Or would you have stuck to what was comfortable, and risk getting relegated to the sidelines in the wake of the communications revolution that was to follow?

I’ve zeroed in on the fax-email dynamic quite intentionally. Just as enterprise email servers and messaging software have relegated fax machines to the sidelines, so too have they begun to be replaced by cloud-based, SaaS enterprise mail, such as those from Microsoft and Google.

Having been a technology writer for the better part of a decade, I see a couple of trends in enterprise-class messaging that I think may be relevant indicators that describe the relationship between on-premise and Cloud ERP.

Two growth areas for Messaging SaaS

There have been two broad groups of organizations that have embraced cloud enterprise mail.

The first group are major companies like GalxoSmithKline, who have found it more cost effective to convert their mail, calendaring, and contacts functions to a subscription service via the cloud with Microsoft Office 365, rather than to maintaining the hardware and software needed to do these in-house.

It also frees up their IT people to focus on more high-impact IT projects, rather than to patch, update, and otherwise manage a global deployment of enterprise mail.

Says Alastair Robertson, VP of Information Workplace at GSK : “Moving to Online Services will enable us to reduce our IT operational costs by roughly 30% of what we’re currently spending. The ability to introduce a variable cost subscription model for these collaborative technologies allows us to more rapidly scale or divest our investment as necessary.”

The second group is made up of small and medium-sized enterprises that could not or did not want to part with the funds and resources needed to set up on-premise enterprise-class messaging.

That all changed with the cloud – in what represents a major evolution for SMBs, enterprise-class messaging became something that even start-ups could count on, along with Internet connectivity, power, and other utilities that are taken for granted in many parts of the world.

Where Cloud Messaging goes, Cloud ERP might follow

The two categories of Cloud Messaging adopters also, somewhat coincidentally, represent two major markets for Cloud ERP. Similar patterns can be discerned here.

Cloud ERP in the Enterprise

For instance, there is the large enterprise that has grown weary of being locked in by a costly ERP vendor with a pricey maintenance package, and where innovation has taken place at a pace somewhat slower than other enterprise solutions. And then there is the growing SME that is availing itself to cost-competitive ERP SaaS for the first time.

At this time, we should acknowledge that it’s not easy for a major company with an existing ERP system to move to a cloud-based one. It’s a challenging decision and process, but with planning and preparation, and the right partner, this is entirely doable.

Cloud ERP software in the SMB market

The SME has fewer constraints. Often, they can be quite eager to embrace the ERP Cloud to optimize for growth, and leave behind the need to juggle spreadsheets.

For these smaller companies new to ERP, SaaS and the ERP Cloud are highly viable and affordable alternatives to on-premise ERP.

In fact, in a survey conducted in 2011 with over 300 SMEs each posting less than $500 million in annual revenue, Aberdeen Research found that 77% of the SMEs interviewed have already implemented an ERP solution.

A significant number of these SMEs reported adopting an ERP solution due to the expectation of strong growth despite the uncertain economy, with almost four in 10 adding that they were doing so due to lower cost options, like the SaaS and the ERP cloud.

Summary

Naturally, the comparison between different SaaS products is not a perfect one, but the parallels between how Cloud Enterprise Messaging has evolved, and how Cloud ERP will evolve, are ones that any business and technology decision maker would do well to heed.

In today’s blog, I wanted to touch on how a made-to-order manufacturer finally decided to commit to moving their ERP to the cloud after a black swan event that has shaken up the organization. This was a tip-off that we received from one of the Cloud ERP vendors that we partner with.

So – how is this manufacturer currently managing the many complex and distributed ways its business is running?

With pen and paper. Seriously. Good old-fashioned pen. And paper.

Could have, should have, gone with SaaS

Here’s the backstory. The manufacturer’s previous on-premise ERP system had been hacked, which disrupted its ability to function and exposed its business to significant risks. To add insult to injury, the hacker or hackers encrypted all of the compromised files and data, effectively locking the manufacturer out of them.

With no other means to continue operations, the company has had to resort to the technologically primitive stopgap measure of taking orders, managing manufacturing, and ensuring fulfillment with paper forms – and lots of legwork, calls, and faxing.

