Building the Business Case for Cloud Computing

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Building the Business Case for

Cloud Computing

W

illiam M. Sinnett

Senior Director, Research

Financial Executives Research Foundation

the source for financial solutions 1250 Headquarters Plaza

West Tower, 7th Floor Morristown, New Jersey 07960 www.ferf.org

Building the Business Case for Cloud Computing

TABLE OF CONTENTS

What is Cloud Computing? 1

Motivations for Choosing a Cloud Solution 3

The Tangible Benefits of Cloud 4

How Cloud Can Transform the Finance Function 6

Companies that Use Cloud Computing 7

Encore Enterprises Inc. 7

Fitness Formula Clubs 9

ProKarma, Inc. 10

TradingPartners 12

For More Information about Cloud 15

About the Author and the Sponsor 16

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What is Cloud Computing?

Cloud computing has been defined by the National Institute of Standards and Technology (NIST) and the Cloud Security Alliance as:

“A model for enabling convenient, on-demand network access to a shared pool of configurable computing resources that can be rapidly provisioned and released with minimal management effort or service provider interaction.”

ISACA, the worldwide association of IS professionals dedicated to the audit, control, and security of information systems, has identified some key business benefits offered by the cloud:

 Cost containment – The cloud offers enterprises the option of scalability without the financial commitments required for infrastructure purchase and maintenance.

 Immediacy – Many early adopters of cloud computing have cited the ability to provision and utilize a service in a single day.

 Availability – Cloud providers have the infrastructure and bandwidth to accommodate business requirements for high speed access, storage and applications.

 Scalability – With unconstrained capacity, cloud services offer increased flexibility and scalability for evolving IT needs.

 Efficiency – Reallocating information management operational activities to the cloud offers businesses a unique opportunity to focus efforts on innovation and research and development. This allows for business and product growth and may be even more beneficial than the financial advantages offered by the cloud.

 Resiliency – Cloud providers have mirrored solutions that can be utilized in a disaster scenario as well as for load-balancing traffic.

Source: Cloud Computing: Business Benefits With Security, Governance and Assurance Perspectives ©2009, ISACA

There are also risks with Cloud solutions that will need to be managed. ISACA has identified several potential risks:

 Enterprises need to be particular in choosing a provider. Reputation, history and sustainability should all be factors to consider.

 The SaaS provider often takes responsibility for information handling, which is a critical part of the business. Failure to perform to agreed-upon service levels can impact not only confidentiality, but also availability.

 The dynamic nature of SaaS may result in confusion as to where information actually resides. When information retrieval is required, this may create delays.

 Third-party access to sensitive information creates a risk of compromise to confidential

information. In cloud computing, this can pose a significant threat to ensuring the protection of intellectual property and trade secrets.

 Due to the dynamic nature of the cloud, information may not immediately be located in the event of a disaster. Business continuity and disaster recovery plans must be well documented and tested.  Compliance with regulations and laws in different geographic regions can be a challenge for

enterprises. At this time, there is little legal precedent regarding liability in the cloud.

To find out why and how cloud computing is used by the finance function, we interviewed four CFOs in four different industries for this research project:

 Ginger Gordon, CFO at TradingPartners, a spend management consulting company;  Craig Stack, CFO at ProKarma, Inc., a global IT solutions company;

 Mahesh Shetty, COO and CFO at Encore Enterprises Inc., a real estate investment company; and  Bruce Singleton, CFO at Fitness Formula, Ltd., a network of health and fitness clubs.

We asked them to discuss their motivations for choosing a cloud-based solution, what tangible benefits they have enjoyed, and how Cloud has helped them transform the finance function. Questions included:

 What cloud-based financial solution(s) do you use?

 What were the primary motivations behind choosing a cloud-based solution?

 What challenges did your finance organization face, and what did you hope to accomplish with a cloud-based solution?

