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There is hardly any doubt that going forward, only cloud-based deliveries apply to the IT industry. The trend, which has been strong for several years, is just as strong going forward. The vendors who have not yet started their technology shift to a cloud-based architecture have a tough uphill climb ahead.
The arguments for a cloud-based infrastructure are many, with flexibility often highlighted as one of the most important. This means that it gives the customer the flexibility to relatively quickly be able to change and develop their IT systems without locking their systems in concrete. Given that the technical development today is moving at a very high speed, the demands on customers to ensure mobility and flexibility to be able to change and adapt their systems according to the organisation's changing needs are increasing.
But is it true that cloud creates flexibility for the customer? For example, the terms for signing a cloud-based subscription can be mentioned. It is now standard among all vendors that it is easy for the customer to add new and extra licences at any time. Normally, one "click" is enough to acquire more licences and immediately distribute these licences to new users.
However, if we reverse the role and the customer instead wants to deactivate a number of licences, it suddenly is no longer as easy. When we inventoried the licence rules for more than 50 different vendors of ERP systems, it turned out that the subscription is tied for a period of 12-36 months. This varies slightly from vendor to vendor. Thus, the customer does not have the flexibility to deactivate licences with immediate effect but can only increase the number of licences with immediate effect.
What is the logic behind this distorted flexibility? What motivates that the customer can increase the number of licences immediately but is forced to commit to a subscription of several years before these licences can be terminated? It is hardly a demanding process for the vendor to close the licences.
The argument put forward by some vendors points to the investments the vendor makes to maintain a modern environment with high performance, and where these continuous investments require long subscriptions in return to keep the monthly fee low.
This reasoning obviously does not hold. It is instead about creating security for the investors. By forcing customers into long subscriptions, security is created for investors regarding long-term and secure earnings. If customers had the opportunity to quickly terminate their subscriptions, uncertainty would be created about the company's earnings for the coming months and years. And in theory, the vendor's earnings could actually cease entirely in a very short time if all customers cancelled their subscriptions. And this without the vendor having any means to protect itself against the lost revenue.
Regardless of the arguments the vendors use to justify their long binding periods, the model remains one that provides flexibility for the vendor but not for the customer. It is an extremely distorted balance between the parties. And credit and praise to the few vendors that stand out from the crowd and dare to offer the customer full flexibility to sign new or terminate existing licences with immediate effect.
