Rapid cloud adoption marks end of the beginning

THE CLOUD has won.   So declares Netsuite president and CEO Zach Nelson as he recalls how, some 15 years ago, people were just talking about the cloud and questioning whether it would happen.

Today, cloud computing has become a fact of life to many.

“Where we are today, I believe, is at the end of the beginning,” he told the 7,200 or so attendees to the 2015 SuiteWorld in San Jose, California in May.

These days, software and application developers no longer ask themselves whether to jump into the cloud, but rather what to do next to meet the demands of the market and create as many game-changing products as possible and as fast as the continuously advancing technology will allow.

The pace of technology disruption, whether in business or social space, has never been as fast as what the world is seeing now.

It is going even faster and only the cloud or cloud-based solutions can enable any enterprise to immediately adapt to the disruption and also be disruptive.

The cloud allows small companies with very little resources access to these technology advancements and it is also the cloud that provides the big ones the means to be as agile as their smaller peers in adapting to changes.

Thus, in this day and age, if a company has not taken advantage of the cloud, chances are it will lag behind its peers, said Nelson.

The reality, however, is that despite the obvious opportunities and possibilities the cloud is offering, the rate of migration varies in different parts of the world. Those in the first world, particularly the United States, are well way ahead, while others are still struggling to get there.

Asia, Philippines

In Asia, for instance,   Japan, New Zealand, Australia, Singapore and South Korea were tagged as the leaders in cloud readiness by the Asia Cloud Computing Association (ACCA), based on its 2014 Cloud Readiness Index.

These countries, according to the ACCA report, retained or even extended their lead by fostering innovation and fresh approaches toward next generation technology and cloud computing services.

The Philippines, in the same ACCA Cloud Readiness Index, is categorized as a “middle band economy and dedicated improver,” along with Taiwan, Malaysia and Thailand. The Philippines, according to ACCA, leads in terms of freedom of information access while Taiwan is ahead in international connectivity and business sophistication; Thailand, in green policy and power grids, while Malaysia scored in the low data center risk index.

James Dantow, Netsuite senior vice president for worldwide support and general manager for the Philippines, said the ACCA assessment was fair, adding that the Philippines was even ahead of some of its neighbors, like Thailand and Vietnam.

“I definitely think, you’ve got a stronger chance here.” This, he explains, is due to the continuing infusion of investments by telecommunication firms Smart Communication and Globe Telecom in infrastructure, primarily to support the business process outsourcing sector.

The good news is that the resistance to the idea of the cloud in favor of the old on-premise platform is not that strong anymore and an increasing number of companies have opened up to the idea, some even embracing the cloud now.

The present rate of cloud migration in the Philippines, according to Dantow, has improved a lot compared to eight years ago when Netsuite, a leading provider of cloud-based financial and omnichannel commerce software suites, established its office in Manila.

Cloud computing awareness

“Eight years ago, awareness of cloud computing here was zero. Our first year was definitely difficult. We did a lot of explanation about the cloud and Netsuite’s offerings, the benefits and return on investments and others,” he said. It took Netsuite a year before it got its first major client in the country, ABS-CBN Corp., which was followed by Jollibee Food Corp.

“Today, if a software company does not have a cloud offering, that company is already considered a suspect in terms of its future. It means that if you don’t have a cloud offering, most customers would think you wouldn’t survive, say, in the next five years,” said Dantow.

The same is true with manufacturers or service providers, big or small.

“Food companies/distributors, pharmaceutical firms, consumables manufacturers, construction companies … if they do not make the move to the cloud to be more efficient, they run the risk of losing to competitors who will see and use this [cloud] advantage against them,” he explained.

Netsuite SVP James Dantow

Dantow is convinced Philippine business is now more open and ready to use cloud solutions, given the strong growth the economy has been posting in the past several years and the prohibitive cost of setting up on-premise systems. Timing is another factor that made Dantow believe that the pace of cloud migration in the country, particularly in the business sector, will accelerate.

“Many local companies are or will soon be refreshing (updating/upgrading) their technologies and there are those that will replace some of their built-in systems with cloud-based solutions,” he said.

These companies are not likely to jump into the cloud in one fell swoop, he said. Many will phase in cloud solutions as they retire their existing systems, one after the other.

