This is the twelfth in a series of blogs on improving the corporate budgeting process. In the last blog I looked at the role of technology and how it can help streamline the process. In this blog I continue with the technology theme and look at cloud-based solutions.
In the past, enterprise budgeting systems were only available as ‘on-premise’ software solutions. That is they need to be loaded onto a PC or network belonging to the company, to which everyone is then given the appropriate access. The problem associated with these systems was typically cost and complexity, which put many organisations off from using them. However, with the advent of cloud-based applications, an alternative method of implementing a budgeting solution is now available. Cloud-based applications mean that users do not need to install or maintain software versions, and they do not need any specific hardware on which to run the application. In the same way that organisations can conduct banking over the web without the need for software/hardware, so they are now able to conduct budgeting, forecasting and management reporting.
The way it works is that each company is given access to an application that is hosted by the vendor. This is accessed via a single URL from any Internet enabled device, irrespective of where the user is based. The user is required to login to the application, which then determines what they can see and do. Administrators are able to define what items are to be budgeted and how the organisation is structured along with the users responsible. This information is held, along with any data, within a secure central database on the hosted service. Depending on a user’s defined role, they are able to enter, submit and approve submissions all without the need to handout, collect or load data. These systems can typically handle multi-currency consolidations as well as go on to collect forecasts and report results. Because everything is centrally held, there is only ever ‘one version’ of both data and application to which all users refer. The software is always up-to-date, and as well as making the process efficient, it can also very cost effective. With cloud-based systems, there is typically no upfront fee or annual maintenance, just a comparatively low monthly rental fee. They are also typically much easier to setup and maintain, which can reduce implementation fees. A report by Nucleus, a US software analyst form, found that cloud-based deployments typically provide greater value than on- premise solutions.
The reason why cloud vendors can typically deliver powerful systems at a fraction of the cost of on-premise solutions is down to the amount of support they need to provide:
- First, the newer vendors don’t have the expensive sales and support infrastructure that was necessary in the past as these functions tend to be web based.
- Next, they only have to support one version of the software and they don’t need to provide installation support, which can be huge for on-premise providers.
- Lastly, many of the newer systems are built for the cloud and recognise that simplicity is paramount for success. In the same way that no one expects to read a manual to use an iPad, these vendors have constructed their systems so that administrator training is minimal, which in turn reduces the amount of support they need to provide.
- Investigate the use of cloud-based solutions. How do they compare to on-premise systems in terms of software and hardware requirements?
- How does the cost/complexity of a cloud-based solution compare to an on-premise system?