One could say that Cloud is “in the wind” (fashioned). Quite understandable for a cloud, isn’t it? But it’s not so simple to understand the weather forecasts of economy, even if global warming makes it more and more similar to plain weather forecasts. In fact, Cloud computing, and its cousin SaaS, as any technology, have their bright side and their dark one. Simply, SaaS-Cloud solutions are tightly fitted to our economy’s general weather: changing, unstable, fast-moving, unpredictable, frugal. Providing you make the best of them, and have them really accepted and integrated in your company.
Cloud and agility
Choosing an SaaS ERP solution “in the Cloud” means choosing agility. Such a choice is in fact quite consistent with a general trend in our society: the choice of use-oriented business models — also referred to as sharing-economy or economy of use — rather than property-based models. What is it about? It simply means to prefer rent than buy, for a generally better quality of service and a “usage global cost” usually less than the “global possession cost” of a similar solution in full property.
Those who are accustomed to renting know how much freedom it gives them. Ever at top, since their goods don't risk obsolescence, through the simple fact that renting may be interrupted whenever they want. Liberated of caring for maintenance, since the owner is clearly the one in charge of maintaining his property attractive. And, most of all, they are able to adapt to their evolving needs, whatever these evolutions are.
What is true for car renting, boat renting, renting of a vacation house, or even, nowadays, clothes or heavy appliances is of course still true when dealing with software, information systems, ERP solutions. You get the same guarantees in terms of adaptability. Regarding costs, in addition to cash flow gains, you can predict the global cost on the mean term, contrary to buying, where you generally encounter hidden adaptation costs, very hard to predict.
Cloud computing adds agility in space to what could be called agility in time. Wherever you are, as long as you get an Internet connexion — that is almost everywhere you make business —, you can access your system. Those who are nomad workers, using regularly iPads, smart phones or laptops, measure daily how important it is to be able to always connect to the same database. They don’t even care anymore where their data are physically located.
In an instable economy as it is today, such an agility could make the difference. We are not in the middle of a simple crisis, but we are living a mutation, a thorough transformation of our economic system. This transformation is due to the demographic explosion, the narrowing and “flattening” of our planet in the last fifty years, first through transport of goods and persons, and today through the data transport, the fantastic speeding of technological (r)evolutions. The only sure thing in this context is that those who pretend to predict the future are either lying or fooling themselves! Just have a look backwards to the economic predictions of those last years, and you'll surely agree with this sentence.
In this type of context, be agile in your strategy and in your management is a condition of survival. Those who will lead the pack at the end of this mutation period aren’t those who will have better predicted the future: it would be vain to try. It will be those who will have been able to adapt faster to their constantly changing present. The future becomes very quickly present, a present full of surprises and opportunities. How could you be agile in your strategy and your management if your information system isn't?
So, Cloud computing and SaaS are a panacea for an enduring success in this economic and social mutation?
Cloud and acceptability of change
Unfortunately, it isn’t quite so simple. SaaS information systems do not escape the rule that every medal has its own reverse, as we say in French.
The first dark point is shared with the whole use-oriented business models field. This sort of model deprives us of the pleasure of owning. If private property has known such a development through our civilizations’ centuries, if collectivist economies have shown their failure, there is probably a sound reason behind that. Safety and freedom are part of the fundamental needs of human beings. Ownership is able to fulfil both these needs, which are usually in opposition: freedom, because you can make whatever you want with what belongs to you; safety, because it is yours and therefore you will never lack it!
This kind of psychological dimension must not be underestimated, even when talking about the company’s information system. I have met more than once, during my training courses or my coaching sessions, managers or executives telling me very proudly: “we have just installed such or such big, modern, famed ERP solution, this proves that my company is big and strong”.
But this is not the main point. This one is rather induced by a paradox. SaaS gives a real guarantee of a certain amount of agility. But it displays, at the same time, a true lack of flexibility. You are no more the owner of the system, and you may not do whatever you want! You have to accept that your system give somehow standard answers to the needs that you share with thousands of businesses similar to yours. The sharing-economy only works when one accepts to negotiate, share, take into account the needs of the many others.
When dealing with ERP solutions, this has very sensitive consequences on customization. Out of question to build specific add-ons on top of the standard system, to make it a true proprietary system! This would be in total contradiction with the very nature of SaaS and Cloud computing, and would annihilate your gains in agility. Agility, both in time and space, relies on the fact that you stick with the product as it is released. Find the good fit with the customer needs is the editor’s responsibility, not the customer's one. This lack of customization has first of all implications on the installer business model: software service companies used to make their profit on the numerous add-ons they proposed to their customers, “above” the standard package. Those which specialize in providing services around SaaS solutions have to replace this source of revenue by an increased service quality, able to build loyalty of their customer as surely as when this latter was “prisoner of all his add-ons”. This is of course a very positive side effect for the customer.
