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For the last two years a colleague of mine Scott Skellenger (Sr. Director of IT for Illumina) has been professing that the next generation business suite won’t be a traditional suite at all.  He has been carefully watching the integration-as-a-service market and believed that the new world of business applications will be where business units will seek business function-as-a-service solutions (LoB).  Then IT’s role will be to manage integration and master data.

At the time of our first discussions, I had completed implementing a true SaaS ERP platform for the company where I managed their IT.  In that model, the SaaS ERP was the center of the universe and a platform-as-a-service wrapped the solution to provide any customized functionality or workflow needed.  3rd party solutions could also interface directly with that solution.

I was fortune because I was provided a greenfield, to rip and replace all systems and restructure the business’s operations.  So for me this was the ultimately path forward for using cloud solutions to manage a business’s operations.  Given the fact that it was a mid-sized manufacturing company, I could assemble the executives of the company who really understood their respective business processes and collectively work through the end-to-end process changes that the new system would introduce.

What Scott understood very well back then (and I wasn’t quite seeing) was that in the large enterprise, there was going to be very little opportunity to rip and replace existing ERP suites.  Process is understood farther down the org chart, and those business units drove the innovation in their areas, not the topline executives.

As it seems Scott wasn’t the only one who understood this.  Lines of Business cloud providers understand this very well also.  They understand this because when they want to sell their solutions to a large enterprise, they no longer worry about talking to the CIO.  They go right to heads of the business unit and leave IT out the discussion.

So what will the large enterprise IT organizations do? It seems that they need to find a way to become relevant again.  So the challenge is one part architectural, one part organizational and a rethink to become service oriented.

The Architecture

For the last 6 months I’ve been thinking about this more, my thoughts returned to this idea of the integration-as-a-service.  It became clear that more would be required. Integration-as-a-Service would provide process integration between SaaS solutions and with existing internal application services.  It would also provide Master Data Management (MDM).

Public cloud offerings create a borderless computing model.  The result is that the only way to properly secure those assets is to tightly manage the identities that have access.  So IT will need to use an Identity-as-a-Service provider to manage identity federation with all SaaS services.

Now that data is being normalized through the integration translation layer.  There is the opportunity to have a centralized Platform-as-a-Service environment to develop point solutions and workflows.  This is significant change of model.  Because now the PaaS is the center of the universe and the many different SaaS services surround the PaaS.  It would be very important that this platform be built with open standards.  That way if an enterprise desires to change platforms, the solutions that were coded are portable.  Having no vendor lock-in is critical here.

Having BI/Analytics layer goes without saying.  To be able to report on transactional and master data produced across SaaS and PaaS environments is critical for future strategy formation and operational improvements.

Because we are no longer working with a classically integrated suite, we are missing a critical piece of data which in the SAP world is referred to as Document Flow.  We are also missing business context for the end user.  If we have many different SaaS solutions, the end user potentially has no context for knowing when to engage one service or the other.  There needs to be a portal much like a BPM where process is defined across the many different SaaS and internal applications.  As a process is being fulfilled you can track each step and reference the documents related to each step completed.  Along with that process mapping, a Universal Task Engine needs to be available to direct users to the correct SaaS service and fulfill whatever task is required of them.

In total, I’m referring to this solution set as the “Enterprise Cloud Core”.  More recently, I had a chance to reconnect with Scott and we discussed this Cloud Core concept.  As it turns out he has been already presenting a similar concept in industry cloud summits (no surprise Scott is a thought leader in the space).  He refers to this as “Cloud Orchestration”. Whatever name you want to give it, it represents the go forward strategy of the large enterprise.  What Scott and I were pondering was why no one in the industry was putting a stake in the ground and announcing their desire to offer a Cloud Core.  This is a huge opportunity in the industry, if someone gets it right.

Yesterday, I was following a post in Linkedin by Sven Denecken, VP Cloud Solutions SAP.  It was in reference to an article by a partner regarding SAP’s recent Netweaver Cloud offering. http://bit.ly/LLkT9C There it very well described a platform that is more than a development environment.  It’s the beginning of SAP’s Cloud Core.

