Many businesses are currently thinking about moving business critical functionality to the cloud. But when is the right time to migrate? And how can businesses drive this migration successfully?
For smaller and medium sized businesses there is still a lot of confusion about when they should consider moving to cloud-based back office functionality. Why? It is partly driven by a reluctance from some IT suppliers to lose the opportunity to sell and maintain hardware. But legitimate concerns over issues like security and availability also muddy the waters.
Cloud adoption is being driven by the increased variety of services available, reductions in the cost of upfront capital investment and improvements in internet security. The cloud is no longer only seen as a data storage option with many Software as a Service business applications. These used to be limited to email and general office processes but as the platform matures, these are embracing every office process – from HR to finance.
A typical example would be that of the Accounts Payable function. Historically this was a labour intensive and largely manual process that relied on invoices being received by post, being matched to purchase orders, being processed for approval and ultimately being paid.
The opportunities for lost invoices amongst huge piles of paperwork was significant, leading to bill chasing from suppliers. If anything, matters got worse at the dawn of the digital age. Now invoices were arriving by fax, email and paper. The email invoices might be formatted as PDFs, Word documents, Excel spreadsheets or within the body of the email, with no consistency of format or approach. Managing this experience to the satisfaction of all parties required a lot of manual labour.
Larger organisations could invest in document management and automation systems to automate much of this process but smaller businesses did not have this option. This issue was particularly intense for businesses that receive huge numbers of small invoices. The processing cost per invoice can be anything from £2 to £20.
The evolution of the cloud has transformed this kind of process and democratised access to the tools traditionally accessed only by larger businesses. Invoices can be scanned and uploaded to a remote server for storage – in itself a significant advantage over traditional paper storage.
However the real magic takes place when invoices are automatically matched to purchase orders – removing the need for significant manual intervention and eradicating the manual intervention. Typically more than 90% of all invoices can be matched in this way, leaving accounts staff to deal with the exceptional.
So at what point does it become viable for a business to move to a cloud-based service? At Readsoft we typically find that it is less about the size of business and more about volume of invoices. Any business that receives more than 1000 invoices per year can benefit from this back office automation. Businesses that receive 5000 or more invoices can see significant improvements in cash flow visibility, benefit from early payment discounts and see a significant return on investment.
Furthermore once a business is signed up, all it requires is a networked scanner in order to get up and running. Usability is a key consideration, with the best cloud-based systems being simple to use and requiring little training.
The cloud is not only about email and storage. For businesses that wish to reduce capital costs and function more efficiently, numerous back office functions can be taken into the cloud to drive business efficiency and drive down cost.
- Simon Shorthose is Managing Director of Readsoft UK. Readsoft is a provider of business automation services for back office processes.