That was how sugar refining firm Roxas Holdings Inc. migrated to the cloud, Dantow said. Roxas Holdings now runs on Netsuite OneWorld and it is depending on this suite of cloud solutions to prepare itself for the challenges posed by the upcoming tariff reduction on sugar under the Asean Free Trade Agreement’s Common Effective Preferential Treatment and the establishment of the Asean Economic Community.

Scalability, flexibility

The scalability of the Netsuite platform allows companies to start with a single cloud business solution and continue adding to build a complete cloud-based system over time. Netsuite, itself, built its entire suite of business solutions this way. It started disrupting business applications by introducing what now seems to be a simple   web-based accounting software which, over the years, was expanded into an entire suite of applications composed of enterprise resource planning (ERP), customer relationship management (CRM), e-commerce and professional service automation.

Netsuite’s customer base in the Philippines is composed of companies from different industries and sectors, including broadcasting, agriculture, food and restaurants, manufacturing, business process outsourcing, pharmaceuticals and non-government organizations. It hopes to add government agencies and public sector enterprises on its list soon.

The banking and finance sectors pose a big challenge to cloud solutions providers.

A Bangko Sentral ng Pilipinas rule does not prohibit banks from adapting cloud-based solutions but it specifies the types of data the lenders can and cannot move to the cloud. Specifically, banks are not allowed to move to the cloud information pertaining to their depositors and clients, and this rule also applies to financing companies. This means banks and financing companies can move to the cloud only general information such as financial performance.

Omnichannel

Netsuite’s latest focus is on providing customers a unified shopping experience through its omnichannel e-commerce platform. This refers primarily to services provided to customers—in-store or online— wherever the customers are, anytime they want the products or services and with whatever gadgets they are using.

Launched in May during the 2015 SuiteWorld, Suitecommerce inStore integrates comprehensive omnichannel capabilities into an enterprise-class, mobile-first, point-of-sale (POS) solution and seamlessly unifies the online and in-store customer journey. It brings the full omnichannel commerce experience into the retail storefront to provide consumers with the highest level of customer service, product knowledge and personalized engagement that today’s shoppers expect from retailers.

It offers an intuitive and efficient full-featured point of sale (POS) that meets any special needs of the retailer. Its built-in robust functionality allows sales associates to conduct sales transactions, secure payments, print customer receipts, review customer information, perform item lookups from the sales floor, determine product quantity on hand and locate out-of-stock items or suggest alternative items to “save the sale.”

The system keeps a 360-degree customer profile. It provides a timeline display of purchases, returns and support requests regardless of what channel a shopper is in.

The omnichannel order management feature gives retailers real-time visibility into all inventory held across the company, allowing customers to purchase products regardless of location in a single transaction.

Built directly on SuiteCommerce platform, the system provides customers with a continuous buying journey. SuiteCommerce Instore allows customers to buy from an e-commerce shopping cart or a wish list in the store, push in-store items to a shopping cart or wish list and automatically add purchases to their My Account order history online.

Dantow, however, said the omnichannel e-commerce concept was still in its infancy stage in the Philippines. While such a system can be a big hit to the Philippine market—given the Filipino consumers’ rising purchasing power, the availability of gadgets to use, a good delivery and distribution system and the traffic problems that discourage trips to the malls—an immediate shift to the omnichannel solution seems easier said than done due mainly to credit card issues, he said.

He said the credit card infrastructure in the country needed to be improved. Security issues discourage people from using plastic money, especially online. Also, credit card penetration in the country has yet to reach desired levels.

“But this (omnichannel e-commerce) is a trend that is going to happen here in the next few years. Retail outlets will have to start going there to be more cost efficient. The amount of money they spend on commercial locations, for their store fronts is extremely high especially in the Makati and BGC (Bonifacio Global City) areas,” Dantow said.

The market will eventually demand such a service and that will drive the change.

“Even the country’s biggest retailers will have to bring their business online or they will find their customers buying online from stores in, say, Singapore,” he added, “I think companies such as SM and Rustans will realize that their customers want it and if they don’t provide this service, smaller and more flexible companies or even a company abroad will start selling more shoes in the Philippines than SM.”

“Eventually, you are going to wake up one morning and, while you are having your first coffee for the day, you can do your shopping at home and have your goods delivered to you in a few days,” Dantow said.