The Financial Case for The Cloud

In this blog entry, I want to take on the financial case for moving your business to the Cloud. First, let’s discuss what the Cloud is and what it isn’t in the context of business applications. According to NIST (National Institute of Science and Technology) “Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. This cloud model promotes availability and is composed of five essential characteristics, three service models, and four deployment models.”

NIST further defines that there are 5 Characteristics
1) On-Demand Self Service
2) Broad Network Access
3) Resource Pooling
4) Rapid Elasticity
5) Measured Service

The Cloud, for purposes of ERP and CRM applications, will be discussed in the context of Software as a Service (SaaS) and in a Hybrid Cloud model. This means that we won’t discuss Platform as a Service or Infrastructure as a Service nor will we discuss community or public clouds.

Now, let’s tackle the financial case for the Cloud. Having been in this industry since 1994, here are my observations about business applications. First, every business needs business applications. Typewriters are replaced with Microsoft Word and related applications. 13-column ledgers (yes, remember those big green sheets in the Accounting Department?) are replaced with Excel and accounting applications such as Dynamics GP (Great Plains) and SL (Solomon) or at the very least, off the shelf software like QuickBooks. Rolodexes are replaced by CRM systems of varying sophistication such as Act or Dynamics CRM. So the conclusion is that business applications are here to stay. Are you willing to give up your e-mail or your smart phone?

How did we get where we are at? In the 1980’s, the microcomputer began replacing the mainframe and became prevalent in business. This grew into a multi-billion dollar industry over the course of the next few decades. Solutions grew up around the networked PC and then quickly transformed into individualized computing power. Every user now has the ability to create their own Word documents, enter accounting transactions and track sales. This functionality is available for every business that can pull out a laptop or desktop and setup a business. This disruptive change has lowered the barrier to entry for every individual and company. We need only to look at the music industry changing from powerful record labels to individual musicians publishing their music to iTunes.

Today, disruptive forces abound. I am not an economist but I see the effects of the economy on business. It affects almost every industry and every company. Businesses today are forced to watch every dollar they spend and tie it directly to revenue and profit. Therefore, businesses are very smart about their investments and therefore are spending on assets that directly improve their bottom line. Since 1994, I have said many times that accounting and CRM systems are necessary for every business whether in good times or bad. In good times, businesses need to capture more customers than their competitors. In bad times, businesses need to serve their existing customers so they don’t leave and they need to control costs.

However, business applications that were bought just five years ago do not provide the critical functions needed in this economy. Further, what if this economy doesn’t turn around for a few years? What is a business to do in order to either maintain their market share or ideally capture market share from the competition?

Investing in a new ERP (Accounting) or CRM (Sales) system has historically required a significant amount of capital to be used up front to buy software and an equal or greater amount of capital to implement the software. This is capital that most business advisers would recommend being used for new machines, labor or other revenue and profit initiatives.

The solution is to research and deploy cloud-based solutions such as Microsoft’s Exchange Online, NjevityToGo ERP (Dynamics GP & SL) or NjevityToGo CRM (Dynamics CRM). These solutions have the same low barrier to entry that every business expects today. Most businesses pay $100 to $150 per user per month for a smart phone and service. For the same cost per month with a much smaller number of users in the business, you can deploy Microsoft Dynamics GP Accounting software to provide full financial, distribution, reporting and business intelligence functionality.

This is a great leveling in the playing field between you and much larger competitors. In fact, you as a small business, have the upper hand! You have an unprecedented opportunity to implement a new system whereas your larger competitors will still be spending money on their old system with old capabilities.

Our approach to implementation, the other major expenditure you have in a system change, is the key to a successful low cost solution. With our QuickStart and SmartStart implementations, we provide you with project plans, templates, online training and a host of additional resources to reduce the costs of implementation. This approach puts the majority of the data conversion, training and report writing work on your team. The result is that you do not need to pay consulting fees and your team learns the system much quicker. There is also an ownership of the new system that results from this approach.

In conclusion, the time to make a business application change is now. It is time to capture market share from your competition. It is time to streamline your business processes. It is time to finally be able to make informed business decisions. If you have further questions, contact me: Robert Houdeshell for a custom presentation. I am willing to work with you to lay out a plan to improve your business and capture more of the revenue and profit your company deserves.