Using Cloud Computing to Change the Game of Finance


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  • The Mid-market Answer   Let’s return to the mid-market. What did we learn here? We learned that mid-size companies have the same needs in their web-enabled systems that large companies do. The difference is that they can't afford to meet those needs like the big guys do because they don't have anywhere near the financial or IT resources that large companies have. So they need something else. They need an out-of-the-box, end-to end solution that adapts to the way they have run their businesses successfully for years in the brick and mortar environment.   I don't mean to imply this discovery was a stroke of genius for ACCPAC. Anyone who thought about it could see the problem, and certainly, mid-size companies were painfully aware of it. This was when we realized if we were going to address the mid-market, which had been and still is our natural market space, accountants could best write this software. So that's what we did. We wrote our own web-enabling software to tightly integrate the e-commerce needs of mid-size companies with their accounting systems. Click for next slide.
  • Mid-market companies are realizing that without true end-to-end back-office integration, they're missing the promise of the Internet. By end-to-end, I mean e-commerce systems and CRM solutions that understand wireless and can execute in a browser, systems that understand your customers’ perspective, that work the way you work, that allow you to compete the way you've always competed without requiring you to customize your back office.   This means an e-commerce system that integrates from the web store to the accounting system, back to the warehouse and then back again. It means a CRM system that can talk to the accounting system.   CRM is huge right now. Successful businesses today realize they need to touch their customers in a big way. They want to be customer centric. That sounds great. It is great. It’s the way it should be. But going forward, it’s going to be not just a great idea but absolutely essential for business survival. If you're a field sales person and you want to check on a customer's order status, or the availability of inventory items or things of that nature, then the CRM system you use will have to deploy on the web and be accessible via your WAP phone. So you'd better be integrated into your inventory system, your sales order system and your accounts receivable system (use an example or two here to illustrate how this works).   For proof of this intense focus on CRM, you need look no further than the tremendous surge in acquisitions in the e-business industry. Business applications vendors are scrambling to buy CRM companies because they need these solutions to integrate tightly with their own products. Click for next slide.
  • Looking Ahead   I told you I would give you my take on where e-business and e-commerce is going. As I pointed out at the beginning, crystal ball gazing hasn't been a long suit in this industry. As I'm sure you're all aware, it's much, much easier to make five- and ten-year projections than forecast what's going to happen a year from now. That's because nobody remembers what you said five or ten years ago. Click for next slide.
  • Using Cloud Computing to Change the Game of Finance

    1. 1. The Impact of Cloud Computing on SME’s Why You Need to Put Your Head in the Cloud <ul><li>Robert Lavery </li></ul><ul><li>Principal </li></ul><ul><ul><li>Robert Lavery & Associates </li></ul></ul>
    2. 2. <ul><li>A Cloud has something in it but you can’t see it! </li></ul>People in different locations see the same thing. What is A Cloud?
    3. 3. Evolution of Hosted Systems <ul><li>Everything old is new again – Why? </li></ul><ul><li>Time share/service bureau of 60’s (Utility model) </li></ul><ul><li>ASP’s of early 21 st century </li></ul><ul><li>60’s high cost of mainframes </li></ul><ul><li>Early 21 st century – high cost of people to implement and manage software. </li></ul><ul><li>GOAL: Cost effective business systems </li></ul>
    4. 4. Trends Affecting Software <ul><li>More sophisticated systems </li></ul><ul><li>More flexible and feature rich apps </li></ul><ul><li>Easy to use tools for customization </li></ul><ul><li>Shorter cycles between upgrades </li></ul><ul><li>Better communications infrastructure </li></ul>
    5. 5. Evolution of Hosted Software <ul><li>Hosted systems can reduce Total Cost of Ownership </li></ul><ul><li>Solve scarce resource problem </li></ul><ul><li>Convergence of software and communications network </li></ul><ul><li>Software is the network </li></ul><ul><li>Software becomes a service </li></ul>
    6. 6. Big Business Small Business Sales Orders Inventory Expenses CRM Needs Resources Equal Needs - Unequal Resources
    7. 7. Influence of “GEN Y” (15 TO 25) <ul><li>Sense of entitlement – “Want it now!” </li></ul><ul><li>Expect “FREE” access to info & products </li></ul><ul><li>Value shared “Experience” - “Community” </li></ul><ul><li>GEN Y desire freedom and decision making </li></ul><ul><li>Motivated by idealism and shared intelligence </li></ul><ul><li>Boomers and GEN X - Aspire to Acquire </li></ul><ul><li>Cars (AutoShare), Music (MP3BEE) </li></ul>
