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The cost of doing nothing: Why haven’t you made the switch to cloud accounting?

Most finance executives instinctively know that a strong accounting system is critical for keeping the business running smoothly. Then why is it that we still see a lack of urgency to improve those systems?

Most finance executives instinctively know that a strong accounting system is critical for keeping the business running smoothly. Then why is it that we still see a lack of urgency to improve those systems? It’s time to stop suffering in silence or let lethargy get the best of you - it can ultimately damage the business and even your career.

Hold the drama? But we are in 2013 and the FUD factor (fear, uncertainty, and doubt) that used to surround cloud computing should be gone. Cloud accounting apps have taken the market by storm and are completely transforming the finance department for the better. So why are you procrastinating?

Below we’ve listed out the five biggest excuses (we’ve heard) as to why Finance is not making that jump to cloud accounting, along with a serious wake-up call. If any of this is what’s holding you back, do not fall victim and settle for ‘good enough’. The cost of doing nothing is an expense you don’t want.

Excuse No. 1: “Why fix an accounting that isn’t broken? We just do a lot of workarounds.”

Excuse Buster: Then it is definitely broken.  No Finance department should be stuck doing workarounds, manual entry, re-keying of data, relying on volumes of spreadsheets, or using a system that does not integrate with your CRM.

A recent study from Aberdeen Group uncovered that time spent on repetitive tasks went from 48 hours per week down to four hours per month once moving to a cloud based financial system. That’s more than a 1000 percent improvement! Who turns that down?  

And it’s not just about the administrative tasks. If you have been running a system that’s 10+ years old, or even five, it’s definitely not supporting your business growth. Does  your system deliver 360° view of people, projects and accounts? Does it leverage social tools?  Does it support customer interactions?  Does it allow for departments to work together? Very likely not, but the right cloud accounting system does all that and more.

Cost of Doing Nothing:  You could have saved 188 hours per month wasted on repetitive tasks. Imagine what could you do with that time and expense for business growth.  

Excuse No. 2: “A new accounting system would be too expensive. We can’t afford it.”

Excuse Buster: You can’t afford not to. Are you aware that upfront and maintenance costs can be reduced by 75 percent when going to a cloud-based system (Aberdeen Group). What’s not to afford?

Typically offered on a subscription basis, a cloud system means you are able to eliminate large, upfront capital expenditures for computer hardware, systems software and accounting application software licenses. You pay for the access and storage (and maybe some services) and get killer software in exchange. This is the exact opposite of on premises solutions where costs only go one-way: and that’s up. 

Add the fact that cloud accounting solutions are known to deliver higher ROI, real-time, multi-dimensional financial analysis, and a host of other benefits, from mobile access to enterprise collaboration - all geared toward efficiency and providing better value to your customers. Cloud accounting helps grow profitability, not hinder it.

Cost of Doing Nothing: You are spending 75 percent more than an organization that is using a cloud solution. Think of the possibilities that would mean for profit-sharing, or general operating expenses.

Excuse No. 3: “It will be way too hard to sell-in to the CEO.”

Excuse Buster: Absolutely not. When he/she hears figures like an immediate 25 percent increase in productivity, a 50 percent reduction in invoice processing costs, and a 91 percent improvement in Customer satisfaction (Aberdeen Group), then your CEO should be jumping onboard.

The right cloud accounting system also offers the types of functionality that CEOs love - e.g. dashboards, real-time reports and analytics, mobile access, automated workflows - functions that make audits smooth and keep the company lean. Plus a cloud accounting system is scaleable so it will grow with the company and improve efficiencies across multiple departments. When you partner all that with a comprehensive cloud app strategy - where your apps, sync, grow and work together - you will be praised for moving the organization that way.  

Cost of doing nothing: Customer loyalty is jeopardized. Productivity is compromised. Both deadly to any business.

Excuse No. 4: “It will take too much time to get a cloud accounting system up and running. Implementation might disrupt business/financials.”

Excuse Buster: The exact opposite is true. Cloud solutions are ready to go — users need only a login and an Internet connection, and there is no need to procure hardware or do testing. Also, implementation is usually quicker, with a lighter, more iterative approach to configuration versus the heavy upfront customization that often characterizes on-premises deployment. That faster speed also applies to ongoing enhancements. It’s also important to note that the entire time a cloud system is getting implemented, it doesn’t interfere with your current system operations because no intersection is ever necessary.

Cost of Doing Nothing: The initial change-over might not be fun. But the benefits it brings in terms of CRM integration, speed, automation, is immeasurable.

Excuse No. 5: “There’s no way my financial data is secure in the cloud.”

Excuse Buster: You’re probably not spending enough on security. So, spend less and get more. If you go with the right cloud app/provider, there’s actually no place more secure for your data. Take salesforce.com, the host/cloud provider for FinancialForce Accounting - they have invested three times more than any other company in the world to ensure that the data that lives in their cloud gets state-of-the-art protection along with backup and disaster recovery. This is far more advantageous than the cost and uncertainty of trying to protect data held in house - which may already reside in a number of separate company sites. We haven’t even mentioned that the Finance team retains complete control over the data and tools that each user is allowed to access and work with. This delivers reliable data security and underpins auditability.