 What tangible benefits have you realized versus your previous on-premise solution?  How have existing staff been redeployed? And

 How has the cloud enabled you to transform the finance function? This chart summarizes the responses from the CFOs interviewed:

Prior Solutions On-Premise Today’s Cloud Solutions

Access/

Visibility Extremely limited

Anytime/Anywhere “Live and Local”

Implementation Time

Implementation hours based on required customization

300 to 400 hours (including the importing of past transaction data)

Integration

Issues Nothing was integrated Solutions are integrated Upgrade Costs $1K to $60K/

Depends on solution $0

On-Going

Maintenance $1K to $200K/year $0

Scalability Very limited Easy to scale with

Full multi-dimensional analysis

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Motivations for Choosing a Cloud Solution

The primary motivations for choosing a cloud-based solution described by the CFOs fall into three general categories:

 A desire to optimize IT system(s), eliminating costs and IT overhead;  A desire for better user access; and

 A desire to streamline and automate financial accounting processes and provide robust reporting for improved decision making.

Optimize IT Systems

Mahesh Shetty, COO and CFO at Encore Enterprises Inc., decided that Encore is a real estate investment company and not an IT development company. As a growing business, he wanted Encore to be able to scale up while reducing both costs and headcount, and get the best available technology at the lowest cost. Shetty also wants automatic updates, which do not require the purchase, installation or additional maintenance of new releases. He describes these goals as “optimizing the IT systems that we use.”

Craig Stack is CFO of ProKarma, Inc., which has 20 locations on three continents. “We were looking for a quick and cost-effective implementation with solid maintenance and support. And we didn’t want to install and maintain any software or hardware.”

Ginger Gordon, CFO of TradingPartners, was simply looking for a system that would be easy to install and would not be dependent on an IT department for implementation or support.

Better User Access

Ginger Gordon had employees in both the UK and the U.S., but the data was maintained on a server located in the UK. They had different processes, so it was difficult for them to collaborate. “It became clear to me that in order for the company to have a more efficient finance organization, we needed to find a way to easily share accurate and real time information.”

Craig Stack wanted centralized control. “We wanted one central database with central control and equal, simple access for everyone. We needed Cloud to Cloud integration, so system connectivity was very important.”

Streamline Accounting and Reporting

When Ginger Gordon joined TradingPartners as CFO, the finance function had quite a few complexities, including global consolidations for entities in the UK, U.S., China and Japan, foreign exchange translations with four different currencies, and the inability to access financial information outside of the UK. “The consolidation and FX processes were compiled manually and highly dependent on error prone excel spreadsheets.”

Brian Singleton is the CFO at Fitness Formula, Ltd. When he joined Fitness Formula, they had nine locations, but no standard chart of accounts. “I got separate reports for each location, which I had to

consolidate manually using Excel, and that took a full day to do. Then, any changes created other problems, because everything had to be recalculated, and nothing was updated in real time. So consolidation was very labor-intensive. In addition, all statistical reporting had to be done manually.”

The Tangible Benefits of Cloud

Marc Linden, CFO of Intacct Corporation, describes three achievable benefits using cloud computing: 1. Companies can finally realize the promise of accessing data real time, wherever the data was

entered and wherever it is used. Data can be stored in one centralized location and access anywhere, in any country, based on permissions.

2. Companies have flexibility in how they organize the finance department. Data can be input anywhere, so the companies may take advantage of labor cost savings in other countries.

3. Cloud computing provides more computing capability per dollar. Companies pay on a subscription basis for just that functionality that they need, as an operating expense, with no upfront capital expense. Cloud computing is scalable, with the provider assuming the risk.

Ginger Gordon describes a long list of tangible benefits provided to TradingPartners by its cloud-based solution:

 The productivity of the finance organization has been greatly enhanced. The close process has been reduced from 25 days to less than five.

 Numerous manual processes have been eliminated.

 Visibility into financial and operational data. Business unit leaders are able to access real time data at their leisure.

 Adapting to growing business needs.  Improving organizational decision-making.

 Freeing up time to focus on strategic initiatives. “My role has changed drastically.”

Headcount Reduction

TradingPartners has been able to reduce finance staff headcount by 50%, rather than re-deploying existing staff. “We eliminated our U.K. finance department, and transitioned the finance team to the U.S.”

