

Cloud computing is on

everybody’s lips today and is

promoted as a silver bullet for

solving several of the past

problems with IT by offering pay

per use, rapid elasticity, on

demand self service, simple

scalable services and (perhaps)

multi-tenancy [1]

Cloud computing is

furthermore marketed as a cost

saving strategy appealing well to

the post financial crisis situation

for many organizations with

cloud’s “Opex over Capex story

and ability to buy small and, if it

works, to go big” [2]

The business problematic is

the same at the global and local

level

However as Denmark has a

lot of small and medium sized

companies the business

conditions might be different,

and the arguments in favor of

cloud computing and ESaaS /

SaaS might be more prevailing

...

Conclusions and Perspective

• Conclusions Will Enterprise Systems as a

Service become an Organizing Vision for Enterprise Cloud Computing in Denmark? Pro

The OV discourse in DK is very intense and aligned with global discourse

Cons Mainly driven by vendors

Business see no use

Experiences show no specific value in CC

The conception of CC in ES is weak and needs more research

• Perspectives

Do we really need a specific

conception for cloud

computing within

Enterprise Systems?

Do we need to provide an

additional abstration level:

”Business Processes as a

Service”

Completely different

challenges


Five Critical ERP Cloud Challenges

Cloud Computing impact on Enterprise Architecture?

Collaboration in the Cloud?

Performance of Service Oriented Architecture?

Maturity of On Demand Solutions?

Security of Enterprise Data in the Cloud?

Cloud Computing impact on Enterprise Architecture?

• How will ESaaS impact Enterprise Architecture Maturity?

• What will Enterprise Architecture maturity requirements for ESaaS be?

• Is ESaaS a game changer?

Stage 1: Application Silo

Stage 2: Standardized Technology

Stage 3: Rationalized Data

Stage 4: Modular Business

Source: Ross, 2003

Learning Requirements for the Five Architectural Stages

Source: Ross et al., 2006

Business

Silos

Standardized

Technology

Optimized

Core

Business

Modularity

Dynamic

Venturing

IT capability Local IT

applications

Shared technical

platforms

Companywide

standardized processes or

databases

Plug-and-play

business

process modules

Seamless

merging with

partners’

systems

Business

objectives

ROI of local

business initiatives

Reduced IT cost Cost and quality of

business operations

Speed to market;

strategic agility

ROI of new

business

ventures

Key

management

capability

Technology-

enabled change

management

Design and update of

standards; funding

shared services

Core enterprise process

definition and

measurement

Management of

reusable

business

processes

Create self-

contained

business

components

Who defines

applications

Local business

leaders

IT and business unit

leaders

Senior management and

process leaders

IT, business, and

industry leaders

IT, business, and

industry leaders

and partners

Key IT

governance

issues

Measuring and

communicating

value

Establishing

local/regional/global

responsibilities

Aligning project priorities

with architecture

objectives

Defining,

sourcing, and

funding business

modules

Joint venture

governance

Strategic

implications

Local/functional

optimization

IT efficiency Business/operational

efficiency

Strategic agility Organic

reconfiguration

Collaboration in the Cloud?

• Will mobile solutions

circumvent enterprise

systems?

• Are organizations ready for

collaboration in the cloud?

Death of Google Wave!

• Are we able to deal with the

complexity of multi-

sourcing?

Performance of Service Oriented Architecture?

• ESaaS require integrations and a

service oriented architecture

(Vouk, 2008)

• Is the performance sufficient for

mission critical applications?


complexity or are we reinventing

the application silos?

Security of Enterprise Data in the Cloud?

• Do we have sufficient

governance and security

for ESaaS?

The illusion of on-premise

security

• Are we able to deal with

the complexity of

decentralized data?

Person Data Legislation

Maturity of On Demand Solutions?

• Are the available on demand

solutions on a sufficient

maturity level?

Major ES vendors

Methodologies to reflect

ESaaS?


complexity of distributed

immature technology?