moving accounting to€¦ · moving to the cloud are clear cost of support is 55% lower cloud...

Moving Accounting to “The Cloud”

Douglas JohnsonVP Product Management Acumatica

August 22 - 23, 2018 | Boston, MA

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• Understand Cloud ERP – the benefits and risks

• Perform a cost evaluation of on-premises vs cloud

• Learn about tools to help with a Cloud ERP selection and implementation

Learning Objectives


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• What is cloud ERP• Brief history of cloud ERP• Benefits of moving from legacy on-premises to cloud• Cost comparison – legacy versus cloud• Developing a plan for success

Agenda

WHAT IS CLOUD ERP?


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What is Cloud ERP?


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• Cloud• Allow users to access software applications running on shared

resources via the Internet• ERP

• Enterprise resource planning• System that brings together accounting, operations, and

other business processes to a single system

Cloud ERP Definition

HISTORY OF CLOUD ERP


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• Inexpensive broadband• Reliable connectivity – anytime/anywhere

• Web advances• Dynamic features, rich user interface

• Cost of software versus hardware• Compute time vs coding time

• Non-technological enabler• Human transformation

Enabling Technology


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• We have always done it this way.• We have never done it that way.• It will end up costing too much.• We tried something like that before.• I heard a horror story about …

Ha! That’s the way we used

to do it.

Technological Revolution


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• DOS era• Tab, tab, tab, new page, tab

• ERP Benefits• Central data repository• Better than pen and paper

Technology Platform Changes


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• DOS to Windows• Point and click

• ERP Benefits• Faster navigation• Multiple windows



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• Windows to early cloud• Centralized processing

• ERP Benefits• Single source of truth• Centralized security



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• Early Cloud to Web Cloud• Browsers and mobile

• ERP Benefits• Mobility• Lower capital expense• Scalable


BENEFITS OF CLOUD ERP


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• Should every business build a power plant?• Investment?• Backup plan?• Economies of scale?• Core competency

• Should every business build a datacenter?

Electricity and IT


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Private(on-premises)

Infrastructure(as a service)

Platform(as a service)

Software(as a service)

Security & Integration

Databases

Runtimes

Applications

Server

Virtualization

Hardware

Storage

Networking

Power, Facilities


Databases

Runtimes

Applications

Server

Virtualization

Hardware

Storage

Networking

Power, Facilities


Databases

Runtimes

Applications

Server

Virtualization

Hardware

Storage

Networking

Power, Facilities


Databases

Runtimes

Applications

Server

Virtualization

Hardware

Storage

Networking

Power, Facilities

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• Simplified view of server and compute options

Infrastructure(as a service)

Platform(as a service)

Software(as a service)

Different Types of Clouds


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• Needs may change over time

Company Characteristics Private Cloud Public Cloud

I want lower up-front costs

I do not have an IT staff to purchase and maintain hardware

I need to scale up and down quickly

I have a datacenter and IT staff to manage applications

I want to build real-time interfaces with on-premises systems

I a subject to regulations that require on-prem or hosted deployment

I want to be able to customize my application

I want to involve people outside my organization or company

I don’t want to install and manage client software

Which Deployment is best for me?


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Changed the way we interact▪ Buy, ship, invoice, and pay automatically in B2B

and B2C

▪ Increased collaboration (with supply chain and customers)

Transformed the way we work▪ Access to system anywhere, any time, on any device

Internet (cloud)

Extensive functionality at reasonable cost▪ Latest generation Enterprise ERP features now available to

mid-size customers

Total cost of ownership reduced▪ Hosting and subscription reduces IT costs and capital

expenditures

Integrated applications are a necessity

Mid-Sized business solutions

Disruption to business as usual


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Operations & post sales support

Sourcing & inventory

CRM

BI and reporting

Sales

Mobile workforce

Increasing maintenance cost for outdated systems

Duplicate data entry

Incorrect information

Information not shared across departments

Multiple software products to learn and update

Results in

Disconnected business


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Operations & post sales support

Sourcing & inventory

CRM

BI and reporting

Sales

Mobile workforce

Mobile workforce

Instant update across all systems

Single version of the truth

Improved productivity of users

Fewer systems to maintain

Benefits

Connected business


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Access from anywhere, on any device


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48% 45%39% 39%

More cost effective More flexible Easier and faster to deploy

Improve business agility

Percentage of Responses in Top 3

Results of a recent survey where SMBs were given a list of many possible reasons for using (or planning to use) cloud solutions

Reasons for “Why Cloud ERP”

COST COMPARISONS

Legacy versus Cloud

Cost of doing nothing


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You are paying a substantial amount of money to maintain it

▪ About the same as if you replaced it

1

You are not getting the benefits of a modern ERP system

▪ Better business processes &business intelligence

2AND

If you are currently using a legacy ERP system

Cost of staying on legacy systems


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1. Fees▪ For software license and

annual maintenance

4. People costs ▪ For contractors & staff for:‒ Hardware & networking

support

‒ Software upgrades & bug fixes

‒ Custom development (mobile & reporting)

2. People costs▪ For consultants and staff time to

implement a new system

3. Operating expenses▪ For maintaining or replacing:

‒ Servers

‒ System software

‒Networking equipment

‒User devices

Software

1

Implementation

2

Ongoingpeople costs

4

Infrastructure

3

Most TCO calculations stop at 1 & 2

Total cost of ownership (TCO)


