Our advice to CFOs on cloud.. don’t be penny-wise and cloud-foolish.
Cloud computing is all over the lips of executives nowadays as more and more companies consider moving from licensing and do-it-yourself software to renting their software as a service. What is “cloud computing?” It’s simply the new name for the computer network where your accounting software resides, which is connected to you via the public internet. The bottom line of cloud for CFOs is a very compelling and disruptive cost model versus licensing accounting software, that is now a realistic alternative because of the ease of access to the ‘net.
Beyond cost, the crucial advantage of cloud is the elasticity that it provides; which simply means the ability to scale up or back down rapidly without adding more internal capital infrastructure, and only pay for what you use. In fact, you may not even need an internal IT department at all to support your use of cloud software.
The advantages of cloud go on and on. The monthly operating costs are very predictable. The system can be accessed from anywhere that you have network access (in other words, anywhere – all those home workers?). You always have the latest rev – automatically. Your data is always backed up, away from your offices. It allows you to automate and dispense with manual processes. It provides a clear path to integrate your planning tools (the future) with your day-to-day accounting and reporting tools (the past) and performance measurement tools (the present) into a more “seamless” real-time business management system.
So, what is our advice on cloud to CFOs? Be cloud-wise, not penny-wise. But don’t be cloud-foolish.
Most leading edge CFOs are already cloud-wise. What we see, working for many of the most successful companies in the US, is that leading edge CFO’s are indisputably moving more and more of their planning, accounting, reporting, performance measurement and day-to-day processes to cloud software. What’s driving this? They are taking the chance to eliminate out-of-date systems that are fragmented and that lead to long monthly closing processes. They are also automating labor intensive reporting processes, reducing errors, and ultimately therefore providing senior management with better up-to-date snapshots of the state of their businesses.
Unfortunately, we also see too many others electing to go with the absolutely cheapest initial accounting solutions in an attempt to be penny-wise. Then these systems more often end up unable to cope with complexity such as multiple entity and or multiple currency operations. While a suitable cloud ERP solution may cost perhaps $15,000 in annual rental fees and a similar amount in initial setup, it will have all of the capabilities to grow a company to a substantial size cost effectively over time. While $30,000 might seem substantial amount to an early stage company, the total cost of ownership is quickly reduced over the medium term using software over the cloud.
We can’t tell you which software to choose. That, of course, depends upon the features, capabilities, price, experience, staying power and reputation of the vendor. We do predict, as do many analysts, that this move to cloud-based planning, accounting, reporting and performance measurement will only continue to accelerate. More and more vendors will provide ERP, database, planning and other applications in a huge range of configurations and price ranges for startup, fast growing, mid-range and large businesses alike.
But we do advise.. consider cloud very seriously as your leading –edge competitors are probably doing so.