Starting over with SaaS

At the same time, its team has had to rebuild. So they are now reviewing a new SaaS ERP solution because in their minds, not only would this mean less work for their IT people, it would even be more SECURE than their previous on-premise set up.

And while they are planning a cloud ERP system from the ground up, they are also taking the opportunity to load up on a few extras.

On top of the accounting package with BOM, inventory control, OE, Purchase Order and payroll modules, they are also planning for future upgrades such as bar code functionality and serial number allocation to the BOM to minimize errors, as well as a way to create RFQ’s in the purchasing module that would convert the RFQ into a new PO.

Conclusion – Changing Views of Security

Perceptions around security and Cloud ERP and SaaS have come a long way. Four years ago, security perceptions were the number one reason that customers elected not to go to the Cloud. In a 2010 Aberdeen research survey, the desire to control upgrades surpassed security as the number one concern for ERP buyers. As more articles on cloud ERP security are published, customers are overcoming inaccurate perceptions of security. Advice to companies with on-premise servers – perhaps it might not be a bad idea to start planning for a transition to a Cloud ERP solution before a black swan comes a-calling!

If you’re not happy with the service that you receive, take your business elsewhere. That’s pretty much what Amazon CTO Werner Vogels said at an event organized by the company’s Amazon Web Services recently.

His exact words were: “You should keep your providers on their toes every day. If we are not delivering the right quality of services, you should be able to walk away. You, the consumer of these services, should be in full control. That is core to our philosophy.”

That comment created quite a stir in the cloud community. Most people agreed that, philosophically, Vogels was right – nobody wants to be pay big bucks just to be held hostage to a cloud vendor, regardless of whether it was for IaaS, Paas, or SaaS. For that matter, nobody wants to have to pay big bucks to break free, either!

A one-way SaaS ticket?

However, at least one commentator took issue with Vogels. In an article on GigaOm , Barb Darrow pointed out that those who have tightly integrated their SaaS applications, such as with ERP Cloud for instance, with AWS would have a much harder time switching IaaS providers.

Darrow quoted the CMO of VoltDB, Fred Holahan as saying: “Depending on the level at which you’re building software, you might be quite insulated from the details of the underlying infrastructure, but part of the objective of a platform vendor is to provide you with tantalizing services that lock you in.”

While many of the new AWS services do result in more tightly coupled scenarios between AWS and its customer data centers, there are ways to avoid vendor lock-in by planning ahead, both in the Cloud in general, but also in the ERP Cloud in particular.

Planning ahead to keep SaaS portable

Ensuring your organization’s ability to switch providers whenever it makes sense to do so entails a couple of things: planning ahead, and picking a provider that is committed to an open, interoperable framework.

With proper planning, your organization could turn the lights on for its alternative cloud so that it can run in parallel with the legacy provider, and have data written to both databases at the same time. That would allow a smoother transition for when there is a need to do so.

The other thing to consider is to drill down with the service providers of choice, and make sure that they take an open approach and are set up to compete based on the best product, the best service levels, and the best value over the long term, rather than luring you in with sweeteners, but making it painful to leave. This is especially relevant for SaaS applications and the ERP Cloud.

It might be a bit of a pipedream, but perhaps the open service provider that already has that perfect mix of product, service and value might just be able to turn openness and interoperability into a fourth competitive advantage!

It is inevitable that despite upgrades and constant development, enterprise systems will age and eventually become obsolete. The million dollar question for the organizations which depend on such systems is not if they should be replaced, but rather, when they should be replaced.

How to make the decision to upgrade your ERP Software

Probably the most important consideration for executives faced with this issue is the necessity to separate the decision to change from that of deciding when to migrate and which system to select. This distinction has become more significant in our quarter-century experience in the industry. Here is why.

Deciding that it is time to move off the existing system should have little to do with the choice of its replacement. The reason is quite simple. At issue at this juncture is a really quite simple evaluation: is the existing application no longer suitable? If the answer is ‘Yes’, then a replacement should be sought.