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0%

10%

20%

30%

40%

50%

60%

70%

80%

Software Implementation Infrastructure Ongoing support

Legacy SaaS

Over 5 years, a modern SaaS solution can be implemented with no incremental investment plus …

• Real-time insights• Advanced operations

controls• Improved service• Enhanced agility

Cost of doing nothing


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In a 2016 report1, the financial benefits of moving to the cloud are clear

▪ Cost of support is 55% lower

▪ Cloud solutions deliver 2.1 times the ROI of on-premises solutions

1

Aberdeen2 compared cloud vs. non-cloud ERP in mid-size companies over a two-year period

▪ An additional 8% profitability improvement over those without cloud

▪ An additional 14% reduction in the time to decisions

2

From Industry Analysts

1“Cloud Delivers 2.1 Times More ROI” by Nucleus Research 2“Improve Your Midmarket Business Operations with Cloud Applications” by Aberdeen Group

Benefits of doing something

DEVELOPING A PLAN FOR SUCCESS

& Pitfalls to avoid


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The cloud is less secure

Lose access MY data

On-premises is less expensive

System is not reliable

Reputable cloud ERP providers “bet their business” on great security

Because of redundancy, cloud uptime approaches 100%

With the cloud you always have access to data

On-premises includes long term hardware and IT support costs to upgrade and maintain

Cloud Myths


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Physical Security

Transmission Security

Storage Security

Access Security

Data Security

All application code runs on the server – which can be deployed on premise or at a secure datacenter.

Each session is authenticated and all communication is encrypted without the need for a VPN.

Data is stored on the server and encrypted. The only access to sensitive data is through the business logic.

Application Security

Object-level access controls provide role-based access to specific screens, inquiries, fields and reports.

Access permissions extend to accounts, sub accounts, customers and other objects for all screens, inquiries and reports.

All application code and verification logic is managed on the server to eliminate client-side data manipulation.

What are common security concerns?


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• Timelines• Life of ERP system: 7+ years• ERP renewal period: 1 year

• Renewal time options• Accept price increase• Buy new system with large switching costs

• Other considerations• Where is my data?• Can I upgrade when I want?

What is SaaS vendor lock-in?


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• SLA = Service Level Agreement• Agreement between customers and service providers to

reduce risk and establish performance goals• SLA Components

• Uptime and availability• Consequences when performance criteria not met

• Financial compensation• Ability to end contract• Data availability

Do I need a service level agreement?


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• Scenario• 50 users• 100 AP transactions/month• 20,000 SKUs in inventory• 200 sales/day via commerce• 50 sales/day via phone

• What is the cost?• Compute• Storage• Data transfer & bandwidth

Pricing Models

https://aws.amazon.com/pricing/


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• ERP Pricing includes compute, storage, data transfer/bandwidth• Usually at favorable terms due to volume of provider

• ERP pricing depends on • Users• Features• Volume

Pricing Models


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Total cost of ownership


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Cost example

COSTS License(on premises)

License(hosted)

SaaS

ERP software license $15,000 $15,000 $12,000/year

Hardware / software environment $13,000 $2,400/year -

Power / replacement parts $1,000/year - -

Software maintenance (20%) $4,000/year $3,000/year -

Configuration, data migration, training $15,000 $15,000 $15,000

IT person (1/5), hardware support $16,000/year $2,000/year $1,000/year

TOTAL SPENDING(no NPV calc)

License(on premises)

License(hosted)

SaaS

Year 1 $64,000 $38,000 $28,000

Year 2 $85,000 $44,800 $41,000

Year 3 $106,000 $52,200 $54,000

Year 4 $127,000 $59,600 $67,000

Year 5 $148,000 $67,000 $80,000

Year 6 $169,000 $74,400 $93,000

Year 7 $190,000 $81,800 $106,000


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Adding the cost of capital


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• Network Effect• Value of system grows exponentially with users

• Involve Everybody• Many users, few resources

• Timesheets, expense reports, purchasing, shipping, vendor status updates, customer updates

• Don’t share logins and lose audit data• Temps or part-time workers, external consultants,

partners, customers, more!

Users

Syst

em V

alu

e

Network Effect(Adding users maximizes ERP value)

Growth-friendly pricing


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Answer

True cloud (web based architecture)

True mobility

Application functionality & flexibility

One data repository

All inclusive pricing

Deployment flexibility

Licensing options

Data accessibility

Cloud standards-bases, extensible, easy to integrate

Development platform

Questions to ask a potential ERP vendor

QUESTIONS & ANSWERS


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Review Question #1

Multi-tenant refers to:

A. Different organizations sharing a single application deployment.

B. Multiple servers running an application in the cloud.

C. Software deployed on premise and in the cloud.

D. Legacy software moved to the cloud.

E. None of the above.


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Review Question #2

All of the following are benefits of web-based software except:

A. Lower software maintenance costs

B. Faster to deploy

C. Work without an internet connection

D.Use any device with a browser

E. Same interface using Windows, Mac, or Linux OS


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Review Question #3

Do SaaS (software as a service) and Cloud computing refer to the same thing?

A. True

B. False


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Review Question #4

A modern cloud application should contain the following design elements:

A. Minimize network traffic

B. Statelessness

C. Centralized data store

D.None of the above

E. All of the above


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Thank you

• Douglas Johnson

• VP Product Management

• 703-552-7588

• [email protected]

moving accounting to€¦ · moving to the cloud are clear cost of support is 55% lower cloud...

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