If you’re debating whether cloud vs on premise software is right for your business, then before concluding that this argument is won or lost based on the costs alone, you should also consider the pace at which the world is changing around us from a consumer perspective. It’s frightening but exciting at the same time.
If you consider an independent high street shop, the principle hasn’t changed for many hundreds (thousands, or is that pushing it?) of years. A retailer buys stock from a wholesaler, puts it on the shelf, customer walks in and maybe tries the item on, pays and walks out. The retailer buys some more stock, and the process continues. Maybe a big calculator style cash register helped 30 or so years ago, but the value the retailer had and their ability to succeed was based upon things like strong relationships with suppliers, exclusivity on products, capital reserves, perhaps supply chain advantages, in-store industry and product expertise, prime location, premises etc.
Transforming the user experience
Over the last few years, the connected world has transformed the user experience of shopping, to the point where we can buy anything, from anywhere, at anytime. We can choose where we want to collect the item or where to have it delivered, potentially for free, even free returns. Oh, and if I buy something online, it’s far more convenient for me to drop it back at a store rather than arranging a collection.
We’re in a world where cashiers in stores are being replaced with automated technology that bypasses scanning of goods, where your goods may be delivered by drone in the near future, where we can purchase and receive in the same day, and robots (well, Artifical Intelligence software really) can predict our buying behaviour and personalize offers for each shopper without any human interaction. It’s happening fast, and what might be considered the future, quickly becomes mainstream, before becoming the norm and the expected, and then superseded by something even more convenient. And this cycle is happening faster than ever.
This change is driven by expectations of the consumer without a shadow of a doubt thanks to the always on society, and this requires a huge level of agility from retailers in order to keep pace. In a world that wasn’t changing very fast pre internet, and where the innovation could be measured in 10-20 year cycles, retailers would invest heavily in retail management systems that would run off of a cupboard full of IT hardware, with flashing lights, and a team of people somewhere trying to keep the thing alive. Where upgrades would happen every 5 years, but that was fine because the world hadn’t changed and the upgrade was really just to support the latest hardware and operating systems.
Staying ahead of the game
In a world that changes every 6-12 months at most, you’ve got to run fast just to stand still. 6 months to install and customize some software for your business? Too late, the world changed. 3 months to build an integration to the latest sales platform or to modify your link because Amazon has changed the way it operates? Too late, the world changed and your competitors are serving your customers. You get an opportunity to start importing products from the Far East, but it’s going to take a developer 6 months to change your processes? Too late, the world changed and the manufacturer found someone else.
There are many debates that happen all over the social web about cloud vs on premise systems, (and by the way no one is writing content about on premise applications) but speed, pace, innovation win hands down everytime. Sure, cost is a factor, assuming you’re experienced enough to compare the true total cost of ownership then you’ll recognise some savings, but innovation wins hands down because if you can’t keep pace with the world around you, there’s always a new entrant to the market that doesn’t have a cupboard full of IT hardware and require a room full of people to keep it running. No one is safe from this digitisation, no matter how big a brand or organisation. More than 50% of the fortune 500 from 2000 no longer exist, many of which were caught off guard dismissing new business models as a fad.
Breaking down barriers
Think of any barrier to starting up a business, and I guarantee you that there’s a service or company that have removed it, probably for not much money, certainly without a large capital outlay, and can probably be turned around within a matter of minutes or hours. Suppliers can be sourced globally thanks to platforms like Alibaba, funding can be raised easily thanks to crowdsourcing platforms, incredible looking websites can be spun up without the need for any skills or experience in coding, and customers can be acquired quickly via platforms like Amazon and eBay.
So how do retailers succeed in this fast changing world, if the things that used to be an advantage, can be sourced or bought cheapily by anyone? They succeed through being able to adapt and give the consumer what they want, when they want it, however they want to buy it, and at an attractive price...and all of this requires constant change. Darwin famously said that it is not the strongest of the species that survives, it is the one that is most adaptable to change.
Why cloud software gives you an advantage
The retailers that are succeeding are innovating, they’re keeping pace with what their consumers want, and in a modern world this just can’t be done effectively with a cupboard full of IT hardware, particularly when the certainty of the future is no longer guaranteed. Value needs to be bled from every single dollar or pound of investment, and poured into enhancing the customer experience, not running the costly back office.
Cloud gives retailers that advantage, despite some the dinosaurs from the last century clinging on, which is why they all offer “hosting” services which if you've taken anything away from this article you'll know that this does nothing to meet the high expectations, low loyalty and constantly changing desires of the modern consumer. So when considering cloud vs on premise software, consider the needs of your customers first ahead of your own business requirements, because this will give you the answer you’re looking for, as this shouldn’t be a technical debate or one based on cost alone.