Mahesh Shetty reports that Encore Enterprises has also been able to reduce both headcount and costs. “Over the past two years, Encore has reduced the accounting department from 25 people down to 6. Over the past 3 years, the IT department has been reduced from 15 to 4. By next year, the IT department will be reduced again down to 2. This headcount reduction has saved Encore $200,000 annually in IT costs, and $650,000 annually in accounting department costs. And Encore was able to make these reductions while increasing the number of properties owned or managed by 30%.”

Craig Stack says that Prokarma has grown in the past year from 900 to 1,400 employees. “We could not have managed this growth with our previous systems.”

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Visibility

Craig Stack says that visibility into financial and operational data has been the cloud’s greatest contribution to ProKarma. “We currently provide over 400 project P&Ls to our project managers worldwide. This has greatly increased our ability to make timely, informed decisions on our business – at every level.”

Brian Singleton agrees that visibility into financial and operational data is very important. “Before Intacct, all the club managers and department managers would call me after the 10th of the month for their financial reports. Now, they are able to access their own reports with just a Web browser.”

Summary of Benefits

Here is a summary of the benefits of cloud computing as described by the CFOs interviewed:  Benefits of increased anytime, anywhere visibility;

 Productivity savings, such as superior integration with existing business solutions;  Reduced hardware and software costs

o No hardware licenses or hardware maintenance and upgrade costs;

o Reduced up front software license costs, minus discounts; and

o Payment models transition from up-front licensing/purchase costs to a monthly price based on number of users.

 Lower implementation and integration costs

o Reduced professional service costs; and

o Easier access and training.  Lower operational and maintenance costs

o Reduced professional services costs and support requirements

o Improved IT staff productivity; and

How Cloud Can Transform the Finance Function

Cloud-based solutions have provided tangible benefits for each of the companies interviewed. But can cloud-based systems help transform the finance function? Each of the executives interviewed noted that cloud-based solutions have freed up their time so that they could support their businesses with better and more strategic information.

Craig Stack describes the transformation at ProKarma: “Our employees work in concert with each other across the globe, and everyone can look at the same numbers from the same database at the same time. It is a matter of communication. Now when a manager in Chennai, India, needs utilization information,

dashboards and reports are created and delivered in minutes, not days. I have a direct line of communication with the managers, which fosters a deep connection within the organization. There is a high level of

communication, participation, and ownership across all of our businesses.”

Mahesh Shetty sums up the transformation at Encore: “Finance now provides decision support rather than being an historian. We partner with the business people to analyze potential deals.”

Bruce Singleton at Fitness Formula agrees: “Cloud has helped to free up my time so that I can be more strategic and support the business.”

Ginger Gordon describes the results of the transformation at TradingPartners:

“The transformation of the TradingPartners finance department has allowed me to spend more time on strategic issues and work closely with our CEO to grow the business. My #1 goal is business acceleration. This has led to a CFO role which is one of leadership and performance management; clearly a transition from a role as a process manager. My contribution to the organization has evolved and is now viewed as

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Companies that Use Cloud Computing

Encore Enterprises Inc.

Encore Enterprises Inc. is a privately owned national real estate investment company founded in 1999. Encore develops and acquires mixed-use complexes, limited and full-service hotels, multi-family apartment home communities, retail shopping centers and commercial office buildings. In addition, the company manages hotels, vacation condominium resorts, and homeowner associations.

Encore's operational efficiency has allowed the company to stay ahead of the commercial real estate market curve during the recent recession. This efficiency, combined with disciplined underwriting enables the company to capitalize on market trends providing returns in line with each investor's set of parameters.

Encore uses nine different cloud-based solutions:

1. Microsoft Office 365 is used for e-mail, documents and spreadsheets.

2. MRI is the accounting system for the Real Estate Division and Encore corporate.

3. M3 is the accounting system for the Hospitality Division. All hotels that Encore Enterprises either owns or manages use M3 to track revenues and expenses. M3 provides a dashboard for the individual hotels.

4. Exponent HR is used for all payroll, benefits and other human resource functions.

5. Real Page is used as the property management system for the Multi-Family Division. Real Page provides Business Intelligence (BI) and property management services. Real Page enables Encore to optimize rental income based on local market data.

