Cloud Applications
Next Step
In Productivity Evolution

A key aspect of the Networked Business is the idea of a “cloud application”.  There’s a lot of buzz around the word cloud and cloud applications.  In fact, nearly every day I hear a CEO or spokesperson for an enterprise software provider mention their move to the cloud, or quest to become a leader in the cloud.

What I don’t hear a lot about is what exactly is a cloud application, or software as a service (SAAS), as it is sometimes called, or more importantly, how this is helpful to the Payables Community.  Just the other day my brother who is very tech savvy stopped me because I was using the phrase software as a service as if everybody knows what this means.  He didn’t know and suggested that many in the business world don’t either.  So, I too am guilty of assuming people just know what you mean when you say cloud or SaaS.

What is a Cloud Application?

The simplest definition is an application installed and maintained on servers in a data center that: a) your company doesn’t own, and b) you access using the Internet.  Cloud is a reference to the Internet which many refer simply to as The Cloud.  The advent of the web browser was the key enabler for cloud applications because it provides a universal platform to access applications installed on a server not within you company’s data network.  Smartphones added another universal platform to access such applications.

A key innovation cloud applications bring is a huge reduction in the use of very scarce, information technology resources – namely, a reduction in your company’s IT staff’s time spent on installing and maintaining business applications.  While this innovation is somewhat helpful to all, there are other innovations found in cloud applications that are especially helpful to the Payables Community.

Productivity Evolution

So, why are cloud applications important to the Payables Community?  A way to understand this is to consider the evolution of productivity in the community over the past few decades.

Let’s begin by considering how business approached payables prior to the 1990s.  Virtually all payables processes relied almost exclusively on paper business forms using a workflow where these forms or documents were routed externally using the postal system and internally using interoffice transmittal.  Just consider the expense reporting process where virtually every organization used a paper expense report form routed for approval using an interoffice transmittal envelope.

The 1990s was the era when the personal productivity tools of spreadsheets and email became popular in the Payables Community.  Organizations replaced business forms with spreadsheets and routed these using email which provided for both external and internal delivery.  This approach was among the reasons for the huge productivity gains enjoyed in the 1990s.

By the 2000s the vast majority of organizations in the Payables Community were using some type of electronic document for their payables including spreadsheets, portable document format (PDF), or scanned images of paper documents.

A New Era of Productivity

Cloud applications were first introduced in the late 1990s.  By the early 2010s they became popular in the Payables Community because of a few important reasons.

First, unlike general purpose tools like spreadsheets or email, cloud applications are optimized for a specific purpose such as processing expense reports or invoices.  They address the nuances and idiosyncrasies of the payables process in ways that result in vastly improved efficiency and effectiveness when compared to using older productivity tools.  In upcoming posts I will describe in detail some examples to illustrate this.

Second, the Payables Community consumes cloud applications as a service, thus the name software as a service.  SaaS requires you to have only a web browser or smart device to use it.  As mentioned earlier, this means it takes little or no help from your IT staff to use these applications.  That in turn opens the possibility for members of the Payables Community to select applications they want without having to wait in the “IT Project Queue” line.

SaaS also means paying a subscription instead of purchasing a software license.  Paying a subscription, often monthly, makes it affordable.  This is especially the case where the efficiency gained by SaaS results in a reduction in cost that exceeds the subscription.  I call this ‘instant hard dollar saving’ because as soon as you begin using the SaaS, your monthly costs decrease and continue to do so over time.  This in combination with little or no need for IT makes it very practical for the Payables Community to enjoy the benefit of SaaS.

Lastly, most SaaS uses an approach where it is easy to integrate other SaaS applications.  This includes situations where there is a development platform that makes it easy for developers to write applications that extend the functions of the SaaS.  It also includes practical ways to share information and functions between SaaS applications.  Either way, these approaches deliver even greater efficiency and effectiveness. It’s this last reason that makes cloud applications such an important aspect of the Networked Business.

Please watch for my continued posts on how technology advancements can benefit the Payables Community and enable it as a critically important aspect of the Networked Business.