When evaluating the existing system, he says key issues to consider include its ability to support the business operations and strategy. The system may be acting as a constraint, perhaps as a limitation of the underlying technology. For example, many DOS-based accounting systems prevented companies from performing functions now considered the norm. Automatic production and emailing of PDF invoices and statements was not possible; companies using such systems were limited to cumbersome paper and fax based solutions, resulting in unnecessary costs and processing time.

More recently, integration and workflow technology have evolved significantly. Many older systems cannot provide integrated business processes, requiring external systems which add complexity and which reduce efficiency.

I need to upgrade my ERP software, now what?

Once it is established that a shiny new ERP solution is the way forward, a new set of challenges is presented. Evaluating alternatives is a difficult, high-stakes responsibility. It starts with clarifying requirements; experience has proven that those companies which know what they want, with a well-defined and clearly articulated list of requirements, tend to have higher satisfaction from their deployment than those that figure things out as they go.

Critical Business Issues approach

A proven approach is to identify what we call ‘the CBIs’. These are the Critical Business Issues, and by that, we mean ‘What makes a company tick? How does it create value? What are the key measures that need to be monitored or controlled?’

If a system under evaluation doesn’t address the CBIs, the action to take is quite simple. It should not be investigated further. This is a useful filter because it is quickly applied and narrows down the number of systems to be considered.

Of importance, too, is the necessity to clarify the decision-making criteria. Making decisions is easier with a structured approach. While there are many other approaches, I have used the Kepner-Tregoe Decision Analysis methodology, which advocates identification of the criteria for success, and ranking these before considering options. The methodology also provides a structured way of evaluating alternatives using these criteria, and a risk assessment tool.

Narrowing down ERP software choices

As the process narrows down, the time will come to select several potential systems for evaluation. Since evaluation itself is a time-consuming process, the range of options should be substantially reduced to systems which are definitely viable and then choosing from those.

While some systems enjoy a high-profile and will generally be included in any initial list, there are many that do not enjoy the same level of marketing, but which may be a better fit for particular companies. Newer web-based solutions, for example, don’t enjoy the level of marketing that established players do. But, it is well worth exploring these especially in terms of examining international presence and performance. They may enable a level of transformation in your business that more established vendors cannot provide.

Online research provides extensive information and opportunities to identify, explore and evaluate potential systems. Don’t limit the options to what you see on billboards; look beyond the obvious choices as therein may lie the opportunity to introduce changes that could deliver competitive advantage.

And finally, thorough research should also expand your horizons beyond those that existed when setting out on this journey. Our ability to conceptualize new solutions is too often hindered by prior experiences. Our knowledge of current and prior solutions creates blinkers that may prevent us from perceiving solutions that lie outside of our sphere of experience. It is good practice to revise the decision-making criteria based on research findings, before finalizing the selection criteria.
 

 

 

About Computer Initiatives
Computer Initiatives is a specialist provider of accounting system solutions, providing support and implementation of ERP software. The recent addition of cloud-based ERP and CRM means that Computer Initiatives can offer a fully web-based solution to address the requirements of clients taking a strategic view of how to deploy systems that enable them to leverage the power of “The Cloud”.

Nothing lasts forever, especially not in the information and communications technology industry. Even those enterprise systems which have delivered sound and dependable service over the course of ten or more years, and which aren’t broken, may yet require replacement. That’s not so much a factor of their inadequacy, but rather an inevitable consequence of progress which renders even the best systems eventually obsolete.

Can I Continue using my Aging ERP System?

The familiar expression of ‘if it ain’t broke, don’t fix it’ doesn’t apply universally. If advantage is not taken of the new capabilities and possibilities which are emerging, your company could become uncompetitive. So, while your old ERP system may be functioning perfectly, it may already be impeding your business performance.

Or, more simply, emerging software models mean the ability to achieve the same – or better – business performance at far lower cost. That means reduced cost of production and quite possibly increased productivity, too.