    8. 8. Some Stats To Ponder <ul><li>IDC – By 2012 85% of new software delivered as a service rather than a physical product. </li></ul><ul><li>McAfee and Carnegie Mellon University (May 2010 survey) – 49% of respondents claim to be “very” or “extremely” reliant on mobile devices. 1 year later – 70% (35% email addicts) </li></ul><ul><li>IDC - 96% of Employees under 45 have a smart phone. 63% use business devices for personal </li></ul>
    9. 9. Creative Use of Technology
    10. 10. New Knowledge Required <ul><li>Understanding of key technologies </li></ul><ul><li>Assess benefits, risks, threats and opportunities associated with the online economy </li></ul>
    11. 11. 3 Levels of Cloud Based Delivery Methods <ul><li>SaaS: offers a contractual service to deploy, host, manage and rent access to an application from a centrally managed facility. They are responsible for … managing a software application or a set of applications. Example would be Google’s Gmail. </li></ul><ul><li>PaaS: Platform as a service provides applications, frameworks and tools running on hardware managed by a Vendor. MS Windows Azure platform is an example. “Your stuff is hosted.” </li></ul>
    12. 12. 3 Levels of Cloud Based Delivery Methods <ul><li>IaaS: Infrastructure as a service allows users to manage their own applications, data and operating systems leaving servers, storage and networking to a vendor. Focuses on management of the network and servers. “Other’s stuff hosted” </li></ul><ul><li>Which option is right for your business depends on how much control you want over your company’s software and computing resources. </li></ul>
    13. 13. Public Versus Private Cloud <ul><li>You can host your own cloud infrastructure </li></ul><ul><li>OR you can outsource the infrastructure. </li></ul><ul><li>Public Cloud places data control (Security and uptime) outside the company’s 4 walls. </li></ul><ul><li>Privacy concerns slowing adoption of Saas in HR and Finance. </li></ul>
    14. 14. Outsourcing Trends <ul><li>Cloud poll: Which applications require the largest % of your outsourcing budget? </li></ul><ul><ul><li>Accounting/ERP - 26% </li></ul></ul><ul><ul><li>E-Commerce – 17% </li></ul></ul><ul><ul><li>Data Warehousing – 17% </li></ul></ul><ul><ul><li>CRM – 13% </li></ul></ul><ul><ul><li>Web Hosting – 13% </li></ul></ul><ul><ul><li>Messaging – 9% </li></ul></ul><ul><ul><li>Storage – 4% </li></ul></ul>
    15. 15. IT Skills Are Still in Demand
    16. 16. Managed Apps Versus Outsourcing <ul><li>Managed Applications: Manage purchased software as well as the network and servers </li></ul><ul><li>Outsourcing: the management of business processes on a much larger scale that encompasses an entire business process such as the finance function </li></ul>
    17. 17. Hosted Apps Infrastructure
    18. 18. Has Become Cloud Infrastructure The Perceived “Cloud” Benefits Are: 1.) Economies of scale and knowledge (cheaper and better) 2.) Lower barrier to entry (software, hardware, development) 3.) Reduced costs (maintenance, upgrades, enhancements)
    19. 19. Lower TCO 1) Lower barrier to entry and rapid time to implement 2) Lower costs of maintaining applications, IT skills and staff (economies of scale) Source: Aberdeen Group, June 2010
    20. 20. Is The Cloud Really Cheaper? 1) TCO argument falls apart when adding in software, services, hardware and on-going maintenance – Exit and switching costs. 2) Showing accumulated costs over time (above) shows 3-4 year breakeven where SaaS becomes more expensive
    21. 21. Why is Hosting So Popular? <ul><li>Communication network in place </li></ul><ul><li>Inexpensive bandwidth available </li></ul><ul><li>Intelligent & powerful applications </li></ul><ul><li>Can add users as needed </li></ul><ul><li>Keep pace with technology </li></ul><ul><li>Address shortage of IT skills </li></ul><ul><li>Integrate business processes </li></ul><ul><li>Promote specialization </li></ul>
    22. 22. Web Site/Store Accounting Warehouse End-To-End Integration SMART Phone CRM Browser Supply Chain
    23. 23. SaaS Revenue on the Rise <ul><li>Gartner Study – Saas Revenue set to hit $12.1 Billion in 2011 – an increase of $2 Billion from last year. </li></ul><ul><li>Largest segment of the SaaS industry is CRM - $3.8 Billion. </li></ul><ul><li>CCC (Content, communications and collaboration) is close behind at $3.1 B. </li></ul>
    24. 24. Importance of Software <ul><li>Automates processes </li></ul><ul><li>Creates knowledge workers </li></ul><ul><li>Analytical tools to spot trends </li></ul><ul><li>Improves decision making/collaboration </li></ul><ul><li>Requires: </li></ul><ul><ul><li>Fast implementation – increase efficiency </li></ul></ul><ul><ul><li>Seamless integration – increase productivity </li></ul></ul><ul><ul><li>Scalability – reduce IT complexity </li></ul></ul>
    25. 25. Target Customer Profile <ul><li>Any company struggling to keep up with the changes in technology </li></ul>
