Outsourcing: Arul Murugan, Founder and CEO of Enrich IT (Part 3)

SM: Yes. So, you are managing the private cloud supply solutions for these enterprises?

AM: Exactly. Now our focus is on private cloud to large clients that are already using Oracle EBS. We also provide a public cloud model. But we are seeing more success in private cloud since that fits into the IT policies of mid to large enterprises. Moreover, it provides them true integration to their on-premise ERP systems where the public cloud has a lot of challenges. Also by providing private cloud, we are able to scale and increase the footprint to other applications. For example, with one of our clients we started with providing e-sourcing and e-procurement solutions on the private cloud. At a later stage, when the client decides that he needs to have a good MDM solution for products and suppliers first, before rolling out the e-procurement solution across the globe, we are able to put Oracle MDM into our private cloud. That gives a huge value proposition to the client, since we can deploy much faster in our cloud than their on-premise system, and it accelerates their time to value.

SM: Right. I also write a series called Thought Leaders in Cloud Computing where a lot of the top CIOs of the industry have been interviewed, from Intel to IBM to VMware.

AM: I have read a few of those. Particularly, I found the interview you had with [Diane Bryant] on cloud very interesting and thought provoking. I have an interesting thought process that I want to share it with you. You have companies like VMware that have a virtualization product, which is a cloud enabler. Or you could be a strong technology player like Intel or Cisco, which has a lot of play in the cloud. After that, if you look at the actual cloud software or application provider, there are thousands of small scale SaaS providers and only a few of them are going to  be successful in the long run. Because the market is so huge, at some point in time, major ERP players like Oracle or SAP will beat the other small scale cloud application providers. What I consciously decided is that I want to be in the cloud application provider space, but provide them using one of the tier one ERPs. It doesn’t matter whether it’s SAP or Oracle. Since we have gained deep experience in Oracle, we went with Oracle. If somebody goes with SAP, it’s a similar model.

SM: What I was saying is that in the Thought Leaders in Cloud Computing series, we have had these discussions about what’s happening in major and large enterprises around private cloud versus public cloud. There is clearly one camp that is coming out of IBM that is working with the very large enterprises, and they are trying to provide a full architecture for a private cloud stack. So, I am very aware from this Thought Leaders in Cloud Computing series that, in the large enterprises, there is a big interest in creating private cloud solutions for major functional areas. I think what you were saying, the business that you are doing around Oracle ERP, especially focused on supply chain in the private cloud, is actually another data point in that general trend that I am seeing of large enterprises moving to the private cloud.

Okay, let us go to the next piece of your story. This is a good trend. If you were to look at  it as you are focusing on delivering Oracle ERP, the supply chain side of it, for large enterprises in a private cloud setting, who do you see as competition, specifically, in that area?

AM: Within the procurement space, I see competition from best of the breed of solution providers like Ariba, Emptoris etc. But they are into public cloud, and most of the customers are using them as stand alone and not integrated into their ERP systems. The latest Oracle R12 advanced procurement product is comparable to the best of the breed products, and now that we offer it in a private cloud model with the same user interface as their on-premise Oracle ERP system in a fully integrated way, we believe we can capture market share from the competition. If you look within Oracle cloud application providers, within the procurement and supply chain space, there are three providers. One is actually using enrich IT on the back-end to provide hosting and application support, because they have only the subject matter expertise. They don’t have the Oracle technology expertise. If you look at the financials or HR space, there are plenty of providers already lined up in that domain. The reason why not many players come into the supply chain and procurement space is because they feel that supply chain is core to the business, and they are hesitant to go there. I have a little different perspective on that. Yes, supply chain is core to any company. We are not trying to outsource the supply chain. Rather, we are trying to provide the turnkey supply chain and procurement solution to our client on a private cloud model, and we allow our clients to run supply chain and procurement from our cloud. We would out task certain operational aspects to make it more cost effective for them.

This segment is part 3 in the series : Outsourcing: Arul Murugan, Founder and CEO of Enrich IT
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