6. Real Space is used for document management. 7. External IT is used for the IT Help Desk.

8. Avid is used as work flow engine to approve all accounts payable invoices. 9. Wells Fargo A/P is used to process checks.

Mahesh Shetty is Chief Operating Officer and Chief Financial Officer. He has essentially virtualized the entire “back office.” Shetty describes his motivations for choosing cloud-based systems:

From a strategic perspective, we asked ourselves “Are we an IT development company? The answer was No. Our core competence is to identify good real estate locations, develop properties and sell them at a profit. We are a growing company, so we wanted to be able to scale up without increasing headcount. In fact, we wanted to reduce both costs and headcount. So our primary motivation was to optimize the IT systems that we use. We wanted to get the best

“Managing growth and keeping overhead

costs low was a big challenge under our

traditional model of in-house accounting,

IT development and the associated

resources. The path of cloud computing

made the finance organization more

strategic by focusing on decision support

and the IT applications became a utility

that enabled the business to be more

productive without having to wait for the

next release of software.”

technology at the lowest cost.”

“Our old legacy systems had to be customized and maintained, and required in-house development of bolt on programs, all of which created a lot of headaches. Our new cloud solutions have replaced these old legacy IT systems. Cloud solutions also provide automatic upgrades, which do not require the purchase, installation or maintenance of new releases.”

“Managing growth and keeping overhead costs low was a big challenge under our traditional model of in-house accounting, IT development and the associated resources. The path of cloud computing made the finance organization more strategic by focusing on decision support and the IT applications became a utility that enabled the business to be more productive without having to wait for the next release of software.”

What have been the tangible benefits of these cloud-based solutions? Cloud solutions have helped reduce both headcount and operating costs. Over the past two years, Encore has reduced the accounting

department from 25 people down to 6:  The CFO (Shetty),

 Two controllers,

 One senior accountant, and  Two administrative staff.

Over the past 3 years, the IT department has been reduced from 15 (including some in India) to four. By next year, the IT department will be reduced again down to two.

This headcount reduction has saved Encore $200,000 annually in IT costs, and $650,000 annually in accounting department costs. And Encore was able to make these reductions while increasing the number of properties owned or managed by 30%.

So how has Cloud helped to transform the finance function? “Finance now provides decision support rather than being a historian. We partner with the business people to analyze potential deals.”

“We have transitioned from in-house on-premises software to outsourced IT services. But we continue to ask if there is anything else that we should consider.”

Snapshot of Encore Enterprises Inc:

Prior Solutions On-Premise Today’s Cloud Solutions

Access/ Visibility

Issues based on employee computer configuration

Single browser login/

All files available to all employees

Implementation Time

Implementation hours based on required customization

Upgrades are automatic/ IT team not required

Integration Issues

IT team resolved problems/ Time and effort required

Cloud provider manages transition/ Fixes are universal to all customers

Upgrade Costs $25K to $60K/

Depends on solution $0

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Fitness Formula Clubs

Fitness Formula, Ltd. is a network of urban and suburban health and fitness clubs operating under the brand name of Fitness Formula Clubs. It is Chicagoland's largest privately owned reciprocal usage provider of health, fitness and wellness facilities. It employs more than 600 experienced staff, and has established partnership and medical sub-tenant affiliate relationships with Chicago's leading hospitals and physical therapy providers. Currently, Fitness Formula Clubs owns nine clubs in the Chicago area, and manages three others.

Brian Singleton is the Chief Financial Officer. Singleton describes his motivations for choosing a cloud-based financial solution:

“When I joined Fitness Formula, they were using Sage’s Business Works, which is like QuickBooks, and it left a lot to be desired. We had nine locations, but no standard chart of accounts. I got separate reports for each location, which I had to consolidate manually using Excel, and that took a full day to do. Then, any changes created other problems, because everything had to be recalculated, and nothing was updated in real time. So consolidation was very labor-intensive. In addition, all statistical reporting had to be done manually. I lived with Business Works for two years, and then I knew that we needed a change. Choosing Intacct, a cloud-based financial solution, was my decision.”

What have been the tangible benefits of these cloud-based solutions? “The most tangible benefit of Intacct is that we can expand the business without adding headcount. I am the CFO, and I have two staff

accountants working for me. With Intacct, we have been able to add three more locations without adding any additional staff. In other words, we can now do more with the same people. And I can now produce

important metrics for senior management that I was not able to do before.”

