With the announcement that Epicor is moving to cloud only in the shockingly near future, it feels like time to detail what “cloud” actually means, practically.

Software-as-a-Service, SaaS, or “cloud”, has revolutionised a lot of things, because it has real advantages.

Crucially, though, a lot of those advantages are advantages for the maker of the software. And they are so compelling for them that it can overwhelm all other considerations. It becomes difficult for the software company to see how it looks from the buyer and user’s perspectives. Even when they do see it, there’s a strong incentive to present cloud as universally beneficial.

I am not anti-cloud. Looking back over my recent projects, three out of five are on cloud versions of Epicor Kinetic, and they’re successes.

What frustrates me is the way the trade-offs of cloud are downplayed or avoided entirely.

Why you might choose SaaS, cloud software

At the “choice” stage, cloud is fast and low-cost. You can sign up, switch on, and it all works.

You don’t have to buy equipment, you don’t need the deep IT knowledge to ensure components work together, the Finance department doesn’t need to sign off on capital expenditure for the equipment and licensing. You agree to an ongoing cost, which usually fits business cashflow and accounting nicely and is seen as less of a risk.

Then, in business as usual, you have outsourced the “difficult part” of running complex software, which saves on in-house skills. No database management and maintenance. No OS patching. No need to plan for capacity and performance and monitor servers.

For non-critical or replaceable systems, this is almost all upside. Particularly if the software is plug-and-play, to be used exactly as provided. You can be paying for the value you get every month and see the value, and any time the value isn’t there you can stop paying.

Then, the vendor will tell you, there’s immediate access to new features and improvements and a guarantee that you’re not falling behind or missing out. Which always sounds good.

The myth of inevitability

Wrap that all together, and cloud will probably be presented to you as unavoidable. It’s such an obvious choice that you’d be foolish to do anything else, even if anything else remains possible. It’s what all the cool kids do, what the big hitters in your domain are doing, a sign that you’re taking advantage of everything the future offers.

And MUCH easier to sign off, to boot.

But technologies aren’t inevitable. Business models can come close to it, by making others unviable. When a choice is presented as the only one, it’s usually because examining the alternatives is awkward for the seller.

What’s in it for them?

“So, Mr Software Vendor, what first attracted you to the model that allows you complete control and ensures your customers pay you regularly?”

You don’t need to be cynical to see the attractions of the cloud model for vendors. For a start, ARR (annual recurring revenue) is what ends up driving a lot of things, and without subscriptions the only way of achieving that is to constantly come up with new customers or additional things existing customers will pay more for. It’s a lot easier and finance-market-friendly to forgo the lump payments in exchange for a commitment to keep paying.

And it streamlines the vendor’s operations, too. There’s no need to manage an endless proliferation of platforms and versions and maintain back-compatibility, support staff who know all of it, and deal with endless varieties of problems. Centralise it, and it all becomes simpler. And when something needs to change you can change it and know it’s changed everywhere.

Look at this from the most convenient angle, and it’s not difficult to convince yourself that these are all advantages for the end user as well. The financial health and capacity to manage must feed through, mustn’t it? Isn’t everybody better off?

The catches

Nothing is ever all “win”. Everything is a trade-off, and it’s up to us to judge whether it’s a trade-off worth making.

So, most obviously, not having to pay out huge sums for perpetual licenses is balanced by the commitment to keep paying indefinitely. In most cases, that will end up being more, just spread out. That’s not a bad thing if the value is there, but it is a trade-off.

We’ll skip over the fact that once you’re committed, the price can be raised and you may feel you have no option but to go along with it.

More subtly, the promise of always being up-to-date can be a treadmill with no off-switch. New features you didn’t ask for, changes you don’t need, the removal of features you depend on. Even features that are useful may arrive at less convenient times, requiring you to adjust on someone else’s schedule.

Because that is the central trade-off with outsourcing the software provision. You give up control along with the worry and hassle. Which may be a big win, but isn’t always.

Most obviously, there are some companies where control is vital. Sometimes there are requirements around data, sometimes around processing, or vital services that cannot be allowed to go down under any circumstances. SLAs are fine for most, and the likelihood is that problems will happen less often with core provision under the care of central experts, but the trade-off is that when there is a problem, there’s nothing you can do about it. And for some that will never be acceptable.

Even for the average organisation, it turns out to be difficult to foresee the extent to which internal staff will be required to do the bidding of the vendor. It will become a department’s job to do what the vendor says, under threat of all essential services failing, at regular intervals. Not for all software, but to the extent that the organisation and the software have moulded around each other, that job will increase. An IT department may be all ready to deploy something game-changing and have to hold off because an upgrade is hitting, even though it has nothing in it that’s needed.

Which is another subtle pressure on the organisation to do less with the software than it’s capable of, and was promised when signing up. The upgrade cycle will make unique features that give your organisation an edge feel more of an overhead, because they’ll need testing and validating so often. That can be a good thing, forcing them to be justified, but it’s another loss of control.

And ERP in particular …

ERP software, in my opinion, is one of the classes where these trade-offs need more examination, in fact more examination than they usually get.

Because the big benefits of the cloud approach depend on consistency and standardisation, while ERP is explicitly sold on the basis of being able to mould to particular needs. And trust is more crucial than in almost any other class of software, because problems usually lead to organisations being unable to function meaningfully at all.

That puts ERP firmly outside the class of “just pay and use it” software that cloud is so good for. Unless you know you can work that way.

Right now it also feels maybe too pointed to say that trust also extends to being able to plan for the future knowing what a commitment to a software platform is going to involve.

Where does this leave users of Epicor software?

There are many happy users of cloud Kinetic that I know of. It’s a good product, and with eyes open to all these things can be a winner.

Anyone looking for an ERP can consider, say, Epicor Kinetic as a cloud product and may well evaluate the trade-offs here and find it makes sense for them. And go into using it with open eyes, maximising the undoubted benefits and with plans for managing the price paid for them. (Usually the underestimated one, in my experience, is dedicated in-house knowledge and time, which isn’t much diminished in cloud Kinetic use).

If anyone knows that the trade-offs are too negative, then better know as early as possible so other plans can be made.

The main reason I’m negative about cloud, as I say, is simply that the incentive is too great to pretend the trade-offs don’t exist, that’s all. And I’m always disappointed when they have been avoided rather than presented and faced, so this is my contribution.

Meanwhile, anyone using Epicor and now having to make plans for some kind of transition … here we are. I shouldn’t need to say here that Meta eight Ltd can help, should I?