Silver linings

Software-as-a-Service or ‘cloud-delivered’ applications have fast become the ‘new norm’ for owner managers looking to build greater value into their businesses. Glenn Baker reports on the cloud-based business services phenomenon.

Make no mistake. Cloud-delivered business services – also referred to as Software-as-a-Service (SaaS) or just simply ‘online’ or ‘Internet-based’ services – are the way of the future. Well, at least as far as we can see ahead!
In the cloud computing space there is a fast-growing number of players competing for your business, and it can be easy to be confused about the whole subject. So here’s a little enlightenment, courtesy of some experts in the field.
For advice on moving business applications to the cloud, I doubt if there’s anyone more qualified to talk on the subject than the CEO of OneNet, Dr Michael Snowden.
OneNet has provided cloud-based solutions to New Zealand businesses since 2001 – well before it was commonly referred to as ‘the cloud’. Today Snowden’s firm delivers cloud-based services via 150 authorised resellers around the country, and he believes cloud acceptance is entering an exciting new phase. “In terms of technology cycles we’re moving beyond the early adopter phase and into the early majority growth phase where there’s a much wider spread of acceptance.”
Until recently there have been cultural barriers in companies hindering change, says Snowden. Many business owners preferred their data server to be on the premises where they can see it. In larger organisations there has been resistance from IT personnel who’ve seen their livelihoods under threat. Business managers, while not understanding the technical jargon, do understand the constant IT capital expenditure requests (often cropping up when least expected) and challenges associated with having IT staff on the payroll; but they struggle to see how they can get out of it, he says.
“Along comes cloud computing, which for all practical purposes is a different version of outsourcing, and managers suddenly realise that owning IT equipment and having your own people running it, doesn’t bring any value whatsoever to their business. What makes a business competitive is the software they’re utilising.”
It comes down to your business model and the series of processes you employ, which are supported by software – “get that mix right and you can derive some competitive advantage,” explains Snowden. Driving that software is all that internally managed IT hardware – and that brings zero value, he says. Snowden argues that pouring in IT time and resources actually brings negative value to a business in terms of serving customers. He is, of course, talking about software delivery – “the software itself and, more importantly, how you use it, is what creates value.”
Snowden believes the reluctance by businesses to adopt ‘the cloud’ has been overcome by a number of factors – namely the introduction of Google Apps, Microsoft’s subsequent response, and Amazon Web Services coming along in 2005 – all helping create awareness and legitimisation of cloud-delivered services.
The adoption of cloud technology is following a typical ‘diffusion of innovation’ pattern. As business owners learn from trusted friends, peers or even competitors about the benefits of using cloud services – adoption quickly moves from a trickle to a torrent. Trigger points, such as the need for server upgrades, also help drive demand for cloud solutions – as does the trend towards mobile Internet access. If you can access the web, you have a window to your cloud-delivered solutions and tools; you don’t need to carry all that computing power with you.
Snowden believes switching to the cloud is nowhere near as scary as people imagine. He describes the process his company uses to transition a client over – which generally involves identifying the applications driving the business; running them in parallel on OneNet’s servers through a dedicated data line (while the client’s business carries on as normal); having those parallel applications tested thoroughly by users; and then at an agreed point, perhaps a weekend, all client data gets transferred over, and come Monday it’s a fresh start in OneNet’s Cloud.

What’s not on the cloud?
No matter where you turn, or what technology event you attend, everybody’s taking to the cloud – either with hybrid (desktop/cloud) or ‘pure cloud’ offerings. Hosted applications now cover almost every aspect of running a business – including productivity tools.
I recently attended SAP’s Cloud Forum in Auckland where the multinational was launching its ‘unified’ suite of cloud products for local SMBs – a solutions portfolio for supporting business processes for managing money, serving customers, engaging and developing staff and working with suppliers.
It was interesting to hear that SAP now has 29 million users in the cloud, spanning 191 countries, making it “the world’s most pervasive cloud platform”. As I sat through a steady stream of presentations, a common theme emerged about the significance of the cloud. The cloud is simply what you make it. The technology’s not revolutionary, but the way you apply it is. No matter what your operating model may look like, the cloud gives your business unprecedented agility, elasticity and scalability. The market is maturing quickly – what cloud products should you adopt first?
Like I said, there’s no shortage of choice – even if you’re a specialised business. And cloud apps for mobile workers are becoming especially popular.  GeoOP, for example, is a Kiwi-developed cloud service designed to replace the current paper-based practices for mobile workers in the trades and services space.
“For those still using pen and paper to manage their administration, it means ineffective business processes,” says GeoOP CEO Leanne Graham. “Ultimately, any business process that you can put into your mobile workers’ hands, that is simple, easy to use and intuitive, ensures that they have more time in which to do the business that they generate income from, rather than doing admin.
Graham believes cloud computing cannot be ignored for three key reasons:
Connectivity – the ability of a business to be connected is enormously important. This is being connected to their bank, their staff, their customers – ultimately to their business.
Competitiveness – we’re in a very competitive world of technology. Customers, employees and businesses’ expectations of performance are that much higher. People expect to consume and make decisions on the spot, so those businesses that aren’t doing that are going to be left behind.
Cashflow – the reality is there is no way to get immediate payment if you haven’t completed the quote and got the signature of acceptance etc. Businesses need to take advantage of technology to be able to invoice customers and get paid on the spot. Businesses using business processes in their hand (mobile technology) and the cloud will have the ability to get immediate payment and have better cashflow.