When the kings of the business suite (SAP) are throwing down the gauntlet and talking up their Cloud Core, the industry needs to perk up and recognize the change that is coming.  The traditional suite construct as we’ve known it, is dead.  There is no one left who should be confused about the direction of cloud solutions for the large enterprise.  It is a perspective that Lars Dalgaard (now head of SAP’s Cloud Unit) had from his SuccessFactors days and is now paving the way forward to do at SAP.  However with players like RedHat, VMware and the like working their way to a Cloud Core as well, we should see an explosion of activity in this space.  The Cloud Core will represent IT’s next generation killer service for the business.  Enterprises are tired of expensive vendor lock-in and this architecture provides the option to go all in with one vendor or piece together a solution with many to best fit the needs of the business.

More to follow regarding organizational changes to come under this new model.

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5 Comments

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  1. Judson Wickham

    I’m with you on most points with some exceptions.

    1) I think the idea of having tons of point solutions is extremely unappealing to both the end user and IT, unless you can make the experience seamless visually and functionally. I suppose the ‘Cloud Core’ could take care of this for most processes, but I’m not so sure.

    2) Who will choose the point solutions? Executives who like a certain product because they’ve used it before and have some kind of affinity for it, which will very likely not be the right choice.

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    1. Sina Moatamed Post author

      Hey Judson,

      I’m with you regarding a consistent experience, the integration, the ease of master data management and analytics with a SaaS ERP solution.  The difference with this model versus the one (SaaS ERP), you and I have deployed is that there is less vendor lock-in.  Using a model of open standards and portability provides a lot more flexibility and ultimately control for the IT organization and business.

      Larger enterprises have a much bigger challenge with governance and the reality of line of business cloud solutions acquired without IT’s full involvement is undeniable.  There is a fix to this governance challenge and this architecture is one step toward that and the other requires organizational changes and a shift in focus for IT.  I’ll cover this in another blog, but this is the strategy that SAP and others are now taking.

      I had to really step back and look at this model and play out use cases to see if this could really work.  For me, I have changed my view and agree with this strategy completely.  Its now a matter of who will pull this off successfully.

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  2. Sina Moatamed Post author

    The great success and mistake of SalesForce.com

    SalesForce.com created a great CRM Cloud offering.  They did a brilliant job of creating a platform-as-a-service (Force.com).  It became the model that everyone went crazy for. Everyone loved the app store. Then they pulled a great strategic trick on everyone.  They started to acquire and build more solutions that would hook into the Force.com platform.  For those Enterprises that went down the path with them, they are developing in the cloud on their proprietary platform, hooked into all their LoB solutions.

    Suddenly these Enterprises woke up one day and realized that they are in a vendor lock-in.  They have no means of porting anything developed to another environment.  SalesForce.com is the cloud equivalent of Oracle.

    I loved the ERP SaaS suite we deployed at my last company.  It had best practices, integration, analytics, and the best part is that I didn’t have to hire one developer to make it happen.  But it has the danger of taking the enterprise down the same path.

    I think SAP, and any other vendor who are making a transition to this Cloud Core model are not saying that the Suite is dead, it’s the way it’s been constructed, packaged and sold that is dead.

    As stated in the blog, with this architecture you could build a suite from a single vendor or choose to piece it together the way the business requires.  Cloud computing has made services available to business units without having to always go to their IT to innovate.  This is the organizational behavior difference.

    We can discuss the merits of traditional suite versus this Cloud Core suite, but those of us in IT are not so much in control of the solution selection narrative anymore.  So the trick is having an architecture that won’t create a scenario where the business unit makes a decision that creates long term vendor lock-in that hampers future strategies.

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    1. Judson Wickham

      Now this I fully agree with.

      To me the potential of ‘Cloud’ is to consume commoditized and customized functionality on-demand.

      I also have seen the trend of business units or departments doing their own selection. So I agree that IT will have a different function starting from right now.

      Sina, my friend, I can’t wait to see how this plays out with the large enterprise. I’m not really in that space anymore but I’m definitely following along.

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  3. Luke Marson

    A good article Sinu. It’s always interesting to see how these things pan out – SAP have been talking about integration for years and even now their isn’t 100%, native, 1:1 integration within core modules.

    I think the challenge SAP has is creating 100% genuine plug-and-play type integrations for its software. While much of its on-premise software runs on an integrated platform (NetWeaver), there are parts of software components that don’t integrate with other or require additional configurations to enable this integration (which creates additional risks and maintenance). TWo examples I can think of off the top of my head are Global Employment in HCM that cannot be handled in CRM or EIC and the need to configure the use of Business Partner objects for TREX to work properly.

    Most of this comes from how the SAP R/3 system has been built on over years to add new functionality. Now is a great opportunity for SAP to create a unified architecture that allows everything to integrate – but it has to start with the data model as well as the technology.

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