“Visibility into financial and operational data is very important to me. Before Intacct, all the club

managers and department managers would call me after the 10th of the month for their financial reports. Now, they are able to access their own reports with just a Web browser.”

“Another benefit is working with documentation. With Intacct, we can attach documentation to journal entries. When we used the previous system, I had to go to a back closet and sort through old boxes to find documentation. Cloud facilitates a quicker year-end reporting process and helps in the annual audit.”

So how has Cloud helped to transform the finance function? “Cloud has helped to free up my time so that I can be more strategic and better support the business.”

“What have been the tangible benefits of

these cloud-based solutions? “The most

tangible benefit of Intacct is that we can

expand the business without adding

headcount. I am the CFO, and I have two

staff accountants working for me. With

Intacct, we have been able to add three

more locations without adding any

additional staff. In other words, we can

now do more with the same people. And I

can now produce important metrics for

senior management that I was not able to

do before.”

ProKarma, Inc.

ProKarma is a global IT solutions company. They partner with leading enterprise companies to deliver simple and scalable solutions to address complex business challenges. Founded in 2000, it is headquartered in Omaha, NE, with 20 offices across U.S., India and Argentina, and has a global work force of 1,400.

Craig Stack is the Chief Financial Officer. He has been with ProKarma for six years. In that time,

employment has grown from 180 people to 1,400 people. Stack says, “I have 20 years of history with hosted applications, and I have watched the evolution of hosted applications to full Cloud solutions, which gives me a good perspective on Cloud.”

ProKarma employs six different cloud-based solutions:  SalesForce.com for sales and HR;

 Job Science integrated with SalesForce.com, for sourcing and recruiting;  Box.Net for document storage and management;

 ADP for payroll;

 Intacct for finance, project accounting and revenue recognition (1,200 employees using Intacct); and

 Adaptive Planning for budgeting and planning.

ProKarma was using SalesForce.com when Stack first arrived. At that time, it was rudimentary and being used for sales and HR. Over the past six years, SalesForce.com has been developed into a robust system for sales, recruiting and HR. “It has become our front office,” notes Stack. “We use Job Science to source, recruit and onboard new consultants to our staff, and it feeds directly into SalesForce.com.”

Stack describes his motivations for choosing cloud-based systems:

“We have offices in 20 locations on three continents (Argentina, India and the U.S.), and customers in 60 locations worldwide. A year and a half ago, we were using QuickBooks Enterprise in both the U.S. and India, and Excel spreadsheets for all of our consolidations.”

“This was not a very efficient system, so I initiated an extensive vendor evaluation to help us implement a new system that would allow us to drive new levels of efficiency and scale to accommodate our growing operations.”

“We wanted one central database with central control and equal, simple access for everyone. We needed Cloud to Cloud integration, so system connectivity was very important. We were looking for a quick and cost-effective implementation with solid maintenance and support. And we didn’t want to install and maintain any software or hardware.”

What have been the tangible benefits of these cloud-based solutions? “Our Intacct implementation was efficiently planned and well executed by their professional services team. We went from a signed contract to go-live in just three months. We could have only accomplished this success with a cloud-based offering.”

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“The visibility into our financial and operational data has been Intacct’s greatest contribution to the company. Our previous accounting system had a basic Profit and Loss statement with only one dimension choice available. Intacct provides full multi-dimensional analysis into the Profit and Loss statements giving us the ability to analyze our locations, business units, customers, projects, vendors, and employees. We currently provide over 400 project P&Ls to our project managers worldwide. This has greatly increased our ability to make timely, informed decisions on our business – at every level.”

“One of the goals we wanted to achieve with our Intacct system was to deliver accurate financial information within 15 days of every month. Within three months of implementation, we accomplished this goal. This was achieved primarily due to two features: the integration of our 5,000 timesheets per month together with our billing system, and the consolidation process.”

“When we implemented Intacct over a year ago, we had 900 employees. We now have 1,400 employees, of which 20 work in accounting and finance. We could not have managed this growth with our previous systems.”