But what becomes of aging technology and, perhaps more relevant to those saddled with it, what of the users?
That is something we have borne witness to over the course of a quarter of a century. As systems approach end of life, a number of symptoms emerge, apart from there being fewer users and a reduction in the number of new implementations. The average age of people working with the systems increases and it becomes harder to find the necessary skills as individuals update their CVs to secure employment on emerging platforms. Older employees may be less inclined to face the challenges of learning new products, and so remain within the shrinking pool of resources with reduced mobility between companies. Support costs are bound to increase.

Aging Systems – Customer Acquisition Target

Perhaps interestingly, even in the sunset years of a system, a mass exodus of clients doesn’t always manifest; the vendor may instead become a target for acquisition. That’s primarily driven by the value seen in the client base; transition may then be encouraged through neglect of the acquired system.

In such scenarios users should consider some questions to guide strategy: It is worth investigating what a change of ownership communicates. What is the practice of the acquiring company? Has it acquired other products in the past? How has it developed those products? How has it integrated them with its existing stable of products? What has been the experience of customers of the system it acquired? The answers may be telling – and could provide valuable insight into the best way forward.

Pro’s and Con’s of Older ERP Software

Working with a system which is nearing end-of-life isn’t all bad news. There are both positive and negative aspects; the extent to which it is still suitable for business requirements depends on the strategy and requirements of your business.

PROs: On the up side, older systems are often settled and therefore stable; any bugs are ironed out and for those companies that don’t need to change business processes, stability means lower cost of ownership. Support is easier, as users are familiar with the system; maturity also means depth of functionality and also depth of skills in the market (although the persons providing that support may themselves be aging and because of their seniority more expensive).

CONs: The major disadvantage is the inability to take advantage of new ways of working; specifically, concepts like web accessibility, cloud computing, better integration of value chains, and the associated features of software as a service may be out of reach. Difficulty may also result when using new technology in other areas of the business with the ERP system, while compatibility issues may result with new operating systems and other peripheral systems which have faster refresh cycles.

Conclusion – Taking Action

Ultimately, it is as important to examine the reasons for making the decision to remain on older technology, as it is to evaluate the case for moving to new. What should be ascertained is whether or not the current system is inhibiting opportunities, and whether new technology will add value to the company. Will it save costs – and can new technology enable changes to the business which can boost performance? Does the business have requirements that traditional ERP systems do not address? The answers to these fundamental questions should guide the corporate ERP strategy.
 

 

 

About Computer Initiatives
Computer Initiatives is a specialist provider of accounting system solutions, providing support and implementation of ERP software. The recent addition of cloud-based ERP and CRM means that Computer Initiatives can offer a fully web-based solution to address the requirements of clients taking a strategic view of how to deploy systems that enable them to leverage the power of “The Cloud”.

ERP Systems can become Obsolete
Image used with permission from TechyShit.com

Key Technology Changes Impacting ERP

During the past 25 years, we’ve had ringside seats to what happens when products reach end-of-life. Recognizing this phase can be important if you are to take your company smoothly into new-generation solutions – and avoid becoming saddled with a system which inhibits business performance amid escalating support costs.

When software is developed, it is done so within the context of a specific set of technologies. At the time of conception of an enterprise solution, there is a dominant technical framework, with emerging technologies providing new ways of addressing requirements. Within this context, successful software displaces current solutions by providing significantly more than the incumbent market leaders. It does this by utilizing new technology and techniques, adopting programming paradigms previously not possible as the basis for design.

The IT industry is famous (or infamous) for it’s pace of change; the very nature of the way in which technology develops lays the foundation for obsolescence. At some point, a tectonic shift occurs, rendering the fundamental design of an existing system obsolete, with no simple path from the present design to the future.”

Examples of this shift in programming paradigms are clear in the progress from simple assembly languages, to procedural languages and on to object-oriented programming. The point is that these advances enable software developers to do far more with the applications they create. That, in turn, translates into the ability for businesses to function more efficiently and more effectively. In short, the work of the programmers can and often does support the competitiveness of the businesses using their applications.

