2 n d A c t I n n o v a t i o n s I n c . 6 0 6 -‐ 1 8 8 8 B r u n s w i c k S t . H a l i f a x , N S C a n a d a B 3 J 3 J 8 Peter G. Hickey This white paper provides insight on why Cloud enterprise software continues to gain popularity and why organizations are adopting Cloud-‐based ECM solutions. April 2012 ECM and the Cloud
2nd Act Innovations Inc. 2012 ECM and the Cloud 2 Table of Contents Executive Summary 3 Continued Increased Interest in Cloud-‐Based SaaS 4 What is Cloud/SaaS ECM? 4 Why Organizations are Moving to the Cloud 5 Hybrid Solutions 5 Benefits of Cloud-‐Based ECM Implementations 6 Total Cost of Ownership (TCO) 6 Quickly Scale Internal Capabilities 6 Pay as You Go 6 Reduce Cost and Effort of Upgrades 6 Accessibility 6 Conclusion 6
2nd Act Innovations Inc. 2012 ECM and the Cloud 3 Executive Summary Enterprise Content Management (ECM) has become a significant market as organizations grapple with the massive amounts of information they come into contact with on a daily basis. Cloud-‐based ECM will represent a significant portion of this growth as it offers significant savings and comparable features to on-‐premise ECM applications. Cloud computing applications typically requires companies to pay a monthly fee, allowing businesses to better manage their cash flow and reduce capital investment in IT resources and infrastructure. This whitepaper provides insight on why Cloud enterprise software continues to gain popularity and why organizations are adopting Cloud-‐based ECM solutions.
2nd Act Innovations Inc. 2012 ECM and the Cloud 4 Continued Increased Interest in Cloud-‐Based SaaS Growth in software delivered over the Cloud continues to increase in a dramatic fashion. In 2009 the Software as a Service (SaaS) market had worldwide revenues of $13.1 billion. IDC forecasts the market to reach $40.5 billion by 2014, representing a compound annual growth rate of 25.3%.i This trend clearly demonstrates a growing acceptance of the cloud by customers but also signals a significant change in software delivery by vendors. IDC expects that less than 15% of net-‐new software firms coming to market will ship a packaged product (on CD). By 2014, approximately 34% of all new business software purchases will be consumed via Software as a Service (SaaS), and SaaS delivery will constitute about 14.5% of worldwide software spending across all primary markets.ii Robert Mahowald, vice president of SaaS and cloud services research at IDC put it this way: “Enterprise IT plans are rapidly shifting to accommodate the growing choices for sourcing most or all IT software functions,” he says. This includes everything “from business applications to software development and testing, to service and desktop management, as SaaS services become available.” iii Gartner states that the ECM market grew by 4.8% in 2009 despite global economic conditions with global ECM revenues of US$ 3.5 billion in 2009.iv The estimates of ECM’s market size for 2014 range from $5.7 to 10.5 billion. According to AIIM, improving efficiency is the key driver for continued ECM investment across all sizes of organization.v What is Cloud/SaaS ECM? Cloud computing delivers a new method for organizations to use applications. Historically, an organization would buy servers and install them within their premises. Individual licenses of software used across the organization such as ECM, enterprise resource planning (ERP) or customer resource management (CRM) would be purchased and installed on the servers. Cloud computing eliminates the need to purchase servers and buy individual licenses. With Cloud computing, organizations access applications technologies and computing power on-‐demand from internet “clouds” that provide the server, software and data center. The Cloud is enabled by virtualization technology that consolidates hardware to improve efficiency and makes it easier and less expensive to deliver on-‐demand computing resources. SaaS is a delivery model that allows a business to access applications on a Cloud infrastructure.vi
2nd Act Innovations Inc. 2012 ECM and the Cloud 5 Why Organizations are Moving to the Cloud Simply put, organizations (particularly small to medium enterprises -‐ SMEs), are attracted to the Cloud because it delivers business efficiencies that directly translate into cost savings. An uncertain economy, increased competition, higher customer expectations and a shortage in affordable experienced employees to build and maintain IT infrastructure are all key drivers. In addition to cost savings, Cloud/SaaS computing’s recent growth is also a result of a decrease in objections that supported on-‐premise computing. These objections include: • The misperception that on-‐premise solutions offer greater functionality. Today most software applications offer identical functionality whether it’s via the cloud or on-‐premise. • Security has been the major concern; however cloud providers have responded by providing offerings that are both highly reliable, secure, and widely-‐accepted in the market. An example of this is the U.S. governments Central Intelligence Agency which is one of its most secretive operations, and also its strongest advocate of cloud computing. The CIA has adopted cloud computing in a big way, and the agency believes that the cloud approach makes IT environments more flexible and secure.vii Hybrid Solutions Oris4 is one of several products to be offered as a hybrid solution. This has been done as a result of client expectations of flexibility. While most clients opt for a cloud-‐based solution, some still request their ECM be deployed as an on-‐premise solution. Typically on-‐premise solutions are used by organizations with an existing infrastructure, security protocols requiring on-‐premise storage of all information, or a combination of both. Alternatively, an organization is likely to prefer a Cloud implementation if it: • Wishes to avoid an ongoing investment in infrastructure • Wishes to closely match monthly IT expenses with the variable conditions of the business • Prefers making a single monthly payment • Wants to be up and running quickly with their selected solution
2nd Act Innovations Inc. 2012 ECM and the Cloud 6 Benefits of Cloud-‐Based ECM Implementations Using a Cloud/SaaS-‐based ECM implementation has a number of benefits for companies regardless of their size. Total Cost of Ownership (TCO) The total cost of ownership for any SaaS system can provide a significant reduction in costs, both in the short and long term. Many Cloud applications and services share resources and costs among a large pool of users. Quickly Scale Internal Capabilities As companies grow and add people they can typically add more users very quickly to a cloud application. Because the application is Cloud-‐based, remote offices do not require their own separate infrastructure. Instead of spending money and time building an infrastructure, organizations can, in most cases, deploy the application immediately. Pay as You Go Enterprise software typically requires a capital investment. On the other hand, Cloud-‐based applications allow companies to pay as they go. Some companies offer monthly or yearly plans and many have the ability to export your information to a competing product should your organization decide to stop using a particular ECM. Reduce Cost and Effort of Upgrades In a Forrester survey, 68% of respondents selected an SaaS implementation because they wanted to reduce cost and effort of upgrades.viii This is possible because the application provider typically performs all maintenance and upgrades of the application. Accessibility Cloud-‐based solutions allow users to access their applications from any place at any time without the need for their organization to install a virtual private network (VPN). ix Conclusion Organizations can benefit from lower overall costs, scalability, ease of deployment and less ongoing maintenance by using a Cloud application. While there are instances in which an on-‐premise solution may be appropriate for an organization, reasons against using cloud-‐based applications such as security concerns or lack of functionality continue to be proven false.
2nd Act Innovations Inc. 2012 ECM and the Cloud 7 i “IDC: One Third of All Software Delivered Via cloud in 2014” http://www.zdnet.com/blog/service-‐oriented/idc-‐very-‐soon-‐a-‐third-‐of-‐all-‐software-‐delivered-‐via-‐cloud/5474 ii ibid iii ibid iv “CMSWire: ECM Market Fragments, While IBM, Microsoft, EMC Lead Gartner’s Magic Quadrant” http://www.cmswire.com/cms/enterprise-‐cms/ecm-‐market-‐fragments-‐while-‐ibm-‐microsoft-‐emc-‐lead-‐gartners-‐magic-‐quadrant-‐009309.php v “AIIM, State of the ECM Industry 2011”, 2011 vi “Sage: ERP and the Cloud: What You Need to Know”, July 11, 2011 vii “Computerworld: CIA endorses cloud computing, but only internally”, October 7, 2009. http://www.computerworld.com/s/article/9139016/CIA_endorses_cloud_computing_but_only_internally viii “Forrester: State of ERP in 2011”, 2011 http://www.forrester.com/The+State+Of+ERP+In+2011+Customers+Have+More+Options+In+Spite+Of+Market+Consolidation/fulltext/-‐/E-‐RES55901 viii “Sage: ERP and the Cloud: What You Need to Know”, July 11, 2011