So how has Cloud helped to transform the finance function? “From a financial and operations perspective, our company has been transformed 180 degrees over the last year due to the implementation of Cloud. We have consistent, timely, accurate, multi-dimensional finance and operational data.”

“Our employees work in concert with each other across the globe, and everyone can look at the same numbers from the same database at the same time. A project manager from our Portland Oregon office jokingly stated our P&L’s are “live and local”, coining a tag line from our local weather channel. That summed it up perfectly from my vantage point.”

“It is a matter of communication. Now when a manager in Chennai, India, needs utilization information, dashboards and reports are created and delivered in minutes, not days.”

“I have a direct line of communication with the managers, which fosters a deep connection within the organization. There is a high level of communication, participation, and ownership across all of our businesses.”

Snapshot of ProKarma, Inc:

Prior Solutions On-Premise Today’s Cloud Solutions

Access/ Visibility

Extremely limited/

Copy of database required

Anytime/Anywhere “Live and Local”

Implementation

Time 100 hours for Quickbooks 400 hours Integration

Issues

Timesheet system was not integrated

Salesforce.com and Adaptive Planning are integrated with timesheets

Upgrade Costs $5,000/year for 15 users $0

On-Going

Maintenance $1,000/year $0 Scalability Very limited/

No G/L dimensional capability Full multi-dimensional analysis

TradingPartners

TradingPartners provides spend management products and services that create dashboard visibility to enterprise data and enable customers to make better decisions, negotiate more effectively and manage their business profitably. With category expertise in retail, manufacturing, services, healthcare, public sector and foodservice, TradingPartners helps Fortune 1000 customers to identify spend reduction opportunities through strategic SpendScience. SpendScience creates visibility of spend and identifies opportunities to reduce costs and promote corporate procurement initiatives. Most importantly, SpendScience creates dashboard

transparency of key performance indicators from across the business.

Ginger Gordon joined TradingPartners in 2010 as Chief Financial Officer. “When I joined TradingPartners in 2010, the company utilized several cloud based solutions. Our core business was based on a cloud based reverse auction negotiation tool, which today is just one component of the company’s SpendScience

platform. Today, TradingPartners’ SpendScience™ platform is a cloud-based platform and allows customers to create configurable dashboard visibility of complex data streams which can be viewed in real-time online.”

“In addition to SpendScience, the company also utilized the cloud based application Salesforce.com, and Concur Expense Reporting. As the company was keenly aware of the benefits cloud computing offered, the lack of progress utilizing cloud based tools within the finance function surprised me. Today, the finance function uses Intacct.”

Gordon describes her motivations for choosing cloud-based systems:

“When I joined TradingPartners, the finance function was behind the times, inefficient and prone to errors as 100% of the reporting was completed manually using Excel spreadsheets. The finance function had quite a few complexities, including global consolidations for entities in the UK, US, China and Japan, foreign exchange translations with four different currencies, and the inability to access financial information outside of the UK. Our data was maintained on local servers in the UK thus accessing this information in the U.S. was painfully slow and unreliable. The consolidation and FX processes were compiled manually and highly dependent on error-prone Excel spreadsheets.”

“One of my initiatives when I joined TradingPartners was to develop a sound financial infrastructure. I had quality people working for me in both the UK and US, but it was difficult for them to collaborate which resulted in two separate finance functions with varying processes and procedures. It became clear to me that in order for the company to have a more efficient finance organization, we needed to find a way to easily share accurate and real time information.”

“We reviewed eight possible new financial systems. Some were on-premises and some were cloud-based. I was quite surprised by the number of on-premises systems being marketed as a current solution. My expectation was that all the major financial systems providers would offer a cloud-based option. That was not the case. We took our time and used various web-based avenues to discover what products were

available.”

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3. My instinct told me that if we did not select a cloud-based option, soon after implementation our selection would be out of date and not in line with current best practices.”

What have been the tangible benefits of these cloud-based solutions?

 Productivity of the finance organization: Productivity of the organization was greatly enhanced. The close process reduced from 25 days to less than five. More time is now spent analyzing information and providing business intelligence to business unit leaders rather than mundane tasks that are now automated.