Xero’s example
Mention cloud to most business people and the brand Xero inevitably enters the conversation. Xero accounting software is perhaps our strongest example of how cloud delivery benefits businesses. It provides a level of transparency for financial management that makes information easy to report, share and compare – far beyond what any traditional desktop software could provide. With more than 157,000 customers worldwide and counting, sharemarket listings, and an ecosystem of cloud based business software apps that dovetail with it – Xero is not only a pioneer in the sector, but an inspirational example of cloud’s true potential.
Someone who not only realises the potential of Xero, but also the delivery of cloud services to SMEs is RightWay co-founder Greg Sheehan.
RightWay is a relatively new accountancy model based in the cloud which utilises Xero as its default platform for clients, “because we always want up to date financial information that we share between accountant and customer.”
Sheehan believes more than 50 percent of businesses out there are ready for the cloud – but many others are not. “Some don’t even have a decent Internet connection; fortunately they are amongst the minority.
“We like to make a customer’s move to the cloud seamless and take away any potential headaches around moving their accounting data,” he adds. “In fact we have a specialist conversions team that do all the ‘heavy lifting’ for the customer.”
Sheehan says from their perspective there are many pluses around cloud delivery. “It gives our customers the ability to scale their businesses incredibly cheaply from a technology perspective.
“Our staff can be based anywhere in New Zealand – they can also work from home, the office, the bach, wherever, at any time using any Internet connected device.”
Universal access to the same data (albeit with controls in place) and no need for customers to back up data, are other benefits.
“The only downside is when – and it’s very rare – a good Internet connection can’t be obtained.”
Internet use has become so common, with applications like Facebook and Internet banking, that the shift to accessing business data on the cloud has been frictionless, Sheehan says.
Not surprisingly, an increasing number of accounting software providers now offer a cloud option for clients, including GlobalBizpro, MYOB and QuickBooks (Reckon).
Catie Cotcher, GM of Reckon New Zealand, says cloud service providers invest millions in developing and maintaining enterprise-level infrastructure, which, in reality, is often out of reach for many firms internally. “There are also stringent guidelines for backup, recovery, and failover, as well as documented disaster recovery plans that make doubly sure that data remains safe.
“The important thing to remember is that most individual companies wouldn’t have safety and security measures, or often infrastructure, to that level – so by working with a large cloud service provider, you are actually putting your data in the safest hands possible.”
Reckon launched new customisable cloud accounting software for small business in Australia earlier this year. ReckonOne provides the ability to ‘pick and mix’ (and pay for) the modules you want and need, and skip the ones you don’t, and is due for launch in New Zealand later this year.

