MyCIMA

Cloud based ERP system

Replies : 11

I have been trying to use P4 to understand how to implement/justify a new IT system at work. But that is not enough; I think, I need the experience! I feel P4 is outdated!

Anyway, I work for a small sized business (manufacturing, retail and service company). A very small accounting team. Currently, we have a stand alone basic accounting system and thinking of upgrading that to a Hosted/Cloud based ERP system (for example, NetSuite). And also would prefer to migrate to Google Apps from Microsoft Exchange Server. I just don't know how to justify the cost of the new system.

I believe it would improve the cash flow, customer service and hopefully efficiency of the operational activities. We would able to get rid of IT servers - so there will be no maintenance cost. People from all Sales, Service, HR and Account departments will be able to access the information at real-time and anywhere. Our impression in-front of the customer could improve and hence generate more sales.

Anyway, I cannot even find right questions to ask! Could you please give me some advice, what to look for, how to work out ROI, etc. I would appreciate it a lot. I don't know how to produce a report to present in front of my MDs. Thanks

Interesting Scenario

Hi Akash, To ask any kind of questions you will have to define your objectives, which you have done in a very simplistic fashion like when you mentioned the improvement in cashflow, customers service etc. Now if you could convert them using SMART then you should be able to gain a starting point to your report which can further be developed with numbers from your business data. Hope this helps and feel free to ask any further questions. Cheers Ash

Cloud Computing article from Accountancy Age

Hi Akash

An interesting question.

This article written by David Doyle, Capgemini Consulting's head of Finance Transformation might be of real use to you: http://www.accountancyage.com/accountancyage/features/2250853/cloud-computing-special-cloud

 

To me, the key benefits to finance departments is that the cloud can provide better control of both performance management and expenditure, if used correctly. However, too many finance departments just view it as a panacea, which is a costly mistake with an IT investment.

 My sense is that you should take a look at the above article, and then even pose the questions directly to the vendors that are touting for your business. What differentiates each of them from their competitors? What value can your product bring to my finance department.

This should allow you to develop a long list of criterion that you can use to assess offerings and build the business case for investment.

 

Noel

Netsuite system: Cloud computing - EalingMA

Hi Akash.

I am the principal consultant of a Netsuite solution provider, Ealing Management Accountancy Ltd.To justify the cost, you would need to assess the benefits, financial and non financial to your organisation after implementation. 

The exciting thing about Netsuite for me is not that it is a cloud computing application; it is one system. 

A sales order generated from Netsuite’s CRM (built into the system) enters payables part of the system and reduces stock by quantity of that particular order.   So there is no longer the need to duplicate data entry.

You can follow the movement of a transaction from an interest posted by a customer via the organisation’s website to allocation of payments to the invoice generated from the SO. The system would also update the reporting/ KPIs of the sales team, warehouse team, marketing team (if the sale was generated from a promotion) and finance department.

If you would like to know more about the system, please feel free to contact me via email, [content was removed by a moderator on 04/01/10 - please use the website messaging system to contact other community users, more information can be found here]

Dalbir

 

Cloud Based ERP

There is currently a lot of hype around cloud based systems.  For some companies they can indeed be of value, but they are not a panacea.

Producing a financial justification for a new system will be similar for cloud or a locally hosted solution.

Start with your business processes.  How many customers do you have?  How do you interact with them?  Do you communicate by post, if so look at savings from sending Invoices, Orders, Statements etc by email.

How much time do people spend on administration.  Could new system do it quicker?  What opportunities does this present for increasing output & sales, or reducing costs.

If you have a stand alone accounts system, what are other people in the organisation using?  You will need broad support as a new system can be as much a political decision as I financial one.   For an accurate financial evaluation you would need to assess in some detail what a new system will do for each part of the business.  There should be Board approval before approaching potential suppliers.  

For Cloud computing I suggest you consider:

- Your network connectivity.  Are you in an area where you can get a consistent fast connection?  Think about continuity of service if the network fails - you may need multiple lines / suppliers.

- Evaluate the lifetime cost of the Cloud system vs a Standard In House System.  Servers are pretty cheap and should last you 5 years.

- Consider where your data will be stored.  If outside the UK, it could be subject to a different legal jurisdiction.  Ensure that your data will be secure.

- Is the supplier financially sound?  What happens if the supplier goes bust or gets taken over?  

- What guarantees are there over system availability. Do you need out of hours, weekend working?  Remember 99% availability means the system could be down for 4 days a year. 

- Make sure you see several reference sites for any systems you consider.  Ask about the training, and the on-going support.  Most of the standard ERP packages will have well established training and support facilities.  Does the supplier have strength in depth, or just one or two great sales guys.  Ask to see the organisation chart for the supplier, and profiles of the people who will be assigned to your company.

- For business I would suggest that MS-Office is still a better bet than Google.  Its expensive, but standard to most companies.  Your customers, bank & auditors are likely to be using it.

- Consult the other Stakeholders in your business.  Your Auditors, Bank, and shareholders are all likely to have a view.

 

 

Netsuite system: Cloud computing - EalingMA

Cloud based ERP applications are a way forward for most medium sized enterprises.  There are cost savings which are derived from reduction in requirement of IT headcount maintaining and patching servers (being a management accountant- should also include costs of doing no business during downtimes).  Also Upgrades and helpdesk support are included in the licence fee.