 Reduction or elimination of manual procedures: Numerous manual processes are eliminated. For instance, with Intacct, FX rates are automatically downloaded daily. Consolidated reporting reflects the FX rates without any intervention by the user. At set up, our standard practices for FX are documented within the system allowing for consistent and immediate reporting. Automation of the global

consolidations and FX has eliminated numerous manual procedures and has created huge time savings. In addition, the errors which were symptomatic of the manual process are eliminated and confidence in reporting is significantly enhanced.

 Visibility into financial and operational data: Prior to our transition to a cloud based system, business unit leaders were dependent on the financial department to send reports. With Intacct dashboards, business unit leaders are able to access real time data at their leisure. In addition, with scheduled reporting managers are confident reports will be delivered timely. The regularly set schedule allows the finance group to consistently meet reporting expectations of the business unit leaders.  Adapting to growing business needs: TradingPartners current growth into Latin America has been

seamless from a financial reporting perspective. As the business continues to expand, the flexibility Intacct offers makes TP very adaptable to our business needs.

 Improving organizational decision-making: Dashboards and ability to compare like business operations has greatly enhanced our decision-making throughout the organization.

 Freeing up time to focus on strategic initiatives: “My role has changed drastically between year 1 and year 2 with TradingPartners. The focus of year 1 was clearly about building a strong and efficient financial infrastructure. Implementing a cloud-based, multi-currency, multi-entity, time and expense integrated financial system, developing my staff so their focus is on analysis and challenging my staff to embrace change and innovate is the story of year 1. Year 2, my focus is strategic. Working closely with our CEO, my time is now spent on growth of our business, the new products and services developed to meet our clients’ needs and prioritization of our strategic initiatives within the resource constraints that exist.”

“In addition, we just reduced finance staff headcount by 50%, rather than re-deploying existing staff. We eliminated our U.K. finance department, and transitioned the finance team to the U.S. However, because Intacct is so easy to use, we have an admin in London who is able to do finance function tasks. The cloud allows us to monitor her activity and provide assistance to the UK admin as required.”

So how has Cloud helped to transform the finance function?

“The transformation of TradingPartners finance function is evident throughout the organization. Previously the function of the team was 100% transactional. To an outsider, the department function was to reimburse expenses and close the books. Moving to the cloud allowed us to automate manual processes, integrate systems, enhance the quality and quantity of available data, and ensure processes are defined and adhered to. With these improvements in place, the function of the department is now as a business partner; we are a source for analytical information which allows the organization to make more informed business decisions. The team can be relied upon to provide key performance measures that aid managers in running their business units.”

“For example, one of the Key Performance Indicators (KPIs) that we developed measured the productivity of our supply management (SM) team. As project timelines often overlap, the SM team’s productivity

traditionally experienced many peaks with long days and hours and then valleys of idle time. With cloud based KPI reporting conjoined with the ability to compare productivity measurements across the globe, we were able to assign projects more equitably, resulting in improved utilization of the SM team. The KPI visibility enables TradingPartners to more easily share resources on a global basis.”

“The transformation of the TradingPartners finance department has allowed me to spend more time on strategic issues and work closely with our CEO to grow the business. My #1 goal is business acceleration. This has led to a CFO role which is one of leadership and performance management; clearly a transition from a role as a process manager. My contribution to the organization has evolved and is now viewed as

strategic.”

Snapshot of Trading Partners:

Prior Solutions On-Premise Today’s Cloud Solutions

Access/

Visibility Slow and extremely limited

Anytime/Anywhere “Live and Local”

Implementation

Time Implemented prior to current CFO 30 days (non-consecutive) Integration

Issues Nothing was integrated

Expense reporting and time keeping are integrated

Upgrade Costs $1,000/year $0

On-Going

Maintenance $1,000/year $0 Scalability Very limited/

No G/L dimensional capability

Full multi-dimensional analysis/ East to scale

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For More Information about Cloud

Nella, Bryan and William M. Sinnett. A User’s Guide to the Cloud. (FERF, 2011)

This “User’s Guide” seeks to answer questions about the Cloud, and to help executives plan an optimal Cloud strategy. The objectives of this Guide are to:

 Define Cloud technology;

 Describe Cloud service models and categories of applications;  Describe potential benefits of the Cloud that can be achieved;  Describe potential risks and pitfalls of the Cloud;

 Provide the right questions that financial executives should ask vendors, IT departments, and their own staff;

 Help customers evaluate vendors; and  Provide considerations for contracts.