Today’s Technology – Cloud Computing

The major shift underway today is the emergence of cloud computing as a proven, viable means of software delivery. The dramatically reduced price of operating cloud-based systems completely shifts the cost-base. Those companies which adopt cloud computing at an enterprise level may face risks associated with early adoption, but they are also likely to enjoy enormous advantages in lowering the cost of production. We have seen businesses transformed in ways they could not have imagined by enabling staff to access their system from anywhere with only a browser. The more distributed the operations of a business are, the more significant this transformation is.

However, the shift toward web based solutions also means that many vendors will lack the ability to reinvent solutions which are rooted in now-obsolete programming (and even business) models. These solutions will settle into an extended period of decline.

How to Recognize an Obsolete System

The symptoms of such a decline are clear in road maps, versioning, and the pace of improvements and enhancements. A solution is in trouble when the vendor stops publishing the road map, or when it becomes vague or merely focuses on issues such as compatibility with new operating systems and database versions.

And as end of life approaches, new versions contain few major improvements to their capability. A distinctive trait is the ‘lipstick on a pig’ problem, where new versions provide cosmetic enhancements while significant functionality remains unchanged.

A notable example surrounds the emergence of web enablement; older products unable to be deployed in this manner are ‘wrapped’ with technology that renders their old screens via a separate web service. However, the limitations of the older architecture will continue to operate as a constraint on conceptualizing and implementing new ways of working. Ultimately, the design deficiencies aren’t addressed, as they become prohibitively expensive for the software principals to correct.

The more-aware users of such systems are also likely to understand and appreciate the consequences of impending obsolescence and seek improved alternatives. As a consequence, the vendor in question will experience a decline in market share and a reduction in implementation and support partners.

Conclusion – Taking Action

Recognizing the signs is one thing. Taking action is another. Anyone working in this industry knows that change is rapid and that new advances can fundamentally affect business performance in terms of costs and also new capabilities which can accelerate productivity or efficiency. Modernizing the software that runs your business can mean the difference between competing effectively and struggling to keep up.

Next: read part 2, What Becomes of Aging Technology – and its Users, of the 3 part series.
 

 

About Computer Initiatives
Computer Initiatives is a specialist provider of accounting system solutions, providing support and implementation of ERP software. The recent addition of cloud-based ERP and CRM means that Computer Initiatives can offer a fully web-based solution to address the requirements of clients taking a strategic view of how to deploy systems that enable them to leverage the power of “The Cloud”.

Software as a Service (SaaS) provides an option for businesses to “rent” software. For applications that are easy to install and learn, the rental term is often monthly, while more complex solutions such as accounting and ERP software offer annual rentals.

In this article we take a deeper look at equating SaaS with the term software rental.

Why rent when you can own?

People are taught that it’s good to own things. Most people believe that owning a car, a refrigerator, furniture, televisions, vacation properties, and other tangible assets is less expensive that renting. In some cases this is true, but there are situations where renting can be less expensive (home ownership example in San Francisco).

People and businesses with sufficient cash positions will almost always purchase goods instead of renting them. Long term savings, perceived benefits of ownership, control over rental price increases, and freedom to do what you want with the item are reasons people give for owning.

But renting also provides several advantages. From a short term cash-flow perspective, renting ties up less capital. As a renter, you do not always have the hassle of maintaining the item or the risk that the item becomes defective. Rental items are also less complicated to dispose of. In the case of ERP software, the costs of maintaining the operating environment can be substantial.

Ownership with rental cash flow

Traditional on-premise software is almost always purchased; however, companies looking to maximize access to short term cash can find financing options to convert a one-time purchase into a series of monthly payments. There are many leasing companies such as Navitas that make these arrangements. Leasing can provide similar cash-flows to SaaS, but there are many differences …

Comparing software as a services (SaaS) to rental models

SaaS is more than just a rental. SaaS is a service that includes hardware, software, updates, bandwidth, electricity, redundancy, support, and more. The software component of SaaS is delivered over a distance and updated with new functionality at regular intervals.

