You’ve done it! You have founded your company that develops an app that you believe will be in full demand once it hits the market. You have pitched your business plan and received the necessary funding to bring your app to market. You have a top notch team of developers at your disposal. Life is good! Then you realize that you need to get your back office in order. You buy an accounting software off the shelf at the local office supplies store that starts with Q and ends in uickbooks that will reside on a local computer. You call up a large payroll dinosaur and setup a cumbersome process for your payroll and HR needs. You buy a server to setup in your office to hold your company’s collective documents and handle your email process. More off the shelf programs are purchased to handle CRM, network security, etc. You then realize that your technologically advanced business is very much technologically advanced on the front end, but the back office is no different than a back office of mid tier paper supply company out of Scranton. It does not need to be this way.
I believe businesses could benefit greatly by developing a back office that is created using cloud based software solutions. There are three reasons that I think by going with this approach is beneficial.
- Using cloud based software allows you to customize a suite of solutions that is tailored fit to your needs. Out-of-the box software or large ERP systems tend to be one size fits all and even if you can customize those options, you end up purchasing more software than you need or are required to purchase additional software to make your out of the box software work for your needs. Cloud based software solutions allow you to purchase exactly what you need to meet your back office needs.
- Cloud based software solutions are built to talk to each other. For instance, you could use a cloud based CRM solution to track your pipeline sales. When you make a sale, that software could talk to a cloud based invoicing system, which would create an invoice for your sale. The invoice can be sent electronically and include links to allow for payment by credit card directly from the invoice. At the same time once the invoice is sent, your invoicing software can talk to your cloud based accounting software and create the necessary entries on your books. Your accounting software can talk with your bank and once the cash has been received from your invoice sale, entries are created in your accounting software to clear the receivable. This allows for automation of basic transactional level activity that can be prone to human error or delayed due to not having sufficient time and resources to process the activity.
- By their very nature, cloud based software solutions don’t just live on your servers in your office. They can be accessed at anytime and anywhere. This is particularly useful for startups that are spending more time out of the office pitching to potential clients or investors. The ability to obtain your data on the go can increase your productivity out of the office or at the minimum allow you to check in on a dashboard of real time relevant financial information or get your payroll approved and out the door. Most cloud based software solutions include apps for the smartphone or tablet so that you don’t even need to be tethered to a laptop.
Most cloud based software solutions come as software as a service (SAAS), meaning that instead of paying one up front cost, you end up paying each month for the service (which could be a fixed cost or a variable cost). There are some positives and negatives to this. This does allow a startup to save capital on software by spreading that cost over many months instead of incurring the costs upfront. The negative is that as long as you use that piece of software you must incur the costs each month in perpetuity. The upside to that though is the ability to have the most up to date software available as updates are continuously made on SAAS solutions, whereas you would need to wait until the next version was available to get those updates (and incur the costs to upgrade). There are also many SAAS solutions that are free, which negates the cost issue all together.
In my next post, I will list out some of the cloud based software solutions by category that I believe are the most beneficial to startups. Those solutions will include both free and pay SAAS solutions. I think that startups that move towards cloud based software solutions for their back-office needs will benefit greatly from doing so.
This post was originally posted by the author on builtinchicago.org on 10/17/2013. Portions of the article have been edited since the original posting.