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Cloud computing may be just the technological "holy grail" jan/san distributors have been searching for to alleviate the hassles that come with owning servers and software and freeing them up to do what they do best, move product.
The essence of cloud computing is accessing applications on service provider servers via the Internet — i.e. the "cloud" — rather than purchasing and installing the same applications on a distributor's own server. Access to these applications typically involves a subscription fee based on the number of users.
"The concept behind cloud computing is an organization does not have to buy a lot of computer equipment that they have to maintain, put software on and have to keep up to date, which requires them to have technical people on staff," says Steve Epner, founder and president of Brown Smith Wallace Consulting Group, based in St. Louis.
According to Bob Hestenes, president of Step 1 Business Products, based in Newbury Park, Calif., jan/san distributors should be concerned about the most effective way to procure, stock and deliver items to their clients rather than spending time worrying about technology. Since applications do not sit on local servers, but on the Internet, maintenance and troubleshooting falls on the shoulders of the service provider rather than the distributor.
"You don't have to own your own servers and your own software," Hestenes says. "You can pay for it as you go and use the resources that are out there."
One of the major benefits of cloud computing is the elimination of issues that arise with maintaining and troubleshooting software and servers typically found in traditional systems, according to Howard Coleman, a principal at MCA Associates, Derby, Conn.
"A company can focus on its business and have less worry about upgrading and maintaining the system," he says. "Upgrades are potentially a lot easier to get as opposed to your typical vendor downloading some modifications to your server, which often require more than what they tell you it's going to require."
Ideal For Ancillary Solutions
Distributors should categorize each software solution they need to operate their enterprise as being either core or ancillary. Core solutions are considered to be billing and accounting systems and applications, while e-mail and faxing applications fall under the category of ancillary solutions.
Although distributors may not be comfortable moving to a cloud for their core applications, Hestenes says cloud computing can be ideal for ancillary applications. But cloud computing is not an all or nothing proposition. Distributors can have some of their applications on a cloud and other applications served in-house, according to Hestenes.
"The absolute beauty of it is that these cloud applications are emerging for a host of utilities," Hestenes says. "It's sort of like the hundreds of thousands of utilities for an iPhone. None of them are knocking at the core of your business. It's just a bunch of stuff that is nice to have as cloud applications."
Once a cloud computing solution is implemented, access to applications typically can be accomplished through a browser. This may even include the jan/san distributor's ERP application, according to Chris Raffo, president of Universal Business Systems, in Somerville, N.J., which has several clients using cloud computing.
"Almost all of our customers utilize cloud computing for our sales force automation and online ordering solutions," Raffo says. "Our customers have been very successful with it and really enjoy running (our software) on the iPad given all they need is a browser to run."
Jan/san distributors that Sandy Hook, Conn.-based DDI System serves also have begun to embrace the cloud computing concept, which has resulted in more effective business transactions, according to Rayna Naclerio, marketing manager.
"DDI's users are thriving with the ability to enter an order while at a customer location, look up product alternatives, and communicate any past due or outstanding invoices," says Naclerio. "Collection times have shortened, sales have increased and improved customer service are just a few of the cloud computing benefits distributors are realizing."
Slow Movers On New Technology
Although there are a wide-range of benefits that come along with cloud computing, Coleman points out that jan/san distributors are typically slow moving when it comes to new technology.
"There's a certain brick-and-mortar mentality that we have to have our software resident in our place of business," Coleman says. "The historical approach to software, whether it is a full blown ERP system or whether it's some very specific application is resident on an in-house server."
Cloud computing probably makes sense for small jan/san enterprises with about a half a dozen users since it allows for access to applications that the enterprise could not otherwise afford., says Coleman. The per-user, per-month charges, however, may make cloud computing cost prohibitive as the number of users increases, says Epner.
"When you start to get up to 40, 50 or 60 users, it quickly becomes more expensive than doing it yourself," he adds. "The vendors have not yet figured out how to price this properly. The ceiling changes based on the vendor you are dealing with and the kind of services you are buying."
For cloud computing to be cost effective, jan/san distributors should analyze how it fits into roles and processes throughout the business. For instance, cloud computing may be an ideal solution for the distributor that has a remote sales staff that needs access to a customer relationship application.
"It may be less expensive for the customer because of the costs associated with support of the in-house server, but the vendor needs to make sure that what they are charging is enough to handle their additional ongoing support," Raffo says. "Someone has to pay the ISP's or server farms that manage the servers. At this point those fees are still pretty high, but I feel as this becomes more accepted and more competition is brought on, those fees will be reduced."
Cloud computing may make less sense for those individuals who do not need remote access to applications such as personnel in accounts receivable or in the warehouse. A jan/san distributor that has a remote location with one or two terminals may find cloud computing a useful way to allow access to applications that otherwise are too expensive to install at that location.
When enterprises are contracting for cloud computing services, Epner recommends that they make sure they retain ownership of the data that is generated using the applications. Enterprises should also require a guarantee that all of their data is secured and, if a catastrophe occurs, they are able to retrieve their data.
"They shouldn't have to pay extra to get it back and be held hostage," Epner says. "It's just some good, basic contracting. Contracting is very critical and contracting correctly is very critical."
If a distributor is interested in cloud computing, but does not have the in-house expertise to vet vendors and implement a solution, it can hire a consultant. A contract with a consultant should include language that they have no interest in the vendor contract and will receive no fees or payments from the vendor.
Security: Always A Priority
Jan/san distributors should be aware of security issues that may come along with cloud computing. Distributors should prioritize their security concerns when considering cloud computing, according to Sandy Milne, co-founder of Softrend Systems, headquartered in North Vancouver, British Columbia, Canada.
"You have to base your security on the value of the information that you are wanting to have secure," Milne says. "If it's your financial data, you want to have a very high security level. If it is online catalogs of inventory then the security level is not as critical."
But, according to Epner, security should be a concern even without cloud computing.
With all of its advantages, the concept of cloud computing is in its infancy as it pertains to jan/san distributors, according to Milne.
"Cloud computing is coming," he says. "As more vendors of applications write their applications to be on a secured server some place and allow companies access to the server and use that application to the benefit of their jan/san business, that is where there are going to be increased benefits over the course of time."
Brendan O'Brien is a freelance writer based in Greenfield, Wis.