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Budget Gem 4: Exploit the power of the cloud

In my previous blogs I've talked about how organisations can improve their budgeting process. They included getting agreement on its purpose; how to link budgets to operational activities; and the benefits of splitting budgets into 'business as usual' and 'strategic initiatives'. The latter point paves the way towards continuous planning. In this blog I want to cover budgeting systems and in particular how recent developments in technology are transforming the way in which solutions are delivered. It's estimated that around 50% of organisation's still use spreadsheets for budgeting and reporting. This is despite the very real issues these generate - for more information see my article on spreadsheet nightmares. The main reasons for this reluctance to move, has been the very high costs of enterprise budgeting systems, and the complexity in setting up and maintaining a solution. However, things are changing.
In recent years the smart phone app has revolutionised the way in which people buy and use software. To start with they are simple to use in that they often don't need a training course or manual to use; they are often free or relatively cheap to buy, and data can be stored 'in the cloud'. This last point is crucial as it means that the same information, be it photos, music or emails, can be accessed on a range of devices, anytime, and anywhere. And that information is always up to date, irrespective of where it was created. This concept is now being translated into enterprise budgeting and reporting systems. Newer applications like Financial Driver are cloud based, which means users access the system through a secure URL. This takes them into a planning environment that only they can access, but using the software and storage area maintained by Financial Driver. These systems are designed to be very easy to learn and quick to implement. Administrators in just a few hours of training can setup and manage an enterprise wide planning and reporting application.
As well as ease of use, cloud-based applications are extremely cost effective, whose savings include:
  • The elimination of hardware to run the application. The software vendor provides this. This means that as the application grows, there is no requirement to upgrade the hardware, maintain it, place it in a secure facility, or have engineers on standby. Savings here alone can be considerable.
  • The elimination of software at the user site. All the user needs is a web browser that comes ‘free’ with almost any device. As most traditional ‘on-premise’ applications store data in some form of database, quite often the software vendor will require the customer to have operating system licenses, database licenses – all of which are extra costs and are not included with the solution software. Cloud based solutions totally eradicate these ‘hidden’ costs.
  • The elimination of software installation and upgrades. With cloud-based solutions, users are always on latest version. As operating systems change and mobile devices gain more power, it is in the interest of the solution provider to sort out how to take advantage of new developments. Something that users do not have to spend any time or effort on.
  • Anytime, anywhere, access. It doesn’t matter what device is used or where the user is located, providing they have Internet access they will be able to use a cloud based application anytime and anywhere.
All of the above result in a substantial lower cost of ownership. This ownership comes without any upfront capital costs or annual maintenance payments. Instead these are typically replaced with a simple, low rental cost that can be turned off at any time. For example, many enterprise applications start at around £30,000 to buy, with another £10,000 being required to set up the system. Financial Driver in contrast costs £35 per user per month – that’s it. And if customers don’t like the system they can turn it off without it costing a fortune.