There’s nothing particularly exotic about cloud-based applications and this is also true of master data management solutions in the cloud. The growth of a multitude of cloud services, cloud data, and cloud usage continues unabated. As long as good internet connectivity infrastructure is available there will be continued support for cloud-based systems.
More and more organizations are adopting cloud computing infrastructure to afford greater business agility and get access to the best available technology of the time. The adoption of cloud infrastructure not only holds the promise of improved business efficiency but also the benefits of improved economic value and ROI.
In most cases, cloud solutions are of good architecture, unencumbered by legacy technology problems and present themselves as having a lower cost of ownership.
Businesses have been slow on the uptake of cloud-based MDM though Gartner estimates that only 6% of all the companies that they talk to have cloud-based MDM solutions in use.
Cloud-based Customer MDM presents itself in the shape of software as a service (SaaS). This means that organizations do not incur the cost of the hardware and software associated with it and have no application or hardware maintenance to pay. The organization and financial cost of provisioning on-premise and captive hardware is sometimes prohibitive enough for organizations to effectively ditch capital expenditure on a system and instead invest capital budgets elsewhere in the business and instead choose a pay-as-you-go model which SaaS will support.
Avoiding betting on the farm
SaaS offers subscription-based licensing as a model based on cloud provisioning of solutions to help organizations flatten IT spending and push the running costs for solutions to an operational expenditure model. One of the big benefits then, of SaaS, is low or no capital outlays accompanied by increased operational agility.
As demands for a SaaS solution grow, the technology allows almost limitless expansion in response. For organizations just starting on a customer MDM journey, this can be reassuring as they evolve a better understanding of what they ultimately need without having to bet the proverbial farm on the project. If after the subscription period matures, the business doesn’t see value in continuing, then the business can pivot and choose another direction.
Choosing a cloud solution, not only provides these CAPEX vs OPEX benefits and lower risk, they also support the business in being able to focus its energies on its core strength and actually identify cross-organizational synergies and competencies, particular i the business is transnational or global in nature. Many organizations prefer investment and focus on their core business activities and services and view process-bound systems like MDM as not being a distraction. Though this view can often be challenged as a narrow one, it does give the business the ability to put more effort into what they want to achieve and concentrate less energy on how the technology works. An outcomes-based approach to systems, solutions and customer master data management, in particular, is actually a sound approach and one that every organization should consider as a priority.
The cases for and against the cloud
One of the reasons Gartner’s observation of 6% of adoption may be so low, could be tied to the fact that there remains some anxiety around the security of cloud-based systems and a reluctance to store sensitive proprietary data outside the company’s firewall.
This argument though is not a balanced one. Just as businesses choose to run payroll to bank accounts rather than cash in pay packets and just as we store the majority of our fiat currency in bank accounts rather than tucked under our mattress or in a private safe at home, cloud-based systems are often even more secure than those deployed on-premise.
Platforms like the Amazon Web Services (AWS), Microsoft Azure and the Google Cloud Platform are deployed with the best resources available and a high degree of automation and monitoring. Security is a top priority for these infrastructure providers in order to provide top-tier companies and organizations across the globe, with the right level of secure and robust computing to meet their diverse needs. Data hacking is regrettably a continuous threat but since the mid-2010s on-premise system attacks due to inadequate software maintenance and control regimens have highly outnumbered the incidents of cloud attacks. The cloud attacks themselves have had nothing to do with cloud security vulnerabilities.
Almost all the most recent data breaches have been the result of human mistakes which neither on-premise nor cloud infrastructure protects one from. In the assessment of a cloud provider though, there should be a degree of diligence undertaken to ensure that the cloud provider solution is certified secure and data protection compliant. SaaS providers take security very seriously and are willing to go the extra mile to ensure customer data protection.
On-premise deployment of MDM requires more than just an operational budget since there is generally an expectation that the system will be in use for several years and needs to be depreciated over time. Customer MDM solutions like the Pretectum CMDM elastically scale according to processing, storage and software usage and licensing. Additional resources in the SaaS application are easily provisioned.
Numerous customer relationship management (CRM), Enterprise resource planning (ERP), customer data platforms (CDP) and marketing automation (MA) solutions are cloud-based. Most notably Salesforce CRM and NetSuite ERP are exclusively available as cloud solutions.
Despite the need for a customer master data management solution to connect to many other systems using point-to-point integration, this in itself should be viewed as hugely advantageous as an opportunity for the organization to think seriously about centralized integration – a governed data integration layer for cloud integrations. Using a piecemeal approach involving handcrafted integrations is good for organizations of all sizes, particularly those with a complex operational system landscape. The challenges with integrations are a deployment agnostic one and something that one needs to deal with, for both on-premise, cloud and hybrid environments.
Cloud-based SaaS applications like the Pretectum CMDM deliver new functionality on an almost continuous basis and for major changes, you can decide when to upgrade and avail your business of new functionality. Upgrades are seamless and generally invisible to clients until they are actually completed. Legacy versions are typically only supported for a limited time after the general availability of new functionality and enhancements to reduce the costs of operations support. Your organization should therefore be prepared to move with upgrades as they become available to ensure that you are making use of the newest version of your customer MDM. Updated technology or newer infrastructure is available for use via the cloud in a completely transparent way.
In considering a cloud provider, remember that not all cloud providers offer cloud hosting outside the US. This is important when considering Customer MDM, particularly in the context of Europe’s General Data Protection Regulation (GDPR). Also, consider that US safe harbour agreements are problematic with the storage and transferral of EU citizen data outside Europe. If you are using on-premise systems that contain Personally Identifiable Information (PII) data then you may need to always store that data on-premise in the country of origin, this may represent an IT burden to your organization.
Country-specific data residency requirements may influence your selection choices. Pretectum CMDM makes use of the EU-US privacy shield framework.
A holistic assessment of the drivers and inhibitors for your customer MDM will help you to decide if a cloud-based customer master data management system like Pretectum CMDM meets your organization’s long-term business goals and objectives.
Defaulting to on-premise is not necessarily low-risk and certainly not necessarily more cost-effective. Consider Gartner’s Five factors for planning Cloud-Enables MDM report or reach out to us and find out more about the Pretectum CMDM advantage.