I’ve never been one to avoid discussing the elephant sitting in the middle of the room. I like to call it out, point out the size and colors of its ears, the peanuts it’s eating, and the mess it’s creating for the rest of us to clean up. It’s there … let’s not avoid it, ok?
So, the elephant sitting in my room today is the fact that companies are still considering on-premises accounting solutions. I don’t get it. Seriously. How can someone pick an old, antiquated system, or a 1990’s way of handling your accounting data? It doesn’t make sense to me.
You know what? If you are considering an on-premises solution, I have a stock tip for you … buy Blockbuster Video. Seriously … call up your broker and buy as much of it as you can afford today. Your future depends on it.
Let that advice sink in for a minute … pretty stupid suggestion, isn’t it?
I’m pretty sure Blockbuster is dead. I haven’t seen a storefront in at least five years and a rental box in about the same amount of time. Netflix and Amazon crushed them completely.
Even if Blockbuster stock is available to purchase, and it’s not worth my time to even research if it is available, it makes no sense to add it to your portfolio. I think we all can agree on that (see graph below).
Now that we are all in agreement on this point … let’s get back to the elephant in the room. Do you want to invest your future, your job, and your company’s accounting and finance backbone in a system that is being phased out by technology advancements? To me, it’s a pretty easy decision.
Sure, you might have some servers with excess space. I get that. But, just because you own a VCR, or even a DVD player, doesn’t mean you should rush out and rent the entire Breaking Bad or Sopranos collection. Why not stream it from the comforts of your home through Netflix, Amazon, DirecTV or your cable provider? The choice seems pretty clear to me. Plus, I can log into my computer, cell phone, tablet, from anywhere in the world and see pretty much whatever I want, whenever I want, as long as I have Internet access. Can you do this with your VCR or DVD player?
Cloud, or Software-as-a-Service (SaaS), is a far safer bet for both you and your company. Sid Nag, research director at Gartner Research recently said the following… "The market for public cloud services is continuing to demonstrate high rates of growth across all markets and Gartner expects this to continue through 2017. This strong growth continues reflect a shift away from legacy IT services to cloud-based services, due to increased trend of organizations pursuing a digital business strategy."
"Cloud application services (SaaS) is forecast to grow 20.3 percent in 2016, to $37.7 billion," continues Nag. "As software vendors shift their business models from on-premises licensed software to public cloud-based offerings, this trend will continue. In addition, the entry of some major software vendors into the public cloud last year will fuel growth of the SaaS market moving forward."
Hmmm … Gartner points out some interesting things here that you need to consider today. Not tomorrow. Not next year. Today.
So, I am going to leave you with a few questions you need to ask your on-premises sales consultant, whether he or she is selling Sage, Microsoft, Deltek, Blackbaud, Shelby, etc.
- How fast is their proposed solution's customer base growing, year-over-year? Last time I checked, most on-premises solutions are losing customers faster than they can replace them. Fact: Intacct is growing at a rate of 40% year-over-year
- What is the cost of their annual maintenance, how often do they upgrade their system, and how much does upgrading cost? The average annual maintenance cost is about 20% of your purchase price, and most solutions upgrade every 24 to 36 months. Fact: Intacct upgrades every three (3) months, at no cost to the customer (unless it is a new module).
- How long are customizations guaranteed, and after the guarantee is up, what is the cost if they break? 12 months? 24 months? 36 months? Fact: Intacct guarantees all customizations for life.
- What are the uptime, security, and maintenance guarantees of the system? This is actually a trick question, as these are at the hands of your IT department, their equipment and availability. Fact: Intacct has world-class SLAs that cover these areas, and it is included in the subscription cost.
- How many versions of their system do they support across their install-base, and how does this impact their upgrade schedule and support methodology? Supporting multiple versions is a major distraction that slows the development life cycle and increases your total cost of ownership. Fact: Every Intacct customer is on the same version. This allows the organization to release enhancements, upgrades and new features every 90 days, at no cost to the customer.
Blockbuster died because it couldn’t adapt to the way content was being consumed by its customers. If you purchase an on-premises system, how long will it be around to support your needs?
That elephant that we’ve been discussing? You really need to address it, as it’s about to trample your room and you’re going to be responsible for what happens.
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