The cloud’s bona fides continue to improve, and more companies are embracing the trend to keep up with technology and keep down IT costs.
Only a couple of years ago, “cloud,” to most non-techie folks, was a term mostly owned by meteorologists. Of course today, it is a place where companies to which are rushing, particularly in the treasury when it comes to TMS implementation and treasury management in general.
For cloud evangelists, cloud computing model provides access to scalable and elastic IT-enabled capabilities that can be released on demand, giving rise to a new breed of cloud-based TMSs. Moving to the cloud can provide treasurers with access to such systems on a pay-per-use basis, thereby providing significant cost advantages. While cloud-based treasury services are relatively new and often limited to allowing users to see reports and analyze data, they are expected to become more dynamic as the market develops.
At the same time, transition to the cloud involves risks that can’t be easily ignored by treasurers at big multinational companies – particularly in light of notable big hacks at companies like Lockheed, Sony, LinkedIn and, of all places, data storage company EMC. The thought of not knowing exactly where (or how) the internal data and applications reside doesn’t always sit well with some treasurers. The risks include unauthorized access to data and lack of privacy, especially if the contracts are too generalized. For different treasury functions, risks and challenges for “going cloud” vary depending on the complexity and compatibility, whether it is front-office operation or a back-end regulatory function; as far as some operations are concerned, standardization of solutions will be a challenge to areas like risk management and analytics.
Different levels of enthusiasm. Like any other major tech trends we have witnessed before, not all companies embrace the cloud at the same time or with the same level of zeal. According to spring 2012 pre-meeting survey for The NeuGroup’s Global Cash and Banking Group (GCBG), 30.8 percent of respondents now use cloud computing for data storage or file sharing (some admittedly just got started). The services named include popular ones like Google’s gmail and Apple’s iCloud, as well as applications and modules provided by professional service providers such as SAP and EMC. To further highlight how the cloud is gaining adherents, in a spring 2012 pre-meeting survey for The NeuGroup’s Engineering & Construction Treasurers’ Peer Group (E&CTPG), several members mentioned that the topic of cloud computing has been put under review for their treasury policy and procedure.
Asia shines. If there is any bright beacon that enthusiastic cloud-minded treasurers should look to, that would probably be in the Asia Pacific region. Technology industry researcher Gartner forecasts that Asia Pacific spending on software-as-a-service (SaaS), a cloud computing product along with platform-as-a-service and infrastructure-as-a-service, will reach US$934.1mn in 2012, up 28 percent from 2011. “SaaS financial (accounting) applications are most popular, particularly in China and India,” reports Gartner. “The next-highest SaaS usage is for ERP functions — such as expense management and employee performance management — followed by office suites, email and the CRM sales function.”
So in Asia, it is getting very cloudy. While cloud solutions can allow corporates to realize significant cost savings with proper study and planning before implementation. But it is not a risk-free solution for everyone or for all functions. Individual organizations should look into the realistic scenario and challenges before they make the decision to transition to the cloud.