Vendors look to rapid deployment as a way to tackle the cloud threat

Vendors like Oracle and SAP are getting twitchy about cloud - is RDS a way to head off the competition?

In the last days of 2011, I started to hear about vendors who are fast tracking implementation but using traditional, on-premise software.

Michael Krigsman got all excited about it. I have more than a passing interest in this topic since he included Oracle and SAP in the equation. Krigsman's premise is that rapid deployment solutions (RDS) coupled with limited scope adds up to reduced risk.

In reading what Krigsman said, I couldn't help wondering whether simply accelerating implementation based upon pre-configured or constrained software is the way to go. My main concern was that I could not find a single customer reference in his otherwise extensive walk through the topic. To me this was theory, talking a good game but nothing much else.

It didn't take long for the peanut gallery to weigh in with colleague Vijay Vijayasankar posing some tough questions. Following on from his post, Vijay recorded a Skype call with me on the topic which I subsequently developed into a post focusing on the topics at hand.

Vijay is worth listening to because he has many years experience as an implementer and knows what works and what doesn't. He has been in a number of leadership roles and is currently working for IBM, though he is always careful to point out that the opinions expressed are his own. He is not alone in thinking that RDS is not necessarily a cure-all but then I can see circumstances where a fast-track implementation is possible and desirable.

It didn't take SAP long to get in touch and arrange a call with Vijay, my video partner Jon Reed and me to talk through what they are doing. It seems that while current rapid deployment solutions are relatively thin on the ground, SAP claims 70 in development with a planned rollout of 100 by the end of 2012.

Impressed? Kind of. As we talked through what SAP is doing, the company was quick to acknowledge that marketing for these solutions had not really got underway - and won't do until the latter part of 2012. That goes some way towards explaining the lack of references.

My initial perception was that RDS leads to the following:

  1. Supporters among the vendor community view this as a way of delivering early value - essentially giving them an implementation get out of jail free card for past mis-steps.
  2. At least one and likely more large SIs believe the 2012-2015 timeframe will bring much more important projects stemming from planned M&A plus the impact of macro economic conditions.
  3. Tier 2 SI customers may see benefit from this approach.

It turns out that while that may be one view, SAP is also looking at this as a way of encouraging existing customers to dust off shelfware and expand their use of SAP technology.

I get the logic and I also get the requirements of customers wanting a single throat to choke. The problem is this runs the risk of lock-in to on-premise systems at a time when attention is focused on cloud benefits.

I also wonder whether this serves to cannibalise SAP's (and others who follow this route) business model.

SAP disagrees for net new customers. No one will argue that. But existing?

During the conversation, SAP said that in one case, the customer was looking at a project that would have cost $700,000. The company initially rejected the projects. Instead it opted for an RDS modified for some customisation which slashed the bill in half. SAP says that by paring back on customisation, customers can still get most of what they need and certainly all the essentials. But such cases beg many questions:

  • Why have we not seen this style of implementation before?
  • Why not go the while nine yards and simply offer cloud based solutions which could be offered at even lower cost in exchange for a multi-year deal?
  • What does this mean for sales? I cannot see the typical SAP salesperson walking into an engagement and pulling out RDS as the first option.
  • What about the SI since SAP is leading the charge? Are they not left out in the cold?

There are no clear answers to these questions except that SAP says it would like partners to get on the same page. It argues this can be likened to what it did with All-in-One which is a pared back version of the Business Suite for the mid-market.

Whatever the positioning, cloud vendors are not standing idly by. If anything, this validates one of the key planks I've seen in Virtual Cloudsjects: fast track, predictable implementations. The difference is that we're now seeing more customisation in the cloud than ever before and the projects still compare favourably with on-premise.

Part of the reason is that most of the Virtual Cloudsjects I've seen are taking an agile methodology approach that deliberately forces the customer to think hard about what they really need to achieve out of the project. It deliberately places constraints on the business so they rethink business processes. Tom Foydel talks about this extensively in a well written book about NetSuite implementations.

As far as I can tell, RDS doesn't quite get there since it is still a waterfall style of implementation. The proof will be in the eating. Returning to NetSuite, they note that:

Olympus, chose NetSuite ERP to power a new subsidiary in India, rather than deploy an up-to-date version of its SAP central ERP system based in the company’s Japan headquarters. A major reason for the selection was the company’s need to bring the new subsidiary online quickly. The installation beat Olympus’ own nine-month installation objective by 33% by going live in just six months, and it now serves as a prototype for future two-tier ERP installations at Olympus.

While you cannot always make direct, like for like comparisons to RDS, since those often represent modest pieces of functionality, I wonder the extent to which they are functionally constraining will ultimately bring into question the value they can deliver as on-premise solutions and add-ons.

In contrast, I expect that we'll see more customisation for cloud solutions that in turn become productised and especially for vertical markets. That strikes me as a better way forward. As always, the final verdict rests with customers who vote with their wallets.

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