The Cloud Isn't the Answer: NetSuite CEO Declares War on Non-Cloud Vendors


That was the takeaway thought as I watched Zach Nelson at the Demo 2012 conference take a position that every legacy non-cloud ERP vendor was obsolete and should immediately be replaced by the NetSuite Cloud solution.


I couldn't help but think, OMG, here we go again. Sun made a similar argument about IBM in the 80s about Client Server, and Netscape made almost the same argument in the 90s about Microsoft and neither company exists as an independent entity today.


This appears to be yet one more repeated rendition of the old song "Everyone Sucks But Me" and I get so very tired of it. The cloud isn't the answer; in fact, it is never THE answer anymore than you can start by saying the hammer is THE tool.


Let me explain.


Missing the Problem


There is an old saying that goes something like, "If you make screwdrivers, every problem is a screw." The thing is, every problem isn't a screw and the solution should follow the problem. It isn't just "the cloud" that is being used in this way, it is also "mobile." Here at Demo there are a bunch of folks arguing that you have to design tools to be mobile because they are huge mobile advocates. Neither position is necessarily true and it is a chilling reminder of the client/server and Internet wave where folks led with those tools instead of leading with the problem.


Client/server for most of the '80s and into the '90s was a hole that people poured money into and the Internet focus is also called the "Dotcom Collapse" for a reason. People got excited about the tool and lost track of the fact they were actually trying to make money, or at least put in place systems that were financially viable.


Defining the Problem


My first personal lesson with leading with a tool was when Giga Information Group, the IT analyst company I helped start, bought a phone system. The decision had been made prior to my joining and I'd been the competitive analyst that had covered this system when it was created. Our conclusion had been that only an idiot would buy it and, unfortunately, I shared this conclusion with my boss who, and this shouldn't surprise anyone, had been the guy who had selected it. Let's just say that, until he was fired, we weren't that close and leave it at that.


But this mistake along with so many others is typically caused by a decision maker who leads with the technology and not with the problem to be solved. The second time this happened to me, executives decided we needed to collaborate and so we implemented Lotus Notes, which was the bane of my life for most of the time in the company. This is because we didn't first establish how we were going to collaborate and it turned out Notes sucked at what we did (it didn't help that the company that deployed it for us specialized in Exchange).


If you start off with a strong definition of the problem, define what an ideal solution should be, then compare the tools available to that definition, you should be able to come up with a plan that actually solves the problem. But if you start off with Notes, or cloud, or mobile and then try to force fit these solution components to what you are trying to do, the result is more typically less than ideal and you have a higher likelihood of having it fail.


Wrapping Up: Cloud ERP


The critical path for ERM, CRM or SFA and other tools in that class is typically interoperability. All the cloud brings is a possibility of lower-cost hosting and that really depends on what is hosting these systems today. If it is fully amortized hardware or highly virtualized modern servers, there may not be that much extra cost to save by shifting to a more flexible hosting model. More important, the systems these things interface with may not interface well with cloud applications and the end result could be a mess until the other financial and customer tracking systems can themselves be updated.


In the end, I suggest you look at someone who leads with "the cloud," "mobile," or any technology or product before your problem is defined - the same as you'd look at a mechanic who, before you told him what was wrong with your car, took out a sledgehammer. Yes, the sledgehammer may work, but my bet is it'll likely only make things worse. Or, put another way, if you focus on the problem rather than the tool, the vendor may not be as happy, but you certainly are more likely to be. And, in the end, they are supposed to work for you, not the other way around.


The cloud is AN answer; only if you start with a well-defined problem (including interoperability) can you determine if it is THE answer.