Key talking points:

• Location: SaaS involves delivering work over a distance while most rentals involve taking temporary possession of physical goods (furniture, cars, tents, other assets). With ERP software “work” can include creating a financial statement, approving an invoice, and managing inventory.
• Ownership: Like most rentals, SaaS does not allow you to own the infrastructure for doing your work. This is often seen as a negative – but lack of ownership means you don’t have to understand how to maintain and repair the service. SaaS includes software updates, redundancy, up-time, and other complexities wrapped into a service level agreement.
• Maintenance: Typical rental goods (e.g. furniture) are easy to use and maintain. Maintaining ERP software is much more complicated and requires in-house expertise. A rental model that includes software plus the experience to keep it running is appealing to companies without in-house expertise. Without in-house experts, you have to contract with an outsourced IT firm or hire an expensive resource to maintain the system. For these reasons, SaaS can be les expensive in the long term. (see cloud software pricing article in ERP Cloud News)
• Price Control: Ownership allows you to control prices (you pay for it once), but you may encounter unexpected repairs. Renting (and SaaS) eliminate the cost of unexpected repairs, but the price of your service can change during your renewal. Many ERP software vendors raise prices because the switching cost is high. This lock-in has deterred some people from purchasing SaaS.
• Customization: Imagine renting/leasing a car, painting it pink and green polka-dots, and then returning it. SaaS differs from rentals in the sense that some modifications are possible. Since the cost of creating a copy of the software is nearly free, SaaS does not have the strict limits of physical rental goods with regard to customization. However, SaaS solutions are not completely customizable. If you want to change core business logic, accounting logic, or build interfaces to on-premise systems, SaaS can limit your capabilities. If you own the software and have access to source code, then you will have more customization options. Just be careful … too much customization to a complex ERP system can lead to undesirable results.
• Protection from obsolescence: Short term rentals never become obsolete, because you can return the item and rent something new. With ERP software, it’s not so simple. In theory your SaaS vendor keeps making updates so that your software never becomes obsolete. But, if you want to ‘return’ ERP software, then you need to undergo costly training and data migration to a new system. Vendor lock-in that originates from high switching costs is an aspect of ERP SaaS that is not a problem with rentals or simple software.

Conclusion

SaaS has many similarities to a traditional rental arrangement, but comparing SaaS to a pure rental model is not comparing apples to apples. Payment arrangements, maintenance benefits, customization limits, and ownership rules are similar between SaaS and rentals. Differences include the degree of customization (none in rental versus limited in SaaS), protection against obsolescence, ease of disposal, and the services included with the software.

A better SaaS to license comparison would involve comparing a bundle of renting software and contracting with a consultant versus purchasing software and hiring a employee. The software and the person each represent a complete system that can do work. By layering on the idea consultant versus employee, we capture the fact that a consultant is easier to hire (SaaS is easier to install), less work to manage (SaaS doesn’t require maintenance), and more expensive in the long run (SaaS is usually more expensive over multiple years). The consultant/rental model also represents the idea of limited customization because you can modify the consultant’s tasks, but still are limited with what you can do with the software. Finally, the constant represent the idea that you get the services with the software versus the employee who develops the skill to run the software in-house.

Some software packages allow you to use the same software as a rental or license and give you the flexibility to include your own services. In these cases, you can craft a program that meets your financial needs as well as your level of experience.

Resolutions Applied to Business Software

The most popular personal resolutions from the sites above can also be applied to business software. In this article we describe the tools available to help you achieve your business resolutions.

1. Lose Weight, Trim Down

The #1 personal resolution is very applicable to business software. Many ERP deployments suffer from code patches, bulky client software, and customizations that lock businesses in to old technology. Just like personal weight issues, software bloat can cause issues that develop over time. Your business becomes less responsive. Changes to business processes become more difficult. Maintenance of your software becomes more expensive and provides fewer and fewer benefits.

Following through on your resolution

Deploy web-based software to eliminate client software installations and reduce the complexity of maintaining applications on Windows, Linux, handheld devices. Just like losing weight, purchasing a new ERP system is a process that requires a plan and execution. But, the longer you put it off, the more difficult it is to accomplish.

2. Save Money, Stick to a Budget

Another common personal goal is to save money and adhere to a budget. Sticking with a budget is perhaps even more difficult in a business environment because there are many more uncertainties and unknowns. This is especially true if you are using antiquated software that cannot adapt to new business opportunities, split out costs by department/product, or integrate with other systems.