Hybrid options
Start-up businesses are a dead cert for the cloud – “because why would you want to invest all that money in software and hardware?” asks OneNet’s Snowden. However, a well established business might prefer to dip their toe in first – for example, an online server backup with automated data backups every 15 minutes to replace that dodgy tape system, or perhaps a ‘low risk’ email server.
Once that business has, say, its backup in the cloud and other applications such as Exchange and CRM, then it can look to migrate the main, critical software application that drives the business. It could be the ERP program, for example, which may or may not have been specially customised for the business.
Snowden says in this instance, his company rolls out its ‘Desktop-as-a-Service’ offering. They’ll run the application for the client and deliver it back to the users; the client only pays for what gets used. “The client still owns the application and accesses support from the same support provider as before. The difference is that everything below that application – the operating system, storage, processing, distribution, and so on, we deliver back at a per-user or per-usage rate. So if employee numbers increase, you know exactly what the incremental costs will be and you never have to worry about buying servers. It takes away the uncertainty.”
Data integrity can be an issue whenever cloud options are being considered – and the argument for local versus overseas hosting is inevitably raised. Snowden tells me of a local pharmaceutical firm that came to him after its US-based host lost its entire database. “The real issue is that there is almost zero legal redress there for the average Kiwi business; you’re dealing with different laws and can’t meet your host face to face.
“You may get a cheaper service overseas, but who will listen to you when there’s a problem? Is the service and support quality there?”
His advice is to thoroughly check out any potential cloud services provider before entrusting your precious business data to them. “Entrusting your data to someone else is understandably a giant leap of faith, because it is a vital part of your business.”
In the not too distant future, cloud will simply be the way computing is done, he says, and it’ll be a case of how you can harness it. “Businesses will ask, ‘How can I innovate with unlimited computing power?’ ‘How can we better understand our products, services and customers; how can we serve them better and create more business value by using analytics and the cloud’s unlimited capacity?’” There will be no need to have this cloud conversation at all, suggests Snowden, because everyone will have embraced it.
It’s a bold prediction, yet probably a safe one.

Glenn Baker is editor of NZBusiness.

Perfect for Payroll
Alongside accounting providers, most of which have leapt on the proverbial ‘bandwagon’, payroll service providers have also been quick to embrace the cloud. For business owners it’s proving to be the perfect match of delivery platform and service.
“People unfamiliar with technology often have no idea whether the accounting or payroll system they’re using is installed software or if they’re accessing it via a browser,” says Crystal Payroll’s business coordinator Tony Price. “When we point out the big differences – such as being accessible anywhere, always being up-to-date, never needing to load upgrades and never having to back up – their surprise and delight is often tangible. Once they come on board they never look back.”
Datacom PaySystems’ Justin Cheong says payroll applications are particularly suitable for cloud delivery because payroll calculations are constantly changing as a result of legislation.
“The consequent upgrades, cost, inconvenience and risks cannot be avoided, but in the cloud these are all undertaken invisibly your supplier, allowing you to focus on your business.
“Like other cloud applications, cloud based payroll applications are available on a simple ‘pay-as-you-go’ billing scheme. You pay for what you need and get a highly scalable system without the capital outlay. Flexible contract terms don’t inhibit this scalability and often include no commitment to a minimal term,” says Cheong. “This flexibility means that you can easily move on to another system if it is not effectively working for you – as long as you can export your data from your cloud provider into a format that can be imported into your new system.”
He’s enthusiastic about the benefits of cloud delivery. “A simple example is the availability of self-service portals for employees which enable them to view or download payslips, check leave balances and apply for leave, and to update their personal details themselves. All you need is Internet connectivity and 24/7 access.
“Recent events have shown the importance of effective disaster recovery plans to New Zealand businesses too,” adds Cheong. “Payroll is a critical function and few organisations have effective disaster recovery plans in place for legacy payroll systems. Moving to a cloud application with a supplier who has good disaster recovery systems and plans in place can eliminate a significant risk.”
At PayGlobal, another cloud provider, Warwick Hutchins, head of information services, says operational responsiveness is hugely important in ensuring the relationship between provider and client is kept strong. “Maintaining a strong relationship is all about trust and the customer needs to know that we are there for them when they need us. Customers rightly expect the service is going to be available when they need it and that it will perform well, but when they do have a problem they need to know that when they call, you’re going to be there and you’ll help them as much as possible. We regularly work with different parts of the customer’s business, from service end-users to the internal IT team, to ensure the overall experience is a positive one.
“One of the best things about cloud delivery for us is that it allows us to ensure a high quality delivery of our software, right down to the user’s desktop. What that also means is that we can leverage scale across our customer base to create an environment built for payroll – not only optimising performance but implementing the kind of availability and redundancy that reflects the criticality of payroll to the business but is often beyond in-house capability. It also simplifies aspects of our business such as customer support and professional services by streamlining processes that cross the application and the environment,” says Hutchins.
For Crystal Payroll’s Tony Price, one of the biggest benefits of cloud delivery is the security of data. “I have had my home PC fail and I’ve lost important files which remain unrecovered. I now use online systems for all my email, websites and financial accounts.
“All our customers rest easy in the knowledge that their payroll information, including all that historic PAYE data, leave entitlement info and more, is always safe and readily available.”