Application Downsizing to the Cloud

Michael Vizard

As previously discussed, there is an emerging trend emerging where some corporations are actually downsizing their applications as a way to cut costs in these difficult economic times. Doing this is much akin to a family cutting back on its lifestyle.

But there is another way that families cut back in these tough economic times. They move to an entirely different part of the country where the cost of living is lower. The IT equivalent of that is moving to an application in the cloud model.

Not many companies have made the move to traditional back-office applications to the cloud. Instead, they have confined their interest in cloud applications to front-office applications such as customer resource management (CRM) software. But as the economic recovery continues to be spotty, interest in back office ERP applications in the cloud is bound to rise.

Besides some players that target specific vertical markets, the two leading ERP players in the cloud are NetSuite and Aplicor. Naturally, SAP, Oracle and Microsoft are all expected to make a bigger push into this space, so in terms of industry battles ERP in the cloud is just getting under way.

Corporations have thus far been hesitant to put their back-office applications into the cloud for a variety of reasons, including concerns about security, performance, data ownership, legal requirements and IT inertia.

But as cloud computing continues to gain momentum, it's only a matter of time before economic necessity has more companies moving their back office applications into the cloud in order to lower their real cost of business.

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