Saturday, 31 October 2015

The Elephant In the Room – On Premise is Dead! - Part I



Whilst I don’t like to use my blog to focus directly on Certus-Oracle related business, but for those that follow me like all good TV series indulge me and consider this a “Two Part Special”. We are, in my opinion, at an inflection point regarding technology and I feel compelled to comment.

The post will, however, give you some insight into the evolution of Certus and also the “why and what” we did at the start of our journey into the Oracle Cloud. Most importantly you will see that timing is absolutely everything in business, yes cash is still king, but the ability to see the opportunity and move fast is what gives you the competitive edge. This is something we still very much leverage today.

2011 – Turn Back Time
In early 2011 we had our “epiphany” when we saw with absolute clarity the acceleration of enterprise Cloud based solutions, specifically the emergence of Oracle’s Cloud strategy, that would contribute to creating a paradigm shift both in how organisations would consume back office IT services but also how these would be implemented in the future. This provided a once in a lifetime business opportunity and our rationale was simple:
  • The Overall Need - the reality that businesses would always need ERP systems for back office operational efficiencies but also the need for constant innovation to stay competitive moving forward
  • History Would Repeat Itself - dot.com era of 1995-1999 and the opportunity first movers could achieve in creating a new market
  • New Consumer Consumption Models - Salesforce.com and Apple Inc. operating models in terms of access to consumer applications with a view this would be replicated in the future for business back office applications
  • The Evolution of Social Media – specifically Facebook and its move from a single pillar application to a cloud development platform  
  • Access to New Markets – Removal of a barrier to entry for midsize organisations. Cloud technology would become accessible because its total cost of ownership would be significantly lower

…and naturally knowing that if Larry Ellison was going to steer the entire Oracle machine into the Cloud that he would not settle for anything less than being Number 1 in the market. Oracle were late to the Cloud, so they would need to play catch-up and the chances of starting a business that would be solely dedicated to implementing,  supporting and transforming organisations through Oracle Cloud actually failing in principle would be slim - well it certainly felt that way after the third or fourth large glass of red wine!

Betting on Red – The Economics of the Cloud - Supply & Demand
So we went “all in” and bet on Red. For the record our decision period from start to finish was around 4 weeks! We didn’t spend months analysing the market, we backed our gut feel and executed.

Oracle in our view would need a new type of partner as the economics of the Cloud are vastly different from that of legacy on-premise systems, especially for the mid-market. Cloud is a volume play, with rapid but phased implementations, and the need to establish an ongoing long term relationship with the client (the “customer journey”). In the world of SaaS it’s the second “S” for “Service” that is the key watch word.

As a consequence the operational economics of a consultancy practice would need to change. Overheads and costs would need to be kept extremely low, and whilst competitive pricing would be a factor, selling on “value” would be where money could be made. (please remember Certus, just like Oracle is a business!).

Value in the context of a Cloud Consultancy business operation being a combination of retained product knowledge, implementation capability and most importantly delivering excellent customer service over the entire period of the contract term (this is so much more than just providing support!) – this however is all fundamentally table stakes. If you can’t do this, then you can’t play.  

Anyone can sell on price, selling on value takes effort and time and you need a killer proposition. (more about that for another day). Whilst the challenges would be many, it could really be summarised by:

  1. Could we drive consumer demand and “make the market” early?
  2. Could we positively disrupt the existing Oracle Partner ecosystem (supply side) and create a niche and a different type of partner operation to service the need?

Speed would be a critical and we would need to move very very fast with ourselves banking that everyone else (our future competitors) would not see the opportunity or would just stall, wait or pay lip service and not be pro-active in embracing Oracle Cloud.

To do this, we decided to ditch on-premise! Our message would be clear, Certus would only exclusively do Oracle Cloud - no-more legacy upgrades specifically Oracle E-Business Suite R11 to R12 and we would just take you straight to the Cloud. In our eyes the old and tired on-premise systems were dead – keep in view this is still 2011 here!

Our strategy from a supply side was equally simple – we needed first mover advantages. Be the first Oracle partner in the UK to access the new Oracle Cloud product line early and acquire the necessary knowledge; be first to gain recognition from Oracle around our specialist skills; find our first customer gaining reference-ability (continued reference-ability is everything); recruit an executive team that could bring the necessary skills to the table; sell on value and most importantly do all of this before our initial investment capital ran out!

Equally to build long term company value, we would build a consultancy operation around employees, retaining knowledge and not a traditional contractor operation. This was key to our success, but also where the investment needed to be made, not just once but continually as Oracle innovation was coming very fast. You can’t provide world class customer focused consultancy on Oracle Cloud if you don’t know the product.

To create a new market you need both sides of the equation you can’t have a supply side without consumer demand! So to attract customers you need a compelling event so not only would we have to come up with a different service proposition around moving back office on- premise systems to the Cloud but we also really needed the old on-premise market to die, and hopefully die fast.

However the world doesn’t move as fast as we would like and organisations that had invested millions on their on-premise systems were in no rush to replace them regardless how great the new technology was and truly the positive transformation effect it could have on a business. Also some organisations just don’t want to be transformed and corporates take a life time in making decisions. In-fact some take so long or just physically can’t make a decision that they actually go out of business – how mad is that! (and yes I have seen this happen on more than one occasion, and it’s very difficult to have any empathy what so ever).

So in our attempt to take over the world (or at least the UK!) and positively disrupt the Oracle Partner landscape with Oracle Cloud back in 2011-2012 we overlooked the speed of consumer demand and adoption. The market wasn’t mature enough and to be fair, neither was the product set. However with all things someone is brave, has a vision and steps up to the plate and becomes an early adopter – in our case it was Lavendon Group – our first Cloud customer.

Part II to follow…