Prepare your business for the ‘Cloud Generation’
- Sales and Use Tax
- December 16, 2015 | Kerry Alexander
Technology trends track much faster today than in the past. When the telephone first came on the scene, it took 75 years to get 50 million people to adopt it. It took 13 years for that same number of people to embrace television. The Internet took only four years. The Angry Birds app? 35 days.
A month may be a stretch, but onboarding new technologies is happening much more quickly. 2016 will definitely see the rise of the Cloud Generation. Advanced analytics and big data are gaining traction. 3-D printers are being used in manufacturing and production. Mobile is ubiquitous. And companies are getting much more comfortable with the Cloud. A new report by Verizon Enterprise Solutions shows that cloud computing is finally mainstream, with nearly every company using it in some way in their business. A third of those surveyed said that at least half their workloads are in the cloud; Oracle is predicting this will be 70% by 2025.
So what does that mean for businesses with ERPs? Does it require overhauling your platform, investing in expensive upgrades or (gasp) getting an entirely new system? The short answer: no. Hybrid ERPs (a combination of on-premises and cloud applications) are a great bridge option, enabling companies to keep the platforms they have and evolve their systems with new Cloud capabilities through their ERP vendor or third-party providers. Garter predicts Hybrid ERPs will be the norm within five years, but many vendors are accelerating that timeline. Oracle has signed 1,350 new Cloud ERP contracts in less than two years. Epicor added 39 modules to its cloud portfolio in the last year and saw a 71% year-over-year increase in cloud users. Infor experienced a 60% reduction in customizations for customers who moved their ERP to the Cloud.
What functions should you move to the Cloud? That largely depends on your business, but a good rule of thumb is to automate wherever you can to save time, money and resources. Experts generally concur that if you’re not automating at least some of your business processes, you’re lagging behind your competition. According to Gartner, 75% of companies employ an average of four automation technologies. Much of your everyday workload can be automated. Affordable and efficient SaaS options allow you to more efficiently manage human resources and benefits management, payroll and finances, order fulfillment, inventory management, demand planning and, of course, tax compliance.
Automating sales and use tax is a huge time and money saver for businesses. Forrester Research ran an economic impact study on several ERP customers and found that these companies had the equivalent of two accountants spending 70% of their time manually invoicing customers and determining sales taxes. After automating this process in their ERP systems (EPICOR in this instance), these same companies saved the equivalent of 1.4 accountants’ time and expense annually (an average of roughly $385,000 over five years). TechValidate surveyed Avalara customers and found that these companies were able to reduce the time spent on sales and use tax management by 50% or more by using automation software.
The key is smart planning. It’s important to think about how your technology platform serves you today, but also how it can accommodate future growth. Are there on-premises systems you can move to the Cloud to save time and money and future-proof your business? SaaS solutions generally offer the same (or better) functionality without requiring expensive upgrades, multiple systems management or dedicated IT resources. In fact, Nucleus Research found that cloud applications deliver 1.7 times the ROI of on-premises applications and Oracle estimates that the cost of ownership of on-premises solutions is 30 to 50% more than Cloud.
The whole point of an ERP is to help your business grow efficiently. Leveraging the Cloud lets you make faster decisions, often in real time, and scale operations or shift gears as needed. Do your due diligence. You want solutions that integrate easily with your existing systems to minimize any impact on your business. Choose a SaaS vendor who has experience with or is pre-certified to integrate with the business systems you are using. Done right, adding Cloud capability to your existing ERP system should be a smooth process. And there’s no better feeling for a business than starting a new year with a (re)fresh perspective.
Ready to have a conversation with your ERP vendor about Cloud? Arm yourself with our handy guide: 4 Signs Its Time for a Cloud ERP Revolution
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 Citi Digital Strategy Team