Few companies have replaced or upgraded their ERP systems in recent years, having baulked at the cost of installing new versions that offer margin benefits and the risk of sacrificing in-house customization, much of which supports changing revenue recognition rules and an evolving regulatory environment.
It’s certainly not something to rush into! So will pay-as-you-go cloud computing make it any easier?
Certainly all the expensive hardware and infrastructure go away as do the time-consuming, staff-intensive upgrades. This is particularly appealing and undoubtedly the main reason why the cloud delivery model is forecast to grow at six times the rate of the overall software market. But, while the sales and HR functions have readily embraced cloud-based solutions, finance is still standing on the side lines.
Much of finance’s resistance to adopt cloud-based solutions is to do with their role as custodian of critical operating data for the business. The three most frequent concerns I hear being security, data ownership and the lack of customization. But are these valid concerns or simply myths?
- Most business already conduct their most sensitive transactions, such as their sales pipelines , customer data, banking and highly personal payroll via the Web – and even if they are not aware that the encryption involved is far in excess of what they have in house, never raise a concern about security. So why should cloud based financials be any less secure?
- Similarly, a cloud based datacenter is going to use more advanced security routines that are too expensive for single companies to deploy and achieve better service levels than can be achieved in-house as they can afford multiple back-up systems. If you want to check those of current could-based solution providers take a look at status.netsuite.com and trust.salesforce.com.
- Before you point to ‘customization’ as the fatal stumbling block, I’d ask you investigate exactly what you’ve done in your current on-premise financial system and why? My guess is most on premise customization will be work-arounds for revenue recognition or external reporting that your vendor didn’t offer out of the box at the time – and next to none is truly value adding. Are vendors of cloud based Financial ERP systems are going to ignore these needs? I doubt it. My expectation is they will offer a range of plug-in modules to cater for every need as the range and depth of customization will become a key differentiator.
So having addressed those reservations, where would I start if I wanted to dip a toe into the water?
Probably with a discrete process such as planning and budgeting where both finance and line-of-business stakeholders could quickly see the advantages of being able to quickly access the same centralized real-time actuals throughout the business and build tailored reports using state of the art self-service reporting. Corporate could have instant visibility into divisional budgets enabling either a centralized or decentralized process, and systems administrators could experience a budget cycle free of onerous version control.
What’s more, if I wanted to really make the most of available technology then I’d make sure that any new system was mobile ready, with the look and feel of consumer apps, so business managers could tap into the information they need wherever whenever.
So just how close is this in reality? Probably a lot closer that you think. In five years’ time, I’m sure we’ll be embarrassed we were such laggards.