    26. 26. Target Customer Profile <ul><li>Multiple/branch office scenario </li></ul><ul><li>Little or no IT expertise/infrastructure </li></ul><ul><li>Windows users looking to upgrade to web </li></ul><ul><li>Interested in E-Commerce – Supply Chain </li></ul><ul><li>Start Up business (time to market) </li></ul><ul><li>Large company reorganizing </li></ul><ul><li>Fast growing company </li></ul><ul><li>Competitive industry </li></ul>
    27. 27. Benefits of Hosted Model <ul><li>More accountability </li></ul><ul><li>Manage cash flow </li></ul><ul><li>Quick implementation </li></ul><ul><li>Current technology </li></ul><ul><li>Enable B2B Marketplaces </li></ul><ul><li>Utilize Internet appliances </li></ul>
    28. 28. When Should You Host? <ul><li>Companies with no IT infrastructure </li></ul><ul><li>Quick time to market is important </li></ul><ul><li>Use common/standard applications </li></ul><ul><li>IT people not available </li></ul><ul><li>Competitive pressure </li></ul><ul><li>Provider understands your business </li></ul>
    29. 29. Opportunities or Risks? <ul><li>Cloud services provide opportunities </li></ul><ul><li>New Companies – Wikipedia, eBay </li></ul><ul><li>New Corporate Structures </li></ul><ul><ul><li>Infrastructure without hierarchy </li></ul></ul><ul><li>New Business Models - Google </li></ul><ul><li>EVEN New Industries </li></ul><ul><ul><li>Collective/Social Intelligence (InnoCentive) </li></ul></ul><ul><li>“ Risk is the mirror image of opportunity.” </li></ul>
    30. 30. Where Can The Cloud Take You? 18 Possible Destinations: 1) Collaboration – shared access to documents & schedules. 2) Content Management – update internal/external websites. 3) Customer Relationship Management (CRM). 4) Document Management – storage, release and revisions. 5) Email – malware protection, integration requirements. 6) Employee Performance Management – HR need? 7) Employee Self Service – timesheets, vacation requests. 8) Enterprise Resource Planning – integrated bus. processes. 9) Expense Management – Employee or company.
    31. 31. Where Can The Cloud Take You? 18 Possible Destinations : 10) Financial Accounting – auto tax updates, storage, backup. 11) Marketing Automation – analytics, lead generation (CRM). 12) Project Management – access to track progress. 13) Sales Automation – qualify leads, pricing, integration mkt. 14) Supply Chain Planning & Mgmt. – production, shipping. 15) Talent Management – hiring, compensation. 16) Transportation Management – logistics, route optimizer. 17) Warehouse Management – picking, packing. 18) Web Conferencing – remote presentations/meetings.
    32. 32. Fundamental Considerations When Moving to the Cloud <ul><li>Replace or Add Functionality – Effectiveness? </li></ul><ul><li>Changes to User Interface & Functionality </li></ul><ul><li>Planning Matters – Support & Updates </li></ul><ul><li>License Costs – Over Time versus Up Front </li></ul><ul><li>ROI – Based on increased productivity </li></ul><ul><li>Data Migration – Integration to new service </li></ul><ul><li>Comparing Providers – SLA’s, redundancy. </li></ul><ul><li>Trouble Shooting & Training – Good Level 1. </li></ul>
    33. 33. What to Look For in a Provider <ul><li>Understands your business & industry </li></ul><ul><li>Provides on-site services when necessary </li></ul><ul><li>One point of contact for issues </li></ul><ul><li>Low cost high bandwidth connection </li></ul><ul><li>Broad range of services (Co-location) </li></ul><ul><li>Customization </li></ul><ul><li>Strong financial backing </li></ul>
    34. 34. What’s Next?
    35. 35. Is The Cloud In Your Future? <ul><li>Do you require: </li></ul><ul><ul><ul><li>1) Access and Mobility? </li></ul></ul></ul><ul><ul><ul><li>2) Security? (Disaster Recovery) </li></ul></ul></ul><ul><ul><ul><li>3) Improved Business Processes/Reporting? </li></ul></ul></ul><ul><ul><ul><li>(Location based services.) Punch In Punch Out </li></ul></ul></ul>
    36. 36. Top 10 Pitfalls of SaaS ERP <ul><li>10. Miss a payment, your ERP turns off . </li></ul><ul><li>9. My data lives with other data (sounds illegitimate and immoral). </li></ul><ul><li>8. Very limited custom reporting capabilities (but who needs reports from your ERP anyway?) . </li></ul><ul><li>7. Very limited customization capabilities (because everyone knows that ERP out of the box works for everyone) . </li></ul><ul><li>6. You still can’t get rid of that pesky IT guy. </li></ul><ul><li>5. The “hidden” costs can blind you (and make you poor, refer back to #10). </li></ul>
    37. 37. Top 10 Pitfalls of SaaS ERP <ul><li>4. What if I want to use another application specific for my industry and interface it? Sorry! </li></ul><ul><li>3. What if my internet goes down…then you can take the rest of the day off . </li></ul><ul><li>2. What if the cloud internet goes down like the Amazon cloud did recently….then you can take the rest of the day off </li></ul><ul><li>1. It utilizes the “cock-roach-hotel” model; you can check in but you can’t check out. You have years of critical corporate data in the rental cloud which lives with other data. When you want to change ERP like most people do every 5-7 years, you don’t get your data…maybe a little but not all of it. </li></ul>
    38. 38. Don’t Leap Blindly Into The Cloud
    39. 39. Questions? (Got Your Head in the Cloud)