Customer Relationship Management Heads to the Cloud (Page 400)

1. What types of companies are most likely to adopt cloud-based CRM software services? Why? What companies might not be well-suited for this type of software?

• Types of companies which are most likely to adopt cloud-based ERP and CRM software services will be startups, companies that want to reduce internal IT costs and companies that want to reduce their capital costs and companies that are struggling with a lot of data.

• That is because it enables them to achieve operational excellence and customer intimacy. It releases them from infrastructural maintenance and its respective fixed and operational costs. It provides them with operational ubiquity and allows them to easily subscribe and cancel the subscription without losing large upfront software licenses and hardware investments.

• Companies which might not be well-suited for this type of software are those companies from small to middle-sized companies. These companies have senior finance professionals and they concern about security and the lack of information and understanding about cloud technology which are the main reasons for organizations are staying away from cloud ERP. Large firms in fast paced evolving industries are also not suited for ERP and CRM cloud-based software. This is due to the need for flexibility. Firstly, firms require not only deep-seated technology changes but also fundamental changes in the way business operates. Installations of the new software require employees to change their working methods. Employees must learn how to perform a new set of work activities. This requires new organizational learning and provides training for them. Companies that are unable to accept the changes and also provides training for their employees will be not be suggested to use this type of software.

2. What are the advantages and disadvantages of using cloud-based enterprise applications?

Advantages:

(1) Cost EfficiencyThis is the biggest advantage of cloud computing, achieved by the elimination of the investment in stand-alone software or servers. By leveraging cloud’s capabilities, companies can save on licensing fees and at the same time eliminate overhead charges such as the cost of data storage, software updates, management.

(2) Backup and RecoveryThe process of backing up and recovering data is simplified since those now reside on the cloud and not on a physical device. The various cloud providers offer reliable and flexible backup/recovery solutions. In some cases, the cloud itself is used solely as a backup repository of the data located in local computers.

(3) Increased Storage CapacityThe cloud can accommodate and store much more data compared to a personal computer and in a way offers almost unlimited storage capacity. It eliminates worries about running out of storage space and at the same time It spares businesses the need to upgrade their computer hardware, further reducing the overall IT cost.

Disadvantages:

(1) Security and privacy in the CloudSecurity is the biggest concern when it comes to cloud computing. By leveraging a remote cloud based infrastructure, a company essentially gives away private data and information, things that might be sensitive and confidential. It is then up to the cloud service provider to manage, protect and retain them, thus the provider’s reliability is very critical. 

(2) Increased VulnerabilityRelated to the security and privacy mentioned before, note that cloud based solutions are exposed on the public internet and are thus a more vulnerable target for malicious users and hackers. Nothing on the Internet is completely secure and even the biggest players suffer from serious attacks and security breaches. Due to the interdependency of the system, If there is a compromise one one of the machines that data is stored, there might be a leakage of personal information to the world.

(3) Limited control and flexibilitySince the applications and services run on remote, third party virtual environments, companies and users have limited control over the function and execution of the hardware and software. Moreover, since remote software is being used, it usually lacks the features of an application running locally.

3. What management, organization, and technology issues should be addressed in deciding whether to use a conventional CRM system versus a cloud-based version?

Management:
（1）Risk Assessment: it is hard to assess the risk when the company does not own the infrastructure that supports the ERP and CRM systems.
（2）Dependability: companies using cloud based CRM and ERP solutions might become dependent of their providers since they do not store the data, and might not be able to easily export it to another system if required.

Organization:
Human Resource Optimization: while traditional ERP and CRM solutions demand for technical staff, cloud based solutions allows optimizing HR to focus on operation and increase efficiency.

Technology:
（1）Security:  using the web as infrastructure, cloud based ERP and CRM solutions suffer have difficulties in offering security comfort to companies that own sensible data.
（2）Availability: due to the web failure tolerant model, cloud based ERP and CRM solutions suffer from availability issues that might cause business operation failures.