Cloud Computing Pros and Cons, Benefits and Pitfalls

Tim Williams's Profile

Cloud Computing Pros And Cons

I see that Proformative is offering a seminar on cloud computing later in March, but I will not be able to attend so I am hoping to elicit some insights directly from the Proformative community regarding cloud computing

 

We are considering upgrading our technology and I was wondering who here has experience with the new SaaS or Cloud platforms and what the feedback is? Is it better and cheaper than desktop/server-based or not? What about implementation – high or low cost and difficulty? Some of it sounds too good to be true, to be honest. FYI, we are a mid-sized software developer (~200 emps) and are considering what to do with accounting and planning systems as well as CRM.

 

Answers

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If I were implementing a new system today, I'd look at Intacct. Google them--they have an online demo.

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Our company conducts many short-term consulting projects (c. 1 week) and faced challenges with timekeeping, resource (personnel) scheduling, expense reporting, document management, and billing. OpenAir has been a good solution for us. Our workforce is spread all over the U.S., and a cloud solution vs. server/VPN is very efficient. Integration with QuickBooks is a bit clunky, but it works.

We also use Salesforce Enterprise for tracking opportunities and commissions. We are able to move opportunities in Salesforce to create Projects in OpenAir.

From my pov as Controller, OpenAir is reasonably priced; Salesforce is rather expensive.

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I have looked at a number of SaaS systems and a few things to watch for are:
1)Integration and customization costs. The vendors like to have you think there will be virtually no cost here and that this is a cost-saving area vis-a-vis "traditional" systems. Not true. Everyone has their out of the box functionality and that either works for you or it does not. I found that SaaS is just as likely to need customization as anything else, so budget accordingly.
2)Those monthly per user fees can be killer. sf.com is a great example. It gets expensive quickly if you have a number of users on it - and you pay every month. It adds up. If you are looking at having people throughout your organization use parts of a platform, say accounting, finance, HR, sales and marketing, suddenly you may have dozens of users on board and costing you every month. If you want to use something like purchase order workflow, which would be utilized by almost everyone at the company, you have to account for the cost of all of those users every month.

That said, the promise of ubiquity and access on a rental basis can certainly be attractive, but watch out for the pound of flesh. These companies are in it to make money just like the Microsofts and Oracles of the world. Note that this is not a commentary on the appropriateness or functionality of these systems, just the cost.

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Our company is currently in the process of going 100% SaaS. We implemented Workday (www.workday.com) as our platform for financials in January 2009. Since going live we have partnered with Workday and successfully integrated SalesForce.com and CyberSource to streamline the customer invoicing process.

Workday has the ability to be both an HR platform as well as a Financials platform. We currently only operate the Financials platform but are looking to actually move off of ADP and onto the HR platform Workay has.

We actually don't have a per user license fee and have unlimited licenses. I love the ease that comes with Workday and the SaaS platform. Easily being able to have employees and managers log in from any where (including their IPhones) and approve items makes the process go much quicker.

I find it hard to think about working anywhere that isn't on a SaaS platform in the future.

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How is the financial report writer functionality in WorkDay? I looked at NetSuite a couple of years ago and that was one area where they lacked.

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It definently was rocky at the beginning, but it is getting better and better over time. Workday does 3 updates each year while they are enhancing the system and continually take input from existing customers on their needs and wants.

The best thing about the reporting is the ability for the end user to create what they want and they use what they call "Worktag's" accross the entire financials application which makes it really easy to dice up the data and get the information from all different perspectives. I can pull up a P&L and then look at it for just one cost center or one line of revenue.

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Proformative Advisor
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It has been a while since you posted about Workday. Curious to see if you have any new feedback on the product. I haven't heard much about them, but the product seems interesting and they have a fantastic leadership team.

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IT Business Edge included Cloud Commputing on its list of Top 10 Threats for 2010 so it would be prudent to look into the security aspects of whatever solution you are looking at.

http://www.networksecurityedge.com/content/top-10-information-security-threats-2010&utm_source=itbe&utm_medium=email&utm_campaign=FNS&nr=FNS

#9 - Cloud Computing Security Threats (Rising Threat)
Cloud computing is a concept that is becoming very popular. While it still means a lot of things to a lot of people, using cloud based (i.e. Internet based) applications may not be as secure as you might hope. There were many stories in 2009 regarding cloud based security. Many are calling for forced encryption to access many of these services. While it seems ludicrous that this isn’t done by default, you can’t simply assume cloud apps are secure.

Some cloud computing security threats come in the form of vulnerabilities such as the October 2009 story that attackers exploited a web application flaw to hijack Yahoo Mail accounts. This was a brute force attack where the hackers use software to systematically guess the passwords. Someone even went so far as to post the passwords, where there were many common ones such as “password” and “123456”. Poor password policies and software that doesn’t limit this type of attack will always lead to compromise.

As cloud computing becomes more popular in the next few years, we will see the issue of cloud security become a very big issue. There will be no shortage of cloud based security issues in 2010.

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Proformative Advisor
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I implemented Host Analystics a couple of years ago in a half billion $ revenue environment with multiple locations and department and cost center managers. We had great success with the product, in a very complex environment. Myself and my IT team were able to get comfortable with their security and in fact I would say were more secure and disaster resistant than we were in house. Updates were fast and seamless. Outside of initial set up, which still requires the work you would have implementing an on site system, my IT team had to provide little service which was great for them and FP & A. The managers loved have the data at their own fingertips and not being held hostage by accounting. I loved the process. BM

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Private Cloud security is generally superior to the public cloud...if it's for your business use only then a hosted private cloud solution may be the way to go.

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1) "Is it better and cheaper than desktop/server-based or not?"

Better is in the eyes of the beholder. Some people will choose on-premise Microsoft software for their business because it has a similar feel to their Outlook and Office. Others will buy cloud computing solutions just because their on-premise system isn't cutting it and they like the idea of web-based financials and its "anywhere" access.
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Cloud Computing Pros:

a) Eliminate Hardware & Maintenance - Web-based, so there's no need to purchase hardware. Eliminate costs and headaches of maintenance on servers, databases, backups, patches and upgrades. All of it is done for you by the vendor.
b) Pay Only for What You Use- Subscription-based pricing can be less expensive than an up-front license fee.
c) Real-time data - everyone can see the same reports and collaborate without version issues
----------------------------------------------------------------------------
Desktop/server-Based Pros :

a) allows you to do upgrades at your own pace
b) you "own the software"
c) complete control over issue resolution, security, data and service pack updates

Neither cloud computing or on-premise solutions are inherently cheaper.
=====================================================================================================
2) "What about implementation – high or low cost and difficulty?"

Cloud Computing : Expect to pay 1-1.5x the cost of your license fees for a solid implementation. It is usually easier because there is no hardware or software to install, just data migration and customizations.

Desktop/server-Based : Usually higher cost for hardware and integration with current infrastructure.
==================================================================================================================================
3) "Some of it sounds too good to be true, to be honest"
Anyone who claims either option is inherently "better, faster and cheaper" is not being transparent. They really need to understand your needs and limitations before promising the world.
===============================================================================================
4) "FYI, we are a mid-sized software developer (~200 emps) and are considering what to do with accounting and planning systems as well as CRM."

Another key factor to consider is which system is your company more likely to adopt. If your sales team is used to spreadsheets to track their performance, getting them to use a CRM might be difficult. Even when the CRM is enacted, the data fields in popular CRM's are free text and there are no standards for each field's entry. This lack of standardization can be a nightmare for accounting.

To comment, and for full access, login or register
Member's Profile

1) "Is it better and cheaper than desktop/server-based or not?"

Better is in the eyes of the beholder. Some people will choose on-premise Microsoft software for their business because it has a similar feel to their Outlook and Office. Others will buy cloud computing solutions just because their on-premise system isn't cutting it and they like the idea of web-based financials and its "anywhere" access.
----------------------------------------------------------------------------
Cloud Computing Pros:

a) Eliminate Hardware & Maintenance - Web-based, so there's no need to purchase hardware. Eliminate costs and headaches of maintenance on servers, databases, backups, patches and upgrades. All of it is done for you by the vendor.
b) Pay Only for What You Use- Subscription-based pricing can be less expensive than an up-front license fee.
c) Real-time data - everyone can see the same reports and collaborate without version issues
----------------------------------------------------------------------------
Desktop/server-Based Pros :

a) allows you to do upgrades at your own pace
b) you "own the software"
c) complete control over issue resolution, security, data and service pack updates

Neither cloud computing or on-premise solutions are inherently cheaper.

========================================================================
2) "What about implementation – high or low cost and difficulty?"

Cloud Computing : Expect to pay 1-1.5x the cost of your license fees for a solid implementation. It is usually easier because there is no hardware or software to install, just data migration and customizations.

Desktop/server-Based : Usually higher cost for hardware and integration with current infrastructure.

========================================================================
3) "Some of it sounds too good to be true, to be honest"
Anyone who claims either option is inherently "better, faster and cheaper" is not being transparent. They really need to understand your needs and limitations before promising the world.

========================================================================
4) "FYI, we are a mid-sized software developer (~200 emps) and are considering what to do with accounting and planning systems as well as CRM."

Another key factor to consider is which system is your company more likely to adopt. If your sales team is used to spreadsheets to track their performance, getting them to use a CRM might be difficult. Even when the CRM is enacted, the data fields in popular CRM's are free text and there are no standards for each field's entry. This lack of standardization can be a nightmare for accounting.

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Member's Profile

Hey Tim,

I'm not sure what solutions you've come up since first posting this questions, but I have seen many businesses integrate a variety of both local, SaaS and cloud based options to meet their needs. Working in the cloud with accounting programs is obviously mainstream these days, but other solutions work well too. Here's a common scenario...

A business hosts their accounting software so two locations and a remote bookkeeper can all access data files. They also use Microsoft Office both locally and on virtual desktops. Their sales team uses Salesforce.com or something like ACT!, which integrates with the accounting software. Everyone can work from both the office and while on the road(or remotely).

Although the software names and brands might change, the common element of remote access and integration does not change. The thing you need to ask yourself, is whether or not the solution you've implemented is easier, or harder to manage and maintain. Also make sure it is safe and secure.

As far as the "too good to be true" part of your question...sometimes you should be weary. But remember that technology is getting better everyday, and that drives down the cost. So it is possible to find good services for less than you could even two years ago.

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