Sramana Mitra: The 33% that you have moved to the cloud already, what is the organizing principle of that? What have you chosen to move as the early steps? What have you chosen not to move yet?
Lee Congdon: A strong partnership with Salesforce.com; we’ve been using their technology for more than five years for sales automation. Based on that partnership and that success, we added a successful support portal for our partners, the channels we use to deliver our products outside of the direct salesforce. We also added customer ticketing. When customers come to us with a problem, we use the Salesforce solution to capture that data and analyze it and respond internally. We also have a great partnership with Akamai. We use Akamai as a service provider for delivering our bits, for accelerating our websites – our Web properties. When our customers send us dumps and other information that we use to solve their problems, we use Akamai to queue that on the inbound side. Those are our primary investments today, in terms of key applications. We also have recruiting applications, performance management applications, questionnaires and other applications that we use on an ad-hoc basis throughout the organization. The ones I mentioned are the primary drivers of that 33% figure.
SM: Okay. And what have you chosen not to move, yet?
LC: I wouldn’t say there’s anything that we’ve ruled out completely. But we’re in the process of an ERP system upgrade at this point, and we’ve decided to do the technical upgrade and, more important, the business process changes in finance, operations and our human resources – we call it the people organization – rather than attempt to push that into a cloud environment; however, I fully expect that over time, either by moving that infrastructure out to the cloud or by picking software as a service providers in that space, that those applications will be candidates. The timing isn’t good now because of the upgrade project.
I expect that after we complete the ERP upgrade, one of the first candidates we’ll look at for moving to a cloud-based solution, most likely a software as a service solution, would in fact be our HR applications. Because we do business in so many different locations – the ones I mentioned earlier – and because we have tied into local systems for payroll, for tax, for equity management and so on, it’s non-trivial for us to re-architect and re-craft the interfaces to those external providers. The timing isn’t great right now. We have no philosophical reason for not doing it. That is our direction, but today, we aren’t, yet, ready to start that process.
SM: Okay. Right now, you said you are at about 33% cloud adoption in your IT organization. If you were to look out five years from now, what would be the percentage of cloud adoption?
LC: I’m anticipating in the 80%, maybe 80% plus range. I would expect that many of the services that we provide in house today, the bulk of our ERP capabilities, with the potential exception of unique aspects of our subscription management that are specific to our business. Perhaps some elements of our business intelligence, although it’s increasingly starting to look as if we can move those services – at least we’ll be in a hybrid mode for those – certainly our collaboration and social business tools. I would expect all we would be able to move in that time frame.
SM: Okay. There are a lot of things I’d like to get your perspective on, business intelligence being one of them. I would also like to get your perspective on collaboration. But before we go there, let me close off the percentage questions. Let’s say in five years, you have moved 80% of the workflows into the cloud, what do you think is not likely to move?
LC: There’s nothing that I would automatically exclude. We are somewhat unusual in that our intellectual property, as you know, is open source software. So, I don’t have any trade secrets, for example, that I’m protecting or would be reluctant to put in a cloud environment. We can come back and talk about information security ramifications shortly.
I would expect that there would be certain services that won’t yet be in a position to migrate into the cloud, won’t be meeting our needs, or because we’re an operating system and middleware provider, there may be some applications that we choose to continue to operate internally because we believe pretty passionately that we should be using our own products. We had a management off site for the IT leadership last week, and one of the last things that I assumed we would move is our J Boss enterprise service bus that we use to connect all the pieces, the sales automation system, the order processing system and so on. In fact, our technical leadership said, “We would really like to start piloting moving some of that ESB technology into the cloud, because we think that there’s promise in terms of resiliency and also capability. In some cases, we’re connecting cloud services that are already outside the enterprise. Why wouldn’t we have the bus there as well?”
Had we had this conversation 10 days ago, that would have been one of the things that I would have said is the last to move. It’s probably still true about parts of that connectivity technology, but increasingly, we don’t see any limits to what we can move into the cloud. For us as a mid-sized business, the advantages of scale, being able to buy, for example, content distribution as a service rather than have to build out that information architecture ourselves are considerable. In some cases, we couldn’t do it ourselves. We simply don’t have the resources.