But people inside the company also lose there a very convenient way of gradually adapting to the new system. In fact, customization used to narrow the gap between the old processes and the new ones. It also used to contribute in convincing the users that their own way of working was implemented in the system, and not a standard way they would have to learn. Even if this was mainly an illusion, the pilot of an ERP project often used to rely on it to soften the resistances of future users. Of course, SaaS solutions also offer a certain degree of parameterization. But not to any comparable extent, at least if you want to stick with the benefits of standardization.
Thus, accompany the transition to such Cloud solutions by a true managerial work — in Peter Drucker’s sense of the word “management” —, a change facilitation process, in order to deal softly with the unavoidable oppositions, is quite mandatory. But there again it has very positive side effects for the company having chosen a SaaS option. Such a project, by really involving the different layers of management, is a unique occasion to push the company forward. It parallels quality improvement processes. It offers the opportunity to question the habits of the company, and keep only the best ones, which probably are the very ones the software editor has taken into account in developing his solution. In short, it is an opportunity to help the company, and not only its information system, to adapt to the new economical environment, and to catch the chance of preparing itself to ”end ahead of the pack” this period of mutation that we mentioned earlier!
We must take change by the hand or rest assuredly, change will take us by the throat
A very demanding situation for the managers
Clearly, such a situation can become demanding for the managers, particularly if they are more used to give orders than to listen or negotiate. “Take change by the hand”, as Churchill said, doesn’t consist in forcing its way inside the heads and the habits of the staff! On the contrary, it means at the same time take by the hand the change and those who will endure the change or help it succeed well beyond the initial expectations, depending on the very quality of this “hand-taking“.
The tight group of those in charge of steering the project, usually very close to the top management, are obviously the first to be implied in this process of taking the change by the hand. They must at the same time control the relationship with their subcontractor responsible for the deployment and parameterization of the solution and to handle the questions, fears or impatience of the future users. Even if they master the different skills necessary to lead their company’s usual projects, they will have to learn a new set of language, to get progressively used to share the control of their system, since it is a SaaS solution (remember, they call it sharing-economy!), to discover a situation where they are no more “chiefs”, but simultaneously clients and providers — their subcontractor cannot do anything right without their input, and so, they are “provider of their provider”. The respect of the schedule for intermediate deliveries will be a key-factor for the success of the whole project, since this will reassure both the executive suite and the future users, and put the project in a virtuous circle. For that purpose, methodological approaches such as “Six hats for creative thinking”, “the lateral project strategy”, “principled negotiation” could be true weapons at the service of Good: the ultimate success of a project bound to increase significantly their company’s strength.
But an ERP project is not limited to this small circle of pilots and key-users only. It implies the whole management, because, here again paralleling a Quality process, the information system deals with all the departments and persons of the company, or almost. It could be wise then to involve the middle-managers very early in the project, in order to enable them to be true ambassadors of the project among their teams. Those managers will, in their turn, have to develop their skills, to be good listeners, able to understand the criteria and the interests at stake behind the fears or oppositions, and to enter a true win-win approach.
In short, the fact that a Cloud-SaaS ERP solution is more agile and cheaper than an equivalent on-premises option must not lead to underestimate the mandatory managerial work around such a project.
But once more, the positive side effects are quite significant! By demanding such a posture of mediator from the middle-managers as well as from the top-managers, it offers the opportunity of re-assessing the most beneficial dimension of their authority: the one that consists in enabling and empowering, not forbidding or restraining. Thus, the project could become a true federating lever in your company.
In an economic situation where we tend to lack good news, where “frugality” often means ”restriction”, wouldn’t it be unwise to skip such an opportunity?
Writing a paper on this topic was suggested to us by our partner Ubister. We've been working with them for about a year, and understood that the situations that their customers have to deal with remind, if needed, that implementing an ERP solution, even "on the cloud", is a strong act of management.
Ubister provides systems integration and consulting for installation of corporate management software in Saas mode (Software as a Service). Their customers are generally medium-size companies, fast growing, multi-sites, and turned toward the international: this means companies which are fast-moving, open-minded, but also more or less complex. In this type of businesses, management is a matter of men and women, not of procedures. Exactly the kind of businesses that, at J2-Reliance, we love to accompany, coach and train. The kind of businesses too that, according to our customers, benefits the most of a good managerial coaching, for their development.