Following on from the release of research by HCL Technologies indicating that globally, large enterprises plan to migrate 46 per cent of their SAP environments to the cloud within the next two years, Freya Purnell spoke to HCL Axon general manager – Australia, Scott Davidson, about whether Australian organisations are quite so bullish on cloud, or are taking a more cautious approach.
Freya Purnell: We saw some bold statistics in HCL’s research – what are you seeing amongst Australian businesses in terms of plans to move to the cloud?
Scott Davidson: There is a lot of strong interest that has been generated over the last 12 months. Pretty much every conversation we are having with any CIO at the moment is about how they can move to a subscription-based model. It’s still fairly embryonic, and there aren’t a lot of proof points out there for some of the bigger ERP systems like SAP. For more niche components or applications like Salesforce or SuccessFactors, it’s very proven and the take-up is obviously significant. But in terms of actually going that extra step in SAP, there is a lot of interest but not necessarily a lot of movement in that direction.
FP: What’s the motivation for that level of interest?
SD: I think the actual software itself has developed to a point where the standard processes and useability of the cloud solution is such that organisations are saying, “Why wouldn’t we use that?”, and also, “Why are we so different that we can’t use that?” I think there is also a lot of pressure to take investments in IT functions from capital expenditure to operational expenditure. Those two forces more than anything are moving in the direction of cloud.
FP: When it comes to the factors inhibiting moves to the cloud, HCL’s research showed that integration challenges, security and a lack of budget were key. Is that what you hear from Australian customers as well?
SD: Absolutely. Depending on the sector, a lot of organisations still haven’t really got their head around what the cloud means in terms of security for them, so they’ve still got some big question marks about that. I think there is, frankly, some cynicism about quite how much work is needed on the integration side, so they are definitely wary of that. Then obviously they need to have a benefits case, and for some organisations, it’s very straightforward, but for others, it’s not.
FP: What has been the response from Australian customers to SAP’s cloud extension policy?
SD: I am not quite sure the customers fully understand it yet – they haven’t really got their head around what that means, and what their options are. Our organisation globally does a lot of work with SAP in the managed cloud as a service space, which is about being able to take SAP into a private cloud environment, and that particularly gets a lot of resonance with customers at the moment. There is a lot of interest, but it’s still a period of evaluation in many cases.
FP: Have any of your customers made any significant moves to go down the cloud path?
SD: The major customer that’s moving in that direction, where we are leading the HCM transformation, is Woolworths. They have elected to go with the full cloud suite with SAP, so the cloud payroll as well as SuccessFactors. SingTel Optus has also embraced the full cloud solution in the HCM space as well.
FP: What is it about the HCM area that lends itself well to the cloud?
SD: I think the key driver for me with SuccessFactors in particular is that we have finally got to the point where the software and the user experience of it is finally as good as some of the consumer applications we deal with, so it actually encourages and engages employees, rather than turns them off. We have all dealt with some pretty rudimentary performance and goals applications in our time, whether it be spreadsheets or badly put together applications, and it’s not an enjoyable practice to get involved with. When customers bring on SuccessFactors Performance and Goals, the adoption has just been incredible – the likes of which I have never seen in the whole time I have been in the business. So I do think that the software has caught up with what people really want.
There is also [a recognition] out there in the marketplace around how important some of these more strategic talent management and HR processes are, and so it lends itself to that.
With the payroll sector, it is also quite an easy place to separate the system out from the core business operations, so you are not endangering getting your goods out to market, if you have your performance and goals or your succession planning software sitting outside in the cloud and there happens to be a problem that you can’t control.
FP: Any other interesting developments you are seeing in your customer base?
SD: There has been such a fundamental shift in the last six to 12 months in conversations with customers opening up around how they can move their whole IT operations to a service model. That conversation wasn’t even on the table two years ago, and now that is literally happening every week or every couple of weeks. It certainly feels there is a huge groundswell in this direction from our customers.
At the same time, people are starting to feel that they should start embracing more of a standard approach to how they use these big core business processes and that cloud can offer them that, and then they can start investing money more in innovation technologies like mobility and digitisation. That shift that has been a bit theoretical up until now looks and feels like it’s starting to happen.