 

You also gain form one system that interlinks all departments.  It means you can quickly see profit margins in customers, customer types,  run a just in time warehousing facility, quicker communication between heads of departments and availability of up to date information  means quicker decision making  

 

With Cloud model, you are sharing server costs and data storage costs with other organisations.  Thanks to this scale of economy, your organisation gets access to superior data warehousing hardware than hsoting your ERP on in-house low cost server.  

 

My passion for better management accounting reporting is why I ended up having a passion for Netsuite systems.

  

Micro businesses are also well serviced in the off the shelf cloud accounting applications, which cost from £40 to £200 per annum

  

Small organisations with headcount of 20 and turnover of £1- 2million that require little stock management, little reliance on direct marketing campaigns and don’t require the flexibility of remote access (eg: salesperson or engineer logging their job through i-phone or mini pc)- there is still a strong argument (on cost) to remain on-site.   Most use Sage Line 50.  Maumut is my preference there. 

  

Blue chip Multi-nationals are also still better off with on-site systems (except for small subsidiaries/ satellite offices, parts of the business:  cheaper to use Netsuite in those parts of the business, then implementing Oracle)  

  

Regarding Cloud application software houses going bust:   Larry Ellison, Mr Oracle is majority share holder of Netsuite. 

At the end of the day, it's about choosing the right system for your business.

 

Dalbir

 

 

SAP and Cloud based systems

I work for SAP and am part of the team that is responsible for SAP Business ByDesign which is SAP's cloud based solution for SME's.

That said, all the comments below from Mark are absolutely spot on - focus on your business processes and the potential improvements (TCO included) in those areas. There is no real reason for changing for the sake of change.

With regards to evaluating the cost of the cloud vs on premise IDC has done that for you over a seven year period - the paper is available from: http://www.cimaglobal.com/PageFiles/372201372/IDC_Comparing%20the%20TCO%20of%20SME%20On-Premises%20Business%20Management%20Applications%20and%20SAP%20Business%20By%20Design.pdf

Good luck

Roland

 

Mark Andrews wrote:

There is currently a lot of hype around cloud based systems.  For some companies they can indeed be of value, but they are not a panacea.

Producing a financial justification for a new system will be similar for cloud or a locally hosted solution.

Start with your business processes.  How many customers do you have?  How do you interact with them?  Do you communicate by post, if so look at savings from sending Invoices, Orders, Statements etc by email.

How much time do people spend on administration.  Could new system do it quicker?  What opportunities does this present for increasing output & sales, or reducing costs.

If you have a stand alone accounts system, what are other people in the organisation using?  You will need broad support as a new system can be as much a political decision as I financial one.   For an accurate financial evaluation you would need to assess in some detail what a new system will do for each part of the business.  There should be Board approval before approaching potential suppliers.  

For Cloud computing I suggest you consider:

- Your network connectivity.  Are you in an area where you can get a consistent fast connection?  Think about continuity of service if the network fails - you may need multiple lines / suppliers.

- Evaluate the lifetime cost of the Cloud system vs a Standard In House System.  Servers are pretty cheap and should last you 5 years.

- Consider where your data will be stored.  If outside the UK, it could be subject to a different legal jurisdiction.  Ensure that your data will be secure.

- Is the supplier financially sound?  What happens if the supplier goes bust or gets taken over?  

- What guarantees are there over system availability. Do you need out of hours, weekend working?  Remember 99% availability means the system could be down for 4 days a year. 

- Make sure you see several reference sites for any systems you consider.  Ask about the training, and the on-going support.  Most of the standard ERP packages will have well established training and support facilities.  Does the supplier have strength in depth, or just one or two great sales guys.  Ask to see the organisation chart for the supplier, and profiles of the people who will be assigned to your company.

- For business I would suggest that MS-Office is still a better bet than Google.  Its expensive, but standard to most companies.  Your customers, bank & auditors are likely to be using it.

- Consult the other Stakeholders in your business.  Your Auditors, Bank, and shareholders are all likely to have a view.

 

 

erp on cloud

There are various reason for putting erp in to the cloud. I think the best service provider for going erp application in to the cloud is Ramco Systems. For more information, you can go erp on cloud

Cloud based ERP

Cloud ERP is designed to address the inflexibility of existing ERP software by allowing businesses to choose the deployment option that fits their specific needs. Mid-size businesses should be more open to exploring models such as software-as-a-service (SaaS) in the cloud rather than the traditional on-premises software application because Cloud ERP software offers extensive benefits to growing your business:

  • Freedom to scale and grow: Lowers businesses’ total costs and flat-fee prices
  • Freedom from IT constraints: Offers high-level security and privacy, easy accessibility and integration
  • Freedom from lock-in: With your data in the cloud, you can move it at any time
  • Freedom to innovate: Offers continuous new features and functions

Impact of cloud ERP on PMS

What do you think was/is/will be the impact of cloud ERP on performance management systems/management control systems. After all, it is an enabling technology.

If you want to implement

If you want to implement the new system then you need to do a bit of research to find out whether it would suit your need at all. When it comes to IT sector, you need to use the best hardware and software solutions. For instance, at http://www.perfdata.com/, you can find a big collection of high-end IT hardware and software.

Before you take the decision

Before you take the decision to do the technical upgrade it would be better for you to weigh the pros and cons of the new technology. IT companies should always stay updated about the latest trends that are emerging in this field. I recently was reading about BYOD and its implications at http://www.trendmicro.com/us/enterprise/challenges/it-consumerization/index.html.