Cost of Doing Nothing:  You will end up with getting less security, paying more money. Or worse leaving your data more compromised than if you went to the cloud.

Don’t make the biggest mistake of all - doing nothing.

By Tom Brennan, VP of marketing, FinancialForce.com.


7 comments
Sunil Pande
Sunil Pande

Even advertorials can be a fun read and Tom did not disappoint

However, let me respond to the statement “Cloud accounting apps have taken the market by storm

”, with a semi-blatant advertorial of my own

The veracity of Toms assertion depends upon the market segment you look at.

If one looks at the market for entry-level accounting systems, then Tom is right. That market has indeed embraced cloud solutions. It is literally raining cloud accounting vendors in this segment and deployment of cloud solutions is growing rapidly.

On the other hand, in the mid-market, cloud ERP solutions have yet to become mainstreadm.

A key reason for this is a lack of choice. Today you can count all the mid-market cloud ERP vendors on one hand. A drought if you will.

This lack of choice impacts adoption.

The situation is made worse by the price difference between entry-level solutions that run $2-3K/Year and mid-market offerings that run North of $50K to start and end up being $100K+ when finally fully deployed.

Further complicating things are the tricky pricing schemes and terms of service that make it hard to figure out what these systems will eventually end up costing and how costs will escalate as the company grows.

Vendors tout ROI, but the fact of the matter is that ROI is in the eye of the beholder. Vendor projected ROIs are rarely if every. For most small and medium sized companies that are owner and employee owned, AFFORDABILITY is the more important consideration.

So companies with entry-level systems, more often than not, delay their move up to the mid-market, by years, making do with manual processes, spreadsheets, shared logins, and internally developed add-on applications,, till they are large enough to afford an expensive mid-market solution.

However this is changing.

Newer technologies, open source components. agile methodologies and a focus on cost control, allow companies like Versaccounts www.versaccounts.com and Kenandy www.kenndy to offer affordable mid-market solutions that these same companies can deploy today.

And price is not the only thing that companies like Versaccounts are changing. They are also changing the way mid-market cloud ERP systems are sold.

For example, the Versaccounts solution is sold for a fixed price of $999/Mo unlimited users and functionality with live 24x7x365 support included.

This give customers the comfort of knowing that the TCO around their most critical business system will not change as the company grows. 

No contracts are required so customers can stop using the system at any time it stops meeting their needs. And implementation is for a fixed price of $10K. This is waived completely with a long term contract. 

With respect to channels, the business model is also ripe for disruption. Companies like Versacounts offer their channel partners 25-50% of subscription revenues in perpetuity. 

The entry-level accounting pace is well on its way to being taken over by cloud based solutions. The mid-market is next and I expect that a transformation to the cloud is not very far away for it either, providing vendors in the space get realistic about the price of their products and the terms they are offered under.

Sunil Pande
CEO, Versaccounts
www.versaccounts.com

bert
bert

It takes only one DOS attack on cloud service providers, or backruptie of a large cloud service provider leaving its customers data less (everything will be gone!) to make the businesses realize that depending on cloud only is dangerous or even deadly for a bussines.

Cost of doing nothing: What ever happens on the internet, You always have your data available!

2synergy
2synergy

This article is pure fantasy

Cost of migrating to new Finance system is huge, many CFO would rather take a new position then undertake system migration.

Finance system TCO being 75 present cheaper in the cloud. Do present your whitepaper to back this up and follow through with price  for FinancialForce.com (75% over 5 years)

Any real TCO’s  tells another story. 

sperry532
sperry532

Please note that the author is the Vice President of Marketing for a cloud-based accounting company.

This is simply an advertisement for that company and should have been labeled as such.

ksconsult
ksconsult

You forgot a major reason against the cloud:  The area where I live has crappy internet service/no choices.  As a consultant, people are always asking me who they should use for internet, and the choices are slim, unless you want to spend a fortune for some flavor of T1.  Most of my clients are small and simply cannot afford that expense, if it is even available.  One of my clients is an independent insurance agent with five employees.  His software provider is pushing him to use their cloud product, but where his office is located he really has no economically feasible internet choices.  That's something that needs to be considered by everyone who lives in a major metropolitan area with great internet service: there are lots of organizations that DO NOT live there and DO NOT have those choices!

angehodgson
angehodgson

Amazon's AWS recent outages demonstrate exactly why the cloud is not sufficiently robust for the needs of many finance departments.

If you view cloud computing as just another form of outsourcing - and you see many of the outsourcing 'pioneers' rushing to bring their various outsourced capabilities back in house - then it is not difficult to understand why outsourcing the most sensitive data held by any company of any size is not such a good idea.


Bozo T Clown
Bozo T Clown

All five of the points are exactly why rushing into doing something for the sake of doing something is an absolute mistake.  Proponents of the cloud forget that it is still a data centre, it just happens to be co-located and managed somewhere else AND you are responsible for whatever happens there.  From the perspective of  HIPAA and every other compliance tool out there, there are millions of reasons ($$$) why keeping the data in house makes absolute sense.

I, for one, am starting to lose patience with these biased and simplistic arguments that are basically thinly disguised sales pitches with no consideration of the immense up front work that needs to be done or the real ROI calculations that must be done.