Himanshu Palsule: Until the entire ecosystem was ready, those people weren’t as ready as the person who did CRM on Salesforce 10 years ago. I think the key drivers that are tipping this over are largely that our industry goes through a chain cycle for ERP. It used to be five to seven years. Now it’s moved to 7 to 10 years. Every 7 to 10 years, the systems are no longer supported. Y2K saw a big change in the ERP. Companies are now looking out for newer systems and they’re driven by cost of ownership. The concerns around security have largely been alleviated. They’re looking for an instant on.
If I’m a marble distributor and my marble comes to me from Brazil, I want my Brazil operation up and running on ERP within three days. I think the need to change ERP to drive costs down and allow remote access because of globalization were some of the key drivers that are now making even these vertical companies start to seriously look at the cloud.
Sramana Mitra: If you look at the gaps in the vertical cloud trend, what verticals have not been moved to the cloud yet?
Himanshu Palsule: Retail has moved to the cloud earlier. They started getting into e-commerce and shopping cart. We saw that vertical moving.
Sramana Mitra: Then that has become multi-channel commerce.
Himanshu Palsule: Exactly. The whole omni-channel has set in. You have this whole idea of third-party logistics where my cargo arrives at Long Beach and then I have to distribute it across the entire country, and I have truck drivers who need access to the data I have that need to be updated on inventory. The distributors then became candidates for the cloud. They were the next to go. The manufacturers held on for a while until manufacturing started to get outsourced.
There’s a whole industry trend called convergence that we talked about a classic manufacturer in Detroit who would do just make parts for General Motors. Now he has his parts manufacturing done in China. He has started looking at distribution services and repair preventive work. There’s a blurring or conversion of verticals going on. These events, I think, make people look out for a cloud-based solution. That’s the panacea for them to be able to keep costs down and yet work in a global ecosystem. Those are some of the drivers.
We have plenty of customers who look forward to our annual release. They have their request. They come to our customer advisory board meeting. There was one who told me that he doesn’t think he’ll ever move to the cloud because his operation in Ohio is so different. We’ll always have the laggards in complex verticals.