CRM and Cloud Computing

For the past few months now, I have been following developments in the cloud and those are all cheery and bright. CRM being one of the not-strictly-in-house applications, is one of the prime candidates for "clouding" and obviously those of us who depend on CRM for a living are going to look at the developments closely. I am of the opinion that for better or for worse, moving services to the cloud is where we are headed. Software as a Service (SaaS) has already proved its mettle and has not limited itself to SMBs. However for those of the companies who just want their application but not the hassles and for those who may want independence to scale hardware and infrastructure as they wish, moving services to the cloud is an option. And that option has been picking up lot of heat with Amazon & its cloud services, Microsoft & Azure and so on & so forth.

With the above as backdrop what I really wanted to discuss is the recent McKinsey report, which has been interpreted at many a place as "cloud services are ineffective". In many ways, I see this hype/anti-hype as similar to that generated when initial SaaS discussions were on. SaaS came and is here to stay. But that did not make the current software market vanish (though I understand Mr. Benioff has been trying to do just that). Though the dust is not all settled today, we still see a lot of software vendors out there who are making a profit (with a decline on the cards) and at the same time there is a aggresive growth in SaaS market. With the ever lessening costs of SaaS, ever increasing competition and the ease & sophistication of customization options, we might see organizations moving to SaaS over a period of time - nothing overnight. Who knows SaaS vendors may unveil even better strategies to capture new segments by addressing many of the critical issues that face the customer today - yes, including data security concerns.

I see a similar analogy in the cloud services market that will include more than just the one-fits-all software. No data centers are going to move to cloud over night, but will be a gradual process. From where I stand, it makes business sense for the provider to put together a bunch of options and let the users use remote servers and services without the hassle of maintaining one. This has to be cost effective and can result in better resource utilization in the long run. But, not all organizations will be able to do it - may it be geographic constraints or plain "sense of ownership" thought-process. The McKinsey report does deal with such questions and the observations are simple:

• Cloud reduces upfront costs
• Almost immediate access to servers
• Smooth scaling up of services on demand

Cloud services already has made a dent and does make a lot of sense for the SMBs but large organizations would be better off by not investing too much too quickly. Hosting your services in-house costs lot cheaper than putting them on Amazon. New technologies tend to garner lot of interest and that sometimes over-cooks it - too much hype will not automatically translate into benefits. I for one sincerely believe cloud computing will be mainstream and will define the standard in not-too-distant future. Ultimately what will work is the same mantra as IT outsourcing - "We want to concentrate on what we do best and let the IT part be handled by specialists". Here we will have organizations who want to be agile in their response to market and leave the infrastructure & software to be maintained elsewhere. What do you think?