Following through on your resolution

Cloud and web-based accounting software delivers key advantages that will help your financial processes. First, the Cloud delivers real-time data and reports to your home office, remote offices, and business partners. Second, the Cloud is easy to deploy to all people in your organization. By involving everyone, you ensure that processes are not left out and get a clear picture of revenue and expenses throughout your organization. Finally, if you are still using QuickBooks and you suffer from multi-currency issues, lack of a complete audit trail, lack of integration with other systems, or lack of a centralized view of your business, then consider upgrading a more advanced solution in 2012.

3. Get a Better Job

Many individuals pledge to get a better job in the new year. For businesses, outdated software can be a major source of job dissatisfaction. Old software increases complexity and creates manual work for employees. The net result is longer hours, mistakes, blame, and less productivity.

Following through on your resolution

Upgrading to a modern Cloud ERP package can improve your job and your work environment without the hassle of finding a new place to work. Imagine performing your most tedious daily task with a point and click/press from anywhere you happen to be. Tracking sales leads, managing inventory, merging online/offline sales orders, creating accurate financial reports, and getting purchase orders approved are all examples of processes that can go from misery to automation with the right ERP software.

4. Enjoy More Time with Family and Friends

Spending more quality time with family and friends is one personal resolution that is a bit tricky to translate to business. Not many people will pledge to spend more quality time with business associates. However, improving your business life can help you achieve your personal goals.

Following through on your resolution

Installing a cloud solution that provides access from anywhere will help you be productive, even when you are not in the office. Approve an expense report, confirm arrival of a shipment, note a conversation with a sales prospect, and perform other business tasks. Of course, working on your mobile devices while you are ‘spending quality time with family’ should be done at your own risk.

5. Get Organized

In your personal life getting organized involves arranging personal items, cleaning up trash, and getting on top of your to-do list. In business, many of these same tasks apply. Automate your to-do list. Clean up dead inventory, old data, and unimportant tasks. In your personal life, the main obstacle is time and motivation. In business, an old ERP system is often the biggest obstacle to achieving organization. Old ERP software prevents rapid exchange of data, simplified auditing, and process automation.

Following through on your resolution

Take a couple days to define all of your business processes. Then determine essential processes, important processes, and nice-to-have processes. Next, contact your business partner or software vendor and schedule a meeting to discuss process improvement. Determine which essential tasks are being impacted by corrupted data and determine essential and important processes that would benefit from automation. Your business partner or software vendor should be able to give immediate feedback on the viability and ballpark costs associated with automating business operations.

Summary

The New Year should be a time to set business resolutions in addition to personal goals. Making a pledge to get the software you need to run your business better will improve your business. This is especially true if you are running a system that is 5+ years old. Then, once you get your business running better, you will have more time and more money to work on those personal resolutions you’ve been making.

Cloud ERP Adopters – Testimonials and Complaints

I’ve spoken with several folks who have deployed ERP systems. In a few short sound bytes, these users reveal their opinions, both good and bad. The customer names and vendor names have been omitted to protect the sources and avoid a slew of defensive rebuttals. I should be noted that these comments represent a random sampling, not merely quotes from the list of happy customers that you see on vendor websites.

We thought that connecting to a US based cloud service would be terribly slow, but it worked quite well. The software eliminates the amount of data that is transferred, making the response time faster than we have experienced with websites that contain too many graphics and flash movies.
– Distributor in Africa

The ERP software works well, but the Cloud service has slowed operations on a few occassions. I like the fact I’m not worried about IT resources, but I’m considering running the software on an internal cloud so I can eliminate occassional performance issues.
– Manufacturer in Southern US

Cloud ERP gives us the capability to summarize data from multiple locations to get summary reports at headquarters and still maintain the detail to see how individual franchisees are doing.
–Franchiser in Southeast Asia

The cloud eliminated client software so we can easily involve business partners and remote employees without the hassle of installing and maintaining software remotely. This allows us to centrally manage sales across multiple suppliers and distributors while keeping costs low.
– Online retailer in Eastern US

