Moving E-Payments to the Cloud

Mary E. Shacklett, President, Transworld Data | 10/19/2011 | 15 comments

Mary E. Shacklett
Cloud exploration and adoption have been brisk, but there continues to be trepidation among companies when it comes to handing over portions of their financial activities to the cloud. However, an emerging business case is so cost-compelling that companies with major invoice and payment activities are starting to make the leap.

One example is a major natural gas provider that processes more than 14,000 invoices for suppliers each month. “We’d reached the point where we were processing these invoices for our suppliers, and we were unable to process these invoices within the 30-day timeframes for payment that we had committed to,” said the team leader. “Between late fees, operational costs, and vendor relationship issues, our internal payment processing operation was costing us money.”

The cost was being incurred through penalties and late fees that suppliers were charging the company. At the heart of the problem was a legacy internal accounts payable system that was virtually impossible to modify and had operations so complicated that it was literally impossible to meet vendor requirements for issuing timely payments.

“This was a major issue for us, because it was costing us millions in late payment charges from our suppliers that were directly impacting the business’s bottom line,” said the team leader.

The company could have pursued myriad internal solutions to upgrade its accounting system. Therefore, given a natural organizational bias toward keeping finances in-house, any cloud solution had to exceed expectations even to be considered. Yet this was exactly what happened. What was it, then, that allowed the cloud to penetrate the normal resistance and become a solution for financials?

  • Industry-specific governance and security knowledge. The cloud services provider thoroughly understood the oil and gas industry and already was working with more than 9,000 oil and gas companies and contractors in the area of e-payments.

  • Speed of deployment and responsiveness of support. Since the cloud provider already had many industry suppliers on board, it was easy for companies to make electronic document and payment exchanges. The cloud provider also had its own datacenter and was highly responsive whenever a question or a problem surfaced.

  • Trust. The cloud provider gained the company's trust by consistently performing to a demanding set of SLAs (service level agreements) and demonstrating day in and day out a detailed knowledge of the industry.

  • Great R&D and corporate security practices. The cloud provider consistently invested in new research into applications and solutions in the e-payments field, which made clients feel comfortable that someone was looking out for their long-term interests. Additionally, this provider regularly invested in and performed third-party SAS70 and IT audits. This allowed financial clients to sleep well at night, because they recognized that they had a responsible business partner exercising the same degree of vigilance they performed within their own corporate walls.

  • Immediate return on investment. “Since we made the move [to the cloud], we are saving $1.7 million a year, because we are avoiding penalties and fees by getting invoice payments out on time,” said the team leader. “Our supplier relationships have also improved.”

More cloud providers will undoubtedly take away lessons from this kind of performance, because performance at this level is exactly what it is going to take to convince financial clients to move their operations to the cloud. There is also a lesson for IT. Selecting a cloud provider for mission-critical applications goes beyond securing IT services on three-year contracts. The provider also has to be able to demonstrate high levels of industry expertise, support, and the ability to move research forward to keep pace with technology trends. The fact that this is being accomplished by cloud providers to a degree where finance folks feel they can “let go” is a real-life example of some of the progress now being made in the cloud.

[Editor's Note: For more depth on this subject, please join the editors and Mary Shacklett for a live chat Wednesday, October 19, at 2:00 p.m. ET.]
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impactnow   Moving E-Payments to the Cloud   10/27/2011 9:37:11 PM

With so many recent breaches that have been so public we all have reason for concern.

nimanthad   Moving E-Payments to the Cloud   10/27/2011 3:23:17 AM
Re: Trust is a fundamental pilar when moving to the Cloud
Yes and that is what is lacking right now. Without the trust no one can succeed.
Mary E. Shacklett   Moving E-Payments to the Cloud   10/25/2011 10:12:20 AM
Re: Trust is a fundamental pilar when moving to the Cloud
The issue with the  generics is trust (security and governance).
User Ranking: Blogger
Mary E. Shacklett   Moving E-Payments to the Cloud   10/25/2011 10:12:17 AM
Re: Trust is a fundamental pilar when moving to the Cloud
The issue with the  generics is trust (security and governance).
User Ranking: Blogger
nimanthad   Moving E-Payments to the Cloud   10/25/2011 2:35:29 AM
Re: Trust is a fundamental pilar when moving to the Cloud
But still its the same process right ? So if industry-ready cloud e-payments do work why the generic doesnt work atleast as half of as it is ? I think its all because people have lost trust on internet so its high time to do a good training and gain faith of users for e-payments because its very convinient. 
Mary E. Shacklett   Moving E-Payments to the Cloud   10/24/2011 11:19:17 AM
Re: Payments
User Ranking: Blogger
impactnow   Moving E-Payments to the Cloud   10/24/2011 10:59:08 AM

I agree the cloud potential is tremendous but security has to be paramount with sensitive information and payments.

The_Phil   Moving E-Payments to the Cloud   10/22/2011 9:28:29 AM
Re: Confidentiality and Privacy Agreements
True. But you can sort of tell the way those decision-makers are going. I think Google Apps usage has increased significantly over the last few years. Same for a good amount of popular SaaS providers. So it looks like the $$ is making the sway nowadays.
Mary E. Shacklett   Moving E-Payments to the Cloud   10/21/2011 12:46:33 PM
Re: Trust is a fundamental pilar when moving to the Cloud
User Ranking: Blogger
Hospice_Houngbo   Moving E-Payments to the Cloud   10/21/2011 11:55:25 AM
Re: Trust is a fundamental pilar when moving to the Cloud
Trust is not always enough. We should add to it the ability of the provider to assure the integrity of customer data and secure the transaction if there is any. Before I could trust a provider I would make sure that its services are reliable and safe.
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