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I have been recently at an IT conference at Penn State University when during a panel discussion on new IT technologies a very lively dispute between Jorge Lopez (Gartner) and Amy Wohl (Consultant) about the future of ERP erupted. Amy was convinced that cloud computing and SaaS will replace traditional ERP systems in the very near future. She named Salesforce.com and Workday, Dave Duffield’s (founder of PeopleSoft) new ERP Company as example for the new industry trend of ERP (one instance) in the cloud.  Jorge pointed out that ERP systems are like jumbo jets, complex, very reliable and not easy to change. He is convinced that many instance ERP systems will be around for a long time to come.

I pointed out that Dave Duffield’s declaration April 18th, 2007 that Workday will be ‘parity’ with SAP in 18 months http://blogs.zdnet.com/SAAS/?p=317 was obviously wrong. Workday is doing very well but I think that they won’t be parity with SAP for another decade. I also mentioned that the Deutsche Postbank runs SAP for their retail business. They have about 6 million transactions per second and write about 2.5 TByte per second to the disc. At the moment no one could automate with an OLTP ERP the retail business of for example the Citibank which is about seven times bigger than the Deutsche Postbank. Ironically, Dave cited the Citigroup and Federal Express as examples of the type of company Workday will target.

This discussion has led me to write an IEEE Column titled, “ERP Is Dead, Long Live ERP”. In this column I discuss new technology trends such as high-performance computing, pervasive connectivity, Web services, and SOA and how they will affect ERP and the IT departments.

Have a look at my IEEE Column ERP is Dead, Long Live ERP.

http://www.sdn.sap.com/irj/sdn/go/portal/prtroot/docs/library/uuid/50afbe52-203f-2b10-47bf-c8b12b080ef8

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  1. Benjamin Gryson
    Hi Paul,

    personally, I am pretty convinced that SaaS can and will replace the traditional client server architecture. I only don’t think it will be in the near future, lets say, the next 5 years. What is happening now, is that startup companies using SaaS, to reduce there costs. Bigger companies are still in a waiting phase. They know what it is, maybe they already do some demo testing, but they are not willing to change yet.

    In my opinion, a company have to see SaaS as a kind of outsourcing. The outsourcing of your server infrastructure, outsourcing of maintenance work, outsourcing of some R&D budget to make your hardware platform flexible and cheap, … . And this is a enormous advantage.

    You have a point if you are saying companies like the Deutsche Postbank or the Citygroup have huge amounts of data every second to store, and that this can be a problem for SaaS vendors now. But I believe this problem will be solved in some years, as bandwidth will be driven to an higher speed by the increasing use of technologies like Internettelevision, VOIP, … . Who would have thought 10 years ago that you will have a laptop with 4GB of RAM memory today.

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    1. Paul Hofmann Post author
      Hi Benjamin,
      We agree 100% SaaS will come and one day there will be an ERP in the cloud, all companies in the world using one instance (or so). This might be the case in 10 years or more.

      I argue in the  IEEE Column which didn’t get uploaded by mistake that cloud is coming for companies’ IT departement. Intel is saving about 1 billion dollar by putting their IT in the cloud.

      I have just received the link to my article. 
      https://www.sdn.sap.com/irj/sdn/go/portal/prtroot/docs/library/uuid/50afbe52-203f-2b10-47bf-c8b12b080ef8

      Let me know what you think about the article which talkes about high performance computing – mutlicore, multithreading, etc, about dynamic srcitping languages, mobile and web services.

      Thx for your comment, Paul

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      1. Vinay Hiriganahalli
        Hi Paul,

        Enjoyed reading your article in IEEE column.

        I am of the opinion that the ERP On-Pemise will see many more decades before fading out and giving-in to SaaS. The main factor being the complexity and size of such implementations. Not to forget about Security! I think we are still not there in terms of security of data handling and other legal/regulatory requirements and their realization. It’ll not be a surprise if countries come up with another SOx and ISO comes up with another ISOxxxxx shortly.

        Nevertheless, the progress of SaaS seems to be exponentially growing and for good. It was new for me to see the transparency Salesforce gives to its customers on the status of their servers at http://trust.salesforce.com/trust/status/
        Though not a major breakthrough/rocket science, this is definitely something which gets the buy-in from the user and creates more transparency. Way to go SaaS.

        I agree with the fact that its hightime that the companies adopt disruptive business models. Traditionally, Maintenance has been the cash cow for companies and this may see depreciation slowly in the coming decades.

        And yes, software has already become user-centric. Users have begun to throw away practices that they are not used to! Flexible and fast front end applications will rule the coming generations. It’s an age of being fast on the same time, being accurate too.

        Finally, Integration – the other important factor which still has room for improvement in today’s applications. My kids will only like to go to a one stop-shop, place their orders well in advance, pay by their cards (and check status real time) and even order for home delivery! I believe this brings enormous value to the user, business and the underlying technology. In other words, Business Network Transformation is the need of the hour. Collaboration within Competition is the New Age Mantra (Sanskrit – literally a ‘sacred utterance’ in Vedism)

        Vinay.

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        1. Benjamin Gryson
          Hi Vinay,

          thanks to share your view on this topic. Nevertheless, I like to react on your post.
          First of all, I think in IT, it is very difficult, if not impossible, to speak in long terms like “many more decades”. Some decades ago, SAP didn’t exist, Microsoft didn’t exist, … . Now, they both are one of the biggest software company’s of the world.

          Next, I want to react on your phrase about security. True, security is extremely important, but I am sure you can make a SaaS version of an ERP packet as secure as an On-Premise one. Who would have thought 10 years ago that everybody would do there banking online. I am sure, the big banks thought the same thing as you now about security. There view has changed over the years.

          Also about complexity, yes, ERP is a complex thing, but publishing it “in the cloud” will not effect much of the complexity. If there will be a new SOx, it will be as complex implementing it in the cloud as it would be implementing it in an on Premise platform.

          Benjamin

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