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Dan Druker
Dan Druker

Cloud Financials Come of Age

Cloud computing is quickly becoming a part of what every company uses to run their business! Experts at Saugatuck Technology reviewed the financial, technological and operational advantages the cloud has to offer. Read their results.

October 8, 2009

Sponsored by Intacct On-Demand Financial Applications, an AICPA Member Elite Values Partner

by Dan Druker, SVP of Marketing and Business Development, Intacct

Cloud computing has become one of the media’s favorite technology topics. Driven by the ubiquity of the Internet, cloud computing allows you to use a Web browser to access your business applications — just like you use a web browser to use Google, Amazon or do online banking. Someone else runs your applications, on your behalf, out there in the Internet cloud. You no longer have to worry about internal IT infrastructure — which requires capital investment in hardware and software and IT staff to maintain and operate your systems. Instead you just use the applications — turning capital costs into variable costs and getting you out of the no-value added IT business. A recent Nucleus case study on nGenera, a leading software company based in Houston, TX, found that moving nGenera’s financial applications into the cloud helped them generate 589 percent ROI (return on investment), with payback in just two months.

Moving to the cloud can yield remarkable benefits, but you need to be aware of and manage an additional set of requirements when you evaluate and select cloud-based applications. Not only do you have to think about solution fit, implementation success and support quality like you do when evaluating traditional software, you also have to consider the vendor’s operational track record, the infrastructure and security of their data centers and their ongoing business practices and culture. Your cloud computing vendors will be running applications for you — and you want to make sure you’re comfortable with how they handle your data.

Recently the experts at Saugatuck Technology took a close look at whether the cloud was ready to take on financial management and accounting applications and more importantly, whether they could do it better than existing on-premises software. Below you can read an excerpt of their research paper “Cloud Financials Come of Age” that focuses on the experiences of finance organizations that have moved their business applications to the cloud.

If you’re interested in reading the full article which covers the financial, technological and operational characteristics of cloud financials in detail, you can download it here.

Excerpt From 2009 Saugatuck Technology Whitepaper Cloud Financials Come of Age

The SaaS Advantage for Finance

On the application software level, the SaaS provider ensures a continuous stream of ongoing upgrades to the business solution, all behind the scenes. Unlike in a hosted software setting, the new releases and functional upgrades are all included in the “per-user, per-month” pricing (or whatever other metric may be appropriate). There is no annual maintenance surcharge of 22 percent of the list price of the vendor software. And if the needs of the business should expand or contract significantly, it is simple enough to add or subtract licensed seats without any worry about purchasing or disposing of computer hardware, software or networking — or hiring and firing the trained IT technical staff to manage it. In fact, that may be the most significant unstated and unexpected benefit of SaaS: It is a completely scalable business resource that does not require large capital expenses at any time. Moreover, Cloud solutions offer unique business advantages, particularly to small and midsize businesses, that on-premise solutions do not — financial, technology and operational advantages — including improved transparency and support for decentralized organizations.

Financial Advantages

Time to Value — SaaS is quickly installed and more quickly made part of the work process when compared with on-premise software. Often it is possible to self-provision a trial use, or “try before you buy,” a SaaS solution to get a feel for how it looks, feels and operates. Typically, once licensed, a SaaS purchaser is up and running in a matter of days or weeks, rather than months, as is more frequently the case with traditional vendor software. As a consequence, the SaaS purchaser can begin to realize the business benefits earlier. The payback period is much quicker, and the ROI is significantly better than with on premise software.

Affordability — SaaS does not require a large up-front investment and, especially in a recession, presents less of a financial hurdle when compared with on-premise software. Small-to-midsize businesses with limited capital budgets and limited IT support will find SaaS is far more suitable to their needs than on-premise software. Two recent studies comparing the total cost of ownership of SaaS versus on-premise software each show approximately 30 percent lower costs with SaaS, whether the implementation is for 30 (Yankee Group) or for 200 (McKinsey Consulting) users.

If you’d like to continue reading about the technological and operational advantages, you can download the full whitepaper here.