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Thought Leaders In Cloud Computing: Fred van den Bosch, CEO Of Librato (Part 3)

Posted on Thursday, Aug 5th 2010

By guest author Shaloo Shalini

SM: In the case of pay-per-user model, let’s say you have bought a service for 500 users but only 250 of them are actually using the system. The rest of the accounts are sitting idle. Do you think vendors that charge under such a model will be under pressure to reimburse?

FB: Not necessarily. Sales force automation is a common example of such model in practice. If I have a service for a number of sales people in my organization, I am going to base some amount to give them access to sales force automation service. The fact that they are not continuously online and using the service is not necessarily giving me grief, in the sense that I say, well, I am paying for the user. In such a model you are paying for somebody to have access to the feature. Alternatively, you could go for the model where you pay for the number of concurrent users. There too you can run into situations where service is denied because you are exceeding the number of concurrent users. I think even the most viable cost models could cause people to say, well, now I can’t log on and because there are too many users already logged on. That is also not desirable. I don’t necessarily think that the per-user pricing model is problematic as long as the price is perceived to be reasonable for the service that is being offered.

SM: How do you think enterprises view integration in the cloud? Is it a deterrent, or is it something that is looking easier to do inside the cloud than outside of it?

FB: We are a relatively small company and I have not dealt personally with the kind of integration issues that people in large organizations usually deal with. I would expect that the larger ERP vendors will start providing services that big organizations could customize and work with. Even today, vendors such as Oracle offer certain amount of services through their on-demand capability For the larger organizations that have specific needs in the area of integration, it is probably going to take a fair amount of time to address integration in the cloud. They will have the same set of challenges to address in terms of application integration.

SM: In the mid-sized companies, if you are doing sales force automation from one vendor and you have analytics from another vendor and ERP from a third vendor – there is some amount of integration requirement, right?

FB: Well, I think the amount of integration that is required is probably a function of the size of the company. We are a small operation we don’t have any integration requirements as of now. We use Salesforce, and we have our own little ERP package. I mean that we can be perfectly happy without doing company-specific integration.

SM: Are you saying that integration requirements are minimal for small or mid-sized companies?

FB: Yes. I can’t speak for large companies, but certainly for smaller and mid-size companies. Their requirements are more modest. It is always a trade- off. You can get better integration, or more integration that is more specialized for your company, but it’s going to cost you more. Just like in the past, before there were ERP services, there was ERP packaged software. People would write their own software and then the question was, Now are we going to move to packaged software? How can we do what we really want to do? Well, you can’t. You compromise. But you become a lot more efficient when you change from one model to another. I think some of that is likely to happen in the cloud as well. People will still want the efficiency gains or the economic gains by moving to cloud computing. They may realize that they don’t need all that integration that they have today and maybe can live with something that is closer to what the cloud vendors provide.

SM: How much cost savings do you foresee with cloud adoption?

FB: I think that’s impossible to give a generic answer to. It’s going to depend heavily on which business functions the clouds are are actually applied to within the specific organization.

[Note to readers: You may want to read about cloud computing ROI models and key performance indicators (KPIs) here.]

This segment is part 3 in the series : Thought Leaders In Cloud Computing: Fred van den Bosch, CEO Of Librato
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