We have been able to customize [vendor name removed] to meet most of our needs, faster and at a lower price than we would have with any other system.
– Software Company in Eastern Europe
 

We needed to customize our [same vendor as above] software, but the cost quoted by [vendor] was more than 3 times the annual cost. This locked us into a solution that was not able to suit our needs.
– Software Company in Northern USA

The cloud allows me to try the software solution before I buy. Three years ago, I purchased a legacy system from [vendor name removed] and made the mistake of buying into a feature set that was promised in a future release that has yet to occur. The cloud lets me see existing functionality and learn quickly what I am capable of importing and customizing.
– Ecommerce company in US Central

We’re very happy with the software and quality of service delivered by [vendor name]. By removing the complexity of software we can focus on running our business. However, recently [vendor] announced a price increase that more than doubles our current price. The cost of switching to another solution is high, so we had little choice but to absorb the price increase. The price increase eliminated the savings we got by switching to the Cloud.
– Ecommerce company in US Central

Common praises and concerns

The quotes above mirror many testimonials and criticisms of Cloud ERP. On the benefit side there is access from anywhere, scalability, reduced implementation time. On the negative side there can be price/vendor lock-in, some performance issues, and software ownership issues.

As with legacy ERP software, customer expectations and preparation play a large part in overall satisfaction. For example, two customers using the same vendor had very different results with regard to cloud customizations. One customer reported a positive experience while another complained of proprietary tools, lack of on-premise integration, and highly specialized programming requirements. This shows that each customer implementation is different. This makes it difficult to make blanket statements that pertain to all Cloud ERP customers.

One statement that is true across client-server and cloud ERP: customers with a well defined and well prioritized list of requirements tend to have higher satisfaction from their deployment than those who figure things out as they go. This best practice is the same in the cloud world as it is in the on-premise world.

Summary

Different people had different experiences regarding their cloud ERP deployments. Most were very positive and mentioned common benefits such as lower maintenance costs, less IT hassles, and access from anywhere. In a couple cases customers complained about vendor lock-in when faced with slow performance or increasing prices. Overall, the cloud ERP experience in 2011 was very positive and folks were planning on increasing their cloud spending in 2012.

¹ The ROI Of Cloud Apps, Forrester, June 2011.

CFO Involvement

Thirty years ago, managers didn’t need to know how to operate a keyboard. There were secretaries to type letters and agreements that formalized phone conversations. Times have changed. In addition to understanding business, today’s managers need to develop a working knowledge of the software tools that are designed to make their job easier. The CFO is not exempt.

Over a quarter (27%) of CFOs say they’ve become more involved in their company’s operations over the past three years, and 15% say specifically that they’ve become more involved in IT according to a recent report by Robert Half Management Resources survey of 1,400 CFOs. There has been plenty of information and hype about cloud computing with a strong shot of technical jargon thrown in.

Cloud Software, IT, and the CFO

Some IT professionals are threatened by the perceived notion that the cloud will make their jobs obsolete. The reality is that IT jobs will change, but will not be eliminated. IT personnel will become more involved in the business and less involved in the day-to-day management of servers and software updates.

Some CFOs are worried that the Cloud limit the control they have over data. As the steward of the organization’s financial well-being, the CFO has the responsibility to understand the current transformation in IT and provide guidance. With a predicted increase in IT spending of 7.1 percent over 2010 (worldwide IT spending is forecast to total $3.67 trillion in 2011) according to Gartner’s 2011 Q2 update, there is a lot at stake.

Just as IT needs to understand more about the business, CFOs and COOs need to understand more about software options available to them. Getting smart about the cloud is becoming easier with a proliferation of objective articles and white papers. Some ERP Cloud News articles discuss ERP cost comparisons, security issues, and 2011 predictions.

More Information for CFOs

Recently the ERP Software Blog published a white paper targeting CFOs who want to get smart about the cloud.
This paper gives CFOs the foundation ask educated questions and lead discussions about moving ERP software to the cloud.
You can read the white paper on the ERP Software Blog at www.erpsoftwareblog.com/cloud-erp.