ERP Investment Tips for CFO's
Despite talent and organizational challenges, most C-Suite officers are optimistic about their corporate ability to embrace and profit from emerging technologies. The swift evolution of technological capacities, however, continue to confound even the savviest CFO, and every delay in programming selection and implementation impedes critical corporate decision making. Executives responsible for choosing or upgrading their ERP programming should understand the basics of what is available and how it works before pulling the trigger on the (usually) sizable ERP technology investment decision.
Cloud or No Cloud
The "Cloud" is simply the aggregate of the thousands of servers and databanks strung across the planet, connected to each other by the Internet. Accessing "Cloud" programming means utilizing software or programming that exists on a remote server in the Cloud and not keeping it in on-site computers. Both on-premise and Cloud programming have benefits and drawbacks:
- On-premise: The enterprise has in-house capacity to store and use its proprietary data, and access is limited to authorized in-house staff. Updates, maintenance, and repairs for all aspects of programming, including security, are managed by corporate staff, usually via an in-house IT department.
- Cloud: Enterprise databanks are stored in a remote server location and accessed via the Internet. Depending on the configuration and agreement, updates, maintenance, and repairs of the servers are managed for a fee by the server management company. No in-house IT department is usually necessary.
The rapid pace of cloud technology evolution makes it difficult for on-premises technology to compete with its steadily improving capacities and optimizations.
Public or private cloud
Many CFO's have elected a private Cloud over a public Cloud resource. A private Cloud is an enterprise-owned server in which only enterprise programming is stored and used. For larger corporations, a private Cloud offers flexibility for scale and innovation as the company grows, while keeping its key databanks secure and integrated. The company assumes the expenses for building, configuring, maintaining and repairing the server.
Accessing the public Cloud means leasing a section of a remote server in which other companies also store and access data. The server managing company can assume maintenance and repair obligations, as well as expand or contract server capacity as needed. While sharing the server may create additional risks of hacking, public servers often have the tightest and most up-to-date security available.
Short or Long Term Investments
This question concerns RoI on the investment if any. In the short term, the cost of purchasing on-premise technology will be higher than signing a longer-term lease, but estimates are that the return on that investment occurs within five to seven years. Leasing Cloud space requires a monthly or annual lease payment for as long as the company uses the site.
Many corporations are concerned about relying on a server management company to protect their, and their client's confidential data. In reality, cloud management companies are paid to maintain the highest and most current security standards available, and it is in their best corporate interest to do so. For many, if not all Cloud services companies, ensuring the safety of their tenant's data is their primary function. In-house IT departments frequently do not have the resources available to provide comparable diligent oversight.
CFO's responsible for making ERP investments must anticipate the future growth, complexity and security of their enterprise. Keeping these points in mind while perusing the options should assist them to make the best investment possible for their corporation.