High-speed deployment and low up-front costs of cloud computing are stimulating widespread adoption. Worldwide spending on public IT cloud services will reach £30 billion this year and is set to more than double to reach £67 billion by 2017, according to a study by IDC.
Spearheading take-up are applications in the hottest areas of IT: mobile, social and big data, the research firm says. But the rapid growth of cloud computing could make an age-old IT problem considerably more complex.
Enterprises have long struggled to get their business applications to share data in a meaningful way. Enterprise resource planning (ERP), finance and sales applications must share information to give the business a single view of the customers and help organisations act more efficiently and intelligently.
Doug Clark, IBM's cloud leader for the UK and Ireland, says enterprises have spent a huge amount of time integrating back office applications such as ERP and finance. ‘A lot of IT budget is swallowed in maintaining and integrating these, just to keeping the business going,’ he says.
Cloud makes a mess of application integration
At the same time, business managers might be buying cloud applications in an ad-hoc fashion, and without the IT department knowing. Although this might help them respond quickly to business demands with little up-front cost, eventually the companies will want to integrate these cloud applications with on-premise systems such as ERP or finance, Clark says.
Meanwhile, the arrival of off-the-shelf cloud packages is changing how users see integration projects. Because cloud applications are quick to buy and deploy, users expect IT departments to be able to integrate them with back-office functions rapidly as well, says Gartner vice president and research fellow, Massimo Pezzini.
‘One of the reasons people move to the cloud is because they expect applications to be deployed faster, therefore they expect the integration to happen faster,’ he adds.
Although there are specific appliances and software to help these integration projects, the business cannot avoid working through data governance and linking business processes, he says. ‘There are technical means but you need additional methodological approaches.’
In creating the right approach, IT departments need to decide if they want to try to control cloud adoption so the business can only use applications it can easily integrate. An alternative approach is to anticipate employees will use cloud applications with or without IT's consent, and make IT more agile in its response, Pezzini says.
Cloud: part of the solution
Integrating applications is seen as second only to security in the greatest challenges cloud presents to IT departments, says Laurent Lachal, senior analyst with Ovum. The way cloud has been consumed by departments has led to a lot of siloed applications, but IT departments could use cloud computing to their advantage when trying to get to grips with new applications coming from the business, he says.
IT departments can exploit technology known as integration platform-as-a-service (IPaaS), which can be hosted in the cloud.
‘Should I stick to the integration technology I have, or adapt it so that I can cater for new applications as they spring up behind my back? Some companies will try to stop this happening but the most intelligent will try to adapt,’ Lachal says.
Alastair McAulay, IT expert, PA Consulting Group says companies should move to a more proactive response to cloud computing, guiding business users to the cloud platforms that will be easier to integrate, and selecting an in-house architecture which will be easier to integrate with the cloud.
‘You need to work out the platform which you are going to use [alongside cloud], which is the most compatible and puts you in a good position to deal with cloud,’ he says.
‘You’re moving away from the mindset of denial, to trying to intercept to stop bad things happening, to constructively saying, “well actually the cloud is an excellent option, and is going to be cost effective, so we recommend it”.’
This does not mean IT departments should give up the goal of creating strong governance for application integration. Cloud technologies will not remove this role, but they will mean departments need to better understand what is happening in business units, McAulay says.
‘The business says, “we need to do this now” and IT talks about data architecture. IT is not feeling the pain of the business,’ he says. ‘IT needs to understand what is happening. You are in a situation where the finance department is asking why there are so many credit card payments for Amazon Web Services, and IT does not know about it.’
As part of the solution, IT will need to engage the business to make decisions about processes and data governance in order to integrate cloud application. For this to work, IT needs a strong working relationship with the business, McAulay says.
‘A lot of the time people in IT pull the wool over their eyes in terms of how engaged they are with the business. They end up talking to someone who is technically in the business, but is IT-interested anyway. It becomes a conversation between two geeks. It is not the same as talking to someone in the front line.’
Back to the future
While cloud adoption is a burgeoning trend, many of the technologies which underpin it were in fact part of the solution for application integration more than 10 years ago, says Ovum's Lachal. Ideas such as service-oriented architecture and technologies like simple object access protocol are part of philosophy which sees application development and integration as part of the same process.
‘This is a long term trend, and not just linked with cloud computing,’ Lachal says. ‘When we introduced web services [and related technologies] and saw the emergence of enterprise applications integration, we were all saying, “now development and integration are two sides of the same coin”.
