Pros and Cons of Public Clouds

 By Tony Kontzer

It took Schaeffer Manufacturing 168 years to become a $60million company. Then, over the past four years, its revenue shot up to $100million. While pretty much everything else about Schaeffer had remained thesame?save increasing the 180-employee headcount by a single person?one changemay have been the most important enabler of the company’s biggest-ever growthspurt: a move to cloud computing.

By 2007, the company’s technology needs were far outstrippingthe capabilities of the home-grown order entry system it had long depended onto process and fulfill orders. The AS/400-based system was bursting at theseams, and St. Louis-based Schaeffer?whose industrial lubricants once greasedthe axles of covered wagons heading West to join the California Gold Rush?wasscrambling to come up with programming tweaks that would keep it running. Butit was clear to Will Gregerson, the company’s CFO and de facto CIO, that a newsolution was in order.

After evaluating several alternatives, Gregerson settled onNetSuite and its suite of software-as-a-service (SaaS) business applications,opting to move Schaeffer’s order entry and financial systems into the publiccloud. The decision proved to be a wise one. Since going live on NetSuite in2008, Gregerson says Schaeffer has seen notable improvements in the efficiencyof its order fulfillment processes.

For instance, because salespeople could suddenly submitorders electronically, removing the need to enter them manually, the company’stwo-person order entry team increased the number of orders they could processeach day from 75 to 200. And the time it took for a processed order to be loadedonto a truck was shortened from an average of three days to one-and-a-half,with half of all orders on a truck ready for delivery within 24 hours.

Gregerson also points to numerous IT cost savings, in additionto the unknown sum the company would have spent on hardware had it chosen tokeep things in-house. Both of the IT employees that reported to him have sinceleft the company and he hasn’t had to replace them, saving at least $100,000annually. He estimates if the company had migrated to a new in-house technologyplatform, it would have had to spend at least another $200,000 annually foradditional IT staff to keep the company competitive.

All that, and the company also filled its long-standing needfor a disaster recovery solution, which had previously consisted of an extra,dormant AS/400. The new backup plan? "Go into the nearest Starbucks, plugin and go," says Gregerson.