Comparison Chart: Software Delivery Models

On-Premise Software Cloud Solution

Application Development

Developed for Windows-based computing

Developed for online delivery

Application Deployment

Installed on the customer’s own hardware

Single vendor develops and operates the applications – delivered via the Internet

Implementation Lengthy implementation time Faster implementation timeframe

Customization Possible but expensive and time-consuming

Highly customizable and does not break with application upgrades

Application Design Monolithic client/server designs Designed for the Web environment

Upgrades 12+ months Generally monthly or more frequently

Integration Can be difficult and expensive Readily available via application programming interfaces (APIs)

IT Support Generally provided by the customer

Generally included in the package from vendor

Multi-Tenancy Not multi-tenant Applications are designed to be multi-tenant

Hardware Requirements

Requires a specific operating system environment

Delivered via a Web browser so generally operating system agnostic

Accountability Vendor is responsible for the software, IT department is responsible for operations

One vendor provides end-to-end solution so accountability is inherent

About the Author

William M. Sinnett is Senior Director, Research for Financial Executives Research Foundation, Inc. (FERF). He received his Masters of Business Administration degree from the University of Pittsburgh. Prior to joining FERF, he held positions in financial management with Mellon Bank and Carnegie-Mellon University in Pittsburgh.

Bill can be reached at [email protected] or (973) 765-1004.

About the Sponsor: Intacct

Intacct is the cloud financial management company. Bringing cloud computing to finance and accounting, Intacct’s award-winning applications are the preferred financial applications for AICPA business solutions. Intacct applications, in use by more than 5,000 organizations from startups to public companies, are designed to improve company performance and make finance more productive. Hundreds of leading CPA firms and Value Added Resellers offer Intacct to their clients. The Intacct system includes accounting, contract management, revenue management, project and fund accounting, inventory management, purchasing, vendor management, financial consolidation and financial reporting applications, all delivered over the Internet via cloud computing.

Intacct is headquartered in San Jose, California. For more information, please visit www.intacct.com or call 877-437-7765.

17

Announcing the new FERF RESEARCH BLOG

FERF has now launched the FERF Research Blog. The purpose of the blog is to engage members in the FERF research process. It will also serve as the new real-time resource for FEI members and financial management professionals to interact in a peer-to-peer setting to resolve their accounting, finance and management questions. Access the Research Blog at www.ferf.org.

About Financial Executives Research Foundation, Inc.

Financial Executives Research Foundation (FERF) is the non-profit 501(c)(3) research affiliate of FEI. FERF researchers identify key financial issues and develop impartial, timely research reports for FEI members and non-members alike, in a variety of publication formats. FERF relies primarily on voluntary tax-deductible contributions from corporations and individuals. This and more than 140 other Research

Foundation publications can be ordered by logging onto www.ferf.org. Questions about FERF can be directed to [email protected].

The views set forth in this publication are those of the author and do not necessarily represent those of the FERF Board as a whole, individual trustees, employees, or the members of the Advisory Committee. FERF shall be held harmless against any claims, demands, suits, damages, injuries, costs, or expenses of any kind or nature whatsoever, except such liabilities as may result solely from misconduct or improper performance by the Foundation or any of its representatives.

Copyright © 2012 by Financial Executives Research Foundation, Inc.

All rights reserved. No part of this publication may be reproduced in any form or by any means without written permission from the publisher.

International Standard Book Number: 978-1-61509-091-4 Printed in the United States of America

First Printing

Authorization to photocopy items for internal or personal use, or the internal or personal use of specific clients, is granted by Financial Executives Research Foundation, Inc., provided that an appropriate fee is paid to Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923. Fee inquiries can be directed to Copyright Clearance Center at 978-750-8400. For further information, please check Copyright Clearance Center online at: http://www.copyright.com.

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