There has been plenty of information and hype about ERP cloud computing . . . with a strong shot of technical jargon thrown in. Some of the scarier technical terms are being tossed out by IT professionals threatened by the perceived notion that the cloud will make their jobs obsolete. But there are real concerns about moving ERP software to the cloud that should be addressed.

Concerns about the loss of control over ERP data is a common discussion point in the evaluation to move to the cloud. As CFO, you understand that any risk benefit analysis will include obvious and the not-so-obvious factors that affect the decision. Here are replies to nine concerns every CFO has about ERP software in the cloud:

1. Will our data be secure from access by outsiders? The main concern with cloud computing is security and the risk of having your data accessible to others on the web. As mentioned already, having professional security requirements in place can honestly be more secure than the current set up of most companies. If you choose a reputable cloud provider they will be able to clearly articulate specific governance, operational and regulatory guidelines that they follow to assure the security of your data. This includes helping you to understand the policies for ID management and access control — who is authorized to do what and when.

2. Will we still own our data? In most cases you will retain ownership of your data, but this is a crucial question to ask your ERP cloud provider before the purchase. Equally important to ask is how the cloud provider will deliver your data to you if you choose to cancel your contract. For example, some cloud-only vendors will deliver a file of raw data that is difficult to reuse in a new system.

3. What should I look for in an ERP cloud provider? Choose an ERP vendor with a track record and lots of satisfied customers that are willing to talk to you about their experience. Carefully review the uptime guarantees, service level agreement (SLA) and other terms and conditions. Ask if the vendor has redundant infrastructure facilities in the case of a natural disaster at their primary facility. In addition, do research to establish the provider’s financial stability.

4. What if circumstances change and we want to bring ERP back in-house? Not all ERP solutions have the flexibility to run either in the cloud or on premises. Some vendors only support cloud deployment, while others allow you to change your  deployment method without forcing you to go through a new implementation. If your business needs change in the future, having this option available could mean huge financial savings.

5. Will a cloud-based ERP system be able to integrate with the other line of business applications that we use? The answer depends on the ERP application you choose. ERP solutions with robust sets of integration tools will allow you to integrate to other on premises and cloud based solutions. However some companies see integration and customization as a limitation of a pure cloud solution. For example, in cases where you want to edit the underlying source code or add significant new functionality specific to your business. In this case, a hosted solution may give the best of both worlds. You have the benefits of a cloud infrastructure but do not give up the flexibility associated with owning the application.

6. Will the ERP system response time be as fast as it is on premises? Having adequate bandwidth and speed will be a critical part of your user experience with a cloud based ERP system. Your cloud provider will help you define the user-side requirements of internet access to ensure the response times that you expect.

7. What if our internet connection goes down? A redundant internet service can help you ensure continued operations even when your primary ISP goes down. Many organizations find that a redundant system also helps with load balancing during high usage time, keeping the ERP system responsive — even during March Madness.

8. What if the cloud provider’s internet goes down? As part of the SLA (Service Level Agreement), your cloud provider should supply uptime guarantees and explanation of the redundant systems in place to protect against major system failure. To put this in perspective, if your cloud provider guarantees 99.9% uptime this means in the worst case scenario your system would be down less than 8.76 hours per year. Likely if you carefully tracked the uptime of your on premises system you would find it is down more than you realize.

9. Will our ISV solutions work with cloud based ERP? Many organizations use independent software vendor (ISV) applications to manage specific functions or industry-specific requirements. Choosing an ERP solution supported by a robust ecosystem of ISVs will ensure that the applications that you depend on will be adapted to work in the cloud. Note that there will be an additional cost to adding ISV applications to your hosted or cloud system.

Want to know more about ERP Software in the Cloud? You can get the answers to more questions in the white paper 35 Questions Every CFO Needs to Ask about Cloud ERP Software.

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