About three years ago I had a revelation. I was going through an on-premise upgrade of an EPM application and the Director of IT pulled me aside. I thought he was going to congratulate me and he did but what he said afterwards blew me away. “Great job,” he said waving his hands before placing them together. He paused briefly. “Now get that application off my servers.” My mouth dropped open. I had never ever considered that an IT senior leader would want any application outside the organization. I have never looked at cloud applications the same.
Since then I have listened to all of the arguments about the viability of the cloud and whether or not it really is the future of enterprise computing. Well, whether it is the long-term future or not remains to be seen but it is here and now and businesses, both small and large, have finally embraced it mainstream. Cloud computing has been around since the late 90’s but like most disruptive innovations it took a while for the rest of us to catch up to it. Cloud applications are permeating every ERP technology including HR, Learning, Recruitment, Sales, and of course Finance.
In the Finance space, particularly Enterprise Performance Management (EPM), there are applications catering to every size market, and there are a few, like Host Analytics, that traverse all markets.
Five Things to Know about Cloud Applications
Cloud Applications, or Cloud Apps are much more than traditional on-premise applications that got stuck up onto the web. Cloud Apps are markedly more mature now and are overcoming all of the concerns about their capability to enhance operations within the enterprise such as:
Cost with cloud applications beyond the implementation are subscription based and often based upon the number of users. This means you understand the cost of the application at the beginning of the year instead of the end of the year. This is great for budgeting and planning expenses related to operating your department.
Cloud apps are also automatically upgrades by the software vendor. This can assist organizations with avoiding version lock whereby you flex your operations to support the application instead of vice versa. Also, you don’t experience unforeseen hardware responsibilities and those related costs such as planning for upgrades that can ruin your software application budget or forecast. Ultimately, you turn CapEx into OpEx.
Ironically, cloud apps have been disruptive to the ERP application market while enabling users to complete transactions even faster. It kind of like that, “This is going to hurt me a lot more than it hurts you,” we say to our kids when we give them a shot. That transition creates even more capability at a faster pace opening doors of opportunity such as integrating to other cloud apps.
Also, because cloud apps generally implement faster, EPM apps go live in approximately three months, you have more time for rapid prototyping. This means you get more bites at the apple for perfecting your system, or in the case of EPM, your templates and reports design.
The other advantage of implementing faster is more time spent on predictive analytics whereby you can quickly establish models for predicting future outcomes. Finally, with a workforce that has the flexibility to use the application 24×7 from their living room sofa, surveys have shown that employee satisfaction and willingness to contribute outside 9-5 hours increases.
Anytime, anyplace, anywhere is what cloud applications bring to the user community. Cloud apps have enabled senior leaders to review and manipulate data and reports online in airports, train stations, Starbucks, and even sailboats. When you have concerns about whether or not your system will be available (disaster recovery) to you or whether you will be available to your application (stranded) a simple internet connection solves the problem.
Several years ago I worked for a firm that had a gold team, a set of 7 individual that were immediately flown to North Carolina from Florida, if the threat of the hurricane was serious enough. With the cloud, today’s gold teams need only find an internet connection; something much easier to do than run to the airport and take a two-hour flight.
With cloud apps the two biggest risks are security and availability. Fifteen years ago cloud apps would have been scary to trust. They probably weren’t readily hacked because no one knew about them. I would have been remiss to place my corporate data into the ‘ether’.
Today, however, cloud apps have just as much if not more security than on-premise apps. They comply with all security protocols and cloud vendors are constantly working to get certified on standards and regulations such as PCI-DSS, SOX, Nevada SB-227, HIPAA, and even the Massachusetts Privacy Law (201 CMR 17), SSAE 16 audits, and all of the other PCI certifications.
Consider that nearly all of the corporate credit hacks over the past two years were attacks on on-premise applications. Regarding availability, cloud vendors pride themselves on up-time and you can expect 99.-plus uptime with top level applications. Cloud vendors can establish these types of SLA’s with their clients simply because they retain staff whose only role is to keep the applications running. That’s a far cry from typical on-premise apps where you are lucky to get your local IT gal within a few hours if she isn’t busy rebooting someone’s machine on the fourth floor.
Whether cloud applications have sustainability is really more about whether or not businesses will continue to trust their transactions via remote servers and an omnipresent workforce. Cloud applications have not quite reached their tipping point. They are still in the early adopters/early majority phase which indicates we have quite a ways to go before cloud applications are innovatively diffused out of the market.
It’s okay that some organizations aren’t comfortable with cloud as an option for their organizations. There is still time to adapt. Consider that it took us nearly sixteen years to get where we are with cloud applications and those ride on a technology (the internet) that will support disruptive innovation for years and years to come. The biggest indicator should be to look at what all other ERP related application vendors are doing now in preparation of the future. Because premise applications are being challenged on every level, traditional premise vendors are scrambling to create their “cloud” version of their dominant premise application. Seems like a good strategy. Also, sounds to me like something else might end up in the dust bin.
Learn more about Host, and what it can do for you by attending our March 23 webcast, Achieving Complete Financial System Transformation and by seeing the following Host Analytics resources:
- Are We Really at the End of Spreadsheets?
- Block Templates: Uses and Advantages
- FAQ: “Why Can’t I Add a Dimension in Host Analytics?“
- FAQ: “What Do All of these Security Roles Mean?“
- Five Ways We’ve Improved the Speed of Host Analytics Implementations
- Differences between Financial Consolidations and Consolidated Reporting