There is a pervasive perception that moving accounting systems to the cloud is reserved for smaller businesses, but don’t dismiss the software-as-a-service model so fast.
Gartner Inc. estimates that 40% of all enterprises will adopt a blend of cloud-based and on-premise (server) solutions by the year 2012. More specifically, they estimate that 80% of Fortune 1000 enterprises will be using some cloud computing services by the same year.
What makes running accounting, financial management or ERP applications in the cloud any different than other hosted or subscription applications? Well, a few things. Security concerns, software customizations and years of costly investments in IT infrastructure are a few of the big reasons why these highly-specialized applications have traditionally remained in the server room.
Flexibility & Selection
But the burgeoning cloud-computing market, with its different cloud computing options, is offering more flexibility and choices than ever, and in some cases, moving your organization’s accounting or ERP system to the cloud may be the right choice.
Here, we’ll examine 10 consideration points.
- New Economics
Hosting costs have come down significantly and now offer a more affordable solution. These pay-for-what-you-use models can help create lower and more predictable costs, allowing companies to shift from capital to operational expenditures.
- IT Staff Investment
Maintaining accounting and ERP systems is a specialized and unique function within the IT department. Therefore, one must consider the carrying costs and available skill-sets necessary to manage the system versus the annualized cost of a cloud solution. Companies that elect to move accounting to the cloud have likely determined that there is more value in automatically-included IT maintenance and upgrades.
Your company’s finances, payroll records, and client and vendor records require higher levels of security than other company data. Most cloud computing vendors have policies in place to prevent unwanted access to data, but you will want to go deeper than an overview of general security policies. Ask about industry-specific compliance requirements, encryption level and authentication protocol details, and ascertain overall data-center procedures and how technicians are vetted.
- Platform Investment
Maintaining on-premise accounting and ERP applications requires timely replacement of outdated servers and hardware. One must compare the cost of keeping the server room performing optimally versus the annualized cost of a cloud solution. Hosted solutions provide a dedicated environment that replaces your on-premise systems, along with no annual enhancement fees, which can replace your expenditures in server software, windows, terminal services and others.
- Uptime & Disasters
The additional value from business continuity and disaster recovery should be included in assessing the costs of a cloud ERP model. Most internal IT teams can’t provide a service level agreement (99.9% uptime), but cloud providers do. If uptime is a business-critical component for your company, then having that guarantee can offer some insurance. In addition, some companies do not have adequate disaster recovery plans, or they value these plans separately from their accounting and ERP systems. Having a cloud provider in place with defined channels for live cut-over to secondary data centers operates as an integral piece of your disaster recovery plan.
- Consider Going Hybrid
Hybrid is all the rage in automobiles – and in software deployment models, too. Most companies take a hybrid approach to their solutions, maintaining some on-premise applications and integrating them with other systems in the cloud. This model offers the flexibility to accommodate your company’s unique business processes without having to force-fit every solution into the server room.
- Break-fix vs. End-to-end Support
Waiting for something to break and calling a local IT technician is not the way to effectively manage systems. Many companies fall short when it comes to supporting their on-premise deployments. In addition, users often attempt to fix printing and application issues themselves, which can rack up productivity losses. Cloud providers have monitoring systems in place to proactively keep systems up and running, and offer 24/7 support to ensure a high-level user experience.
- Not All Cloud Providers are Created Equal
The main areas to consider when selecting a cloud accounting and ERP provider include: tuned systems with enterprise grade infrastructure; a focus on one technology to ensure expertise; service level agreements that are financially backed; SAS70 type II Data Center; and U.S.-based live body support.
- Multiple Providers vs. Single Provider
Many cloud/SaaS providers only provide one application and support for just that one application (examples: NetSuite, Salesforce.com). While these are all reputable solutions in their own right, Microsoft offers multiple solutions in the cloud, including accounting and ERP, CRM, Office, Exchange and SharePoint. If your organization already utilizes multiple Microsoft applications, you may benefit from consolidating to one provider, which will aid in integration and licensing.
- It’s A Strategic Choice
Moving accounting and ERP systems to the cloud certainly isn’t for every company. It’s a strategic decision based on cash flow preferences, available personnel, customization requirements, and control and ownership preferences. On-premise, cloud-based or a hybrid solution: it’s your choice.