Hybrid Cloud ERP: Taking Treasury by Storm
Sven Lindemann, CEO, Hanse Orga Group
It might sound too good to be true, but there is a way to gain greater visibility over group cash, reduce payments fraud, and extract further value from your ERP – without migrating decentralised subsidiaries into the ERP environment. In this month’s Executive Interview, Sven Lindemann, CEO of Hanse Orga Group, explains the benefits of the new hybrid cloud ERP model and how it could transform corporate treasury in 2018 and beyond.
In your view, what are the top concerns for corporate treasurers in 2018?
Centralisation, automation and fraud prevention are key themes on corporates’ to-do lists. Underpinning these priorities, there is a clear desire to use technology in a smarter way. Treasurers are keen to extract the maximum value from existing system investments whilst leveraging new technologies to make payment processes smoother and more secure, all while gaining greater visibility and control over cash.
A confluence of external and internal factors is driving these trends. The growing number of high-profile financial fraud cases, for example, is incentivising corporates to centralise outgoing and incoming payments. Today’s treasurer needs to be aware of whom the organisation is doing business with at all times, so the greater extent to which payments can be centralised, automated, and have thorough compliance and fraud checks embedded within the process, the better.
Treasurers also need to have complete visibility and control when it comes to the company’s cash. That means having a firm handle on bank accounts and balances across the group. The challenge, however, is that not all companies operate in a centralised environment – with decentralised subsidiaries not using the ERP, making it more difficult to obtain the desired levels of transparency since critical information is not aggregated in one place.
How are corporates tackling these issues and to what extent can technology solutions assist?
One interesting trend that we’re seeing in reaction to this challenge is more multinational companies (MNCs) – in particular those who have recently undertaken M&A – setting up global payment hubs as a means to centralise information quickly. These payment hubs bring the whole order-to-cash process together in one place, enabling the company to increase automation, review and improve payment processes, reduce fraud, and mine their payment data more effectively.
Although payment hubs aren’t a new concept, the growing use of a hybrid cloud ERP model as a means to achieve this level of centralisation is an up-and-coming phenomenon in the treasury world.
What exactly is the hybrid cloud model and how does it work in practice?
The hybrid cloud is a cross between an on-premise ERP solution and a cloud solution – this essentially involves connecting an ERP system with the cloud environment to produce a single source of truth, without any complex interfaces.
Take the example of a large MNC that has 80% of its subsidiaries using SAP, with the rest being non-SAP users. The hybrid cloud model can bridge that systems gap and put in place a central reporting capability for the entire organisation without causing any systems disruption or upheaval to users. As such, the hybrid cloud model allows a corporