Cloud Accounting - From Spreadsheet Misery to Affordable Cloud ERP. David Russell W.

      Angie, his trusted assistant, walked into his office as he logged into his computer. “So how was your meeting?”

      “Only okay,” Peter replied as he split his attention between checking his email and her question. "James and Esther were distracted because their companies have outgrown their accounting software. As a result they were not as engaged in the meeting so we did not get as much done as I had hoped."

      "Well at least it gives you something else in-common with them," responded Angie with a smile. Although the general staff did not know Peter’s plans for a massive software upgrade, he trusted her with everything about the organization. "And since you bring up the subject, I have identified two additional things we need from our next generation of business software. Ideally, we would like to:

      1.Analyze the delivery of our services and measure attributes of our organizational performance to confirm efficiency and effectiveness.

      2.We also need a better way to manage our marketing campaigns so they are targeted more specifically based on donor type, project, and geography.

      “I added these to our list. Do you want to review the list again?"

      "Yes, this is good timing. Just read it to me," Peter said nodding.

      Angie looked at her tablet computer and read, "The other needs on the list are:

      3.Centralize all grant-related information to improve tracking, project management and reporting.

      4.Integrate data from all of our systems so we can measure and report on anything the organization is doing.

      5.Improve service by consolidating member and donor data so staff has complete information from a single system.

      6.Find ways to automate and streamline critical business processes to reduce costs, decrease errors and save time so we can achieve more services with the same number of staff.

      7.Automate compliance with regulatory and external audit requirements (for example, SFAS 117).

      “It sounds like enough to me. Thanks," acknowledged Peter. "I'm confident if we can meet these requirements then the solution will provide other helpful functionality too. I've got about 30 minutes before my next meeting. Unless you want me for something, I need to better understand the difference between cloud computing and on-premise solutions."

      "Go for it. I'll catch up with you later," Angie replied as she turned and left Peter alone to do his research.

      Because Esther and James would report on their recommendations in a month, Peter had the luxury of not having to research potential solutions. He just needed to understand the basic differences between the cloud and on-premise solutions so he could comprehend their conclusions. He found his answers quickly.

      On-premise solutions have been around for decades. Basically this is where software and data shared by multiple people are loaded onto a server in the same building and accessed by individual computers ("clients"). This was why on-premise solutions were also called “client/server.” There were advantages and disadvantages to on-premise solutions. The advantages were:

      1.The software applications were easier to maintain because they reside on a single server instead of dozens, hundreds or even thousands of client computers. Maintenance included repairing, upgrading, replacing and even relocating server hardware and software without affecting the client computers. (Cloud solutions share these benefits.)

      2.The latest versions of data were also easy to access and update because it resided on the server(s).

      3.Critical data was very secure on the server(s) if software and hardware was purchased specifically to protect the server whereas individual client computing devices such as desktop computers, laptops, and tablet computers lack this level of protection.

      4.Servers did most of the calculation work so results were calculated quickly on the client workstations.

      The key disadvantages of on-premise solutions were high cost, longer implementation times, slowing data access times as your number of users increase, and the cost to maintain the servers and software. Also, purchasing robust security can be very expensive for smaller organizations like Esther, James and Peter’s.

      He read about a concern regarding the time it took to access data per on-premise server. Apparently for some companies, data access times can slow significantly as the number of simultaneous client computer requests increase. However this was not an issue for him, James or Esther.

      He was surprised to realize the cloud was not as new as James feared. It turned out his non-profit was already using the cloud because their website and email was managed on another company’s servers.

      The cloud metaphor came from decades of engineers drawing the internet as a cloud. It transferred to this new technology because cloud applications were accessed solely over the internet.

      The difference now was more sophisticated applications were moving to the cloud and the hardware components were being designed to scale automatically based on how much capacity was needed. Therefore cloud computing solutions rarely experienced slow access times due to unexpectantly high user demands. Cloud people described this capability as “elasticity,” where literally thousands of servers sitting in a hosting facility can be harnessed to meet your momentary needs. That’s a lot cheaper than us buying all that stuff, Peter thought.

      Another financial incentive of cloud computing was tax benefits. It takes years for a company to depreciate the cost of server hardware and software, but cloud computing was a service. This meant 100% of its cost can be expensed the year it was paid. This would lower their tax liability and increase cash flow.

      Peter loved the fact that cloud computing was a pay-as-you-go service. His people initially were only using about 10-20% of their server’s capacity, except during donor campaigns, so they were wasting 80-90% of the server cost most of the year. Cloud computing enabled him to only pay for the capacity they used and the system automatically expanded (elasticity) when he needed it at a reasonable, temporary cost.

      I like this, Peter thought. The cloud hosting companies replace their hardware systems every three years without any additional costs to us so our ERP system is never running on obsolete hardware.

      The fourth benefit turned out to be all Peter cared to understand about cloud computing for the moment. It was that cloud solutions were faster to plan, purchase, configure or customize, test and roll-out than comparable on-premise solutions.

      People were debating whether cloud computing or on-premise solutions were more secure, but Peter decided to leave that debate to James and Esther. He leaned back in his chair to ponder this new information for a moment.

      This is cool, he thought. James and Esther had outgrown their small business accounting program and spreadsheets at the same time as his non-profit. They all now needed to move beyond small business accounting systems to more of an enterprise resource planning solution (“ERP”) like major corporations, but designed for small-midsize business. Wow. That sounded scary, but he had two aces “in the hole: James and Esther. And they were going to do the research on his next generation of software for him!

      Chapter 8

      Research

      The next week, Esther set a meeting with her administrative assistant, Jennifer and controller, Daryl.

      Esther had hired her team carefully to balance her natural strengths and business objectives. Because he was an analytical like James, Daryl could irritate her at times as he tried to hold her accountable. As much as she hated his delays to discuss details, systems and skepticism, that was exactly why Esther hired him. Mostly she contained her frustration and appreciated Daryl by reminding herself of the many times his approach had saved them a lot of money and time.

      Jennifer, who helped keep her boss focused, naturally provided a more structured, predictable work environment for Esther. She was a sounding board, filter to eliminate unnecessary distractions, and confidant. She could join Daryl in his skepticism, but still supported Esther’s