‘It has become real over the past 15 years, and cloud computing is part of that. What is emerging is a concept of IT as a cloud broker. Someone who integrates and aggregates services or technology, both internal and external, and offers them to the business on a self service basis. That is where IT is moving towards.’
In a recent report, Gartner Predicts 2013: Application Integration, the research firm forecasts that by 2016, half of new integration projects will involve on-premises applications, e-commerce trading partners and cloud services.
While there are technologies available to make cloud applications share data with enterprise systems, companies must find the right balance between controlling the adoption of cloud computing and adapting to it. In doing so they may find the IT department itself changing.
Cloud gives PowerPerfector a 360 view of its customers
PowerPerfector is a medium-sized manufacturer and distributor of voltage optimisation technology, which regulates and controls the energy supplied from the grid to reduce electricity bills and protect vital electrical infrastructure. With a turnover of around £20 million, it counts supermarket giant Tesco among its customers.
As a fast-growing business, cloud computing was a natural fit, but integration was still a consideration, says Michael Bishop, head of information systems.
About four and half years ago, the company began using Salesforce.com for customer relationship management, but found integrating it with existing application was an issue.
Since then it has recreated these systems in the cloud, using declarative coding available in point-and-click tools in the Saleforce.com platform. These applications addressed logistics, management of third-party contractors, surveys, installation, ordering stock, and post-installation analysis of savings.
In 2010, the business moved away from its old finance system, Mind Your Own Business (MYOB), which was becoming unsupported.
‘Because it is just like Salesforce, and on the same platform, the integration is seamless,’ Bishop says.
By integrating cloud business applications, sales people, project managers, engineers and finance teams all have the same view of the customer, he adds.
‘In terms of how we deal with customers, we have everything about them, in one place, that everybody can access. That means we have a customer-centric approach, which is very beneficial.’
Easynet uses Cast Iron to connect cloud to the ground
Easynet Connect provides network and hosting services to 3,700 SMEs in the UK and creates a turnover of around £25 million a year. It moved to the cloud to support CRM with Saleforce.com, but also used the platform to integrate CRM with its backend service-management system.
With the help of cloud service provider Cloudsense, the company built an application it calls Decorum which integrates sales, customers support and inventory. It means the employees see the same customer data no matter where they are in the business, says Mike Ayres, manager of Easynet Connect.
‘A lot of organisations don't have that end-to-end view of the customer because they can't integrate their products and services,’ he says.
The Decorum system also connects with in-house applications which manage inventory by using an integration appliance from IBM called Cast Iron. This tool can accept data straight from a database, a web service or API, and produce an equivalent web service to connect and integrate the data with a cloud-based application.
Ayres says the business is now able to manage more customers with fewer people. ‘We have gained efficiencies through integration of the system and the single joined-up view of the customer.’
>See also: Tech chiefs predict the future of the cloud
Xchanging links cloud HR to in-house finance
Xchanging, a global firm which provides business process, procurement and technology outsourcing, decided in the middle of last year it would move to a single HR platform. This was designed to support a global HR service centre and allow employee and management to perform day-to-day HR tasks themselves.
In the third quarter of 2012, the company selected Workday to provide a single HR application hosted in the cloud.
With more than 8,000 employees in 10 countries providing services to customers in 48 countries, the company achieved annual revenue of £668 million in 2012. The move to cloud computing was designed to simplify its disparate global HR services, but did come with its own complexity.
This means working through organisational as well as technical problems, says Stephen Neil, Xchanging’s global HR transformation programme manager.
‘Integrating to Oracle finance, one of the issues we're working through is who owns the cost centre structure and aligning that employee data so that we can recognise that Workday is the master data for employees,’ he says.
The solution was to tag individuals in Workday to reflect the cost structure in the financial management software.
Will Fensom, Xchanging group chief architect, says the move to the cloud in HR is creating a 'cloud first' approach, reviewing the strategy for other business applications. ‘We're not necessarily replacing finance this year, but it is one of the things we're evaluating. HR has become a driver to see whether we can adopt a cloud-based platform for [the finance] function.’
Workday is set to support Xchanging's HR function worldwide from July next year, but has already proved a success in providing HR services in the UK, Neil says. ‘We are not on the full release and we are not using self-service, but we stood it up in just over three months.’
Using a cloud-based system, which allows employee and manager self-service, will lower costs and free-up HR manager from day-to-day transactional task, allowing them to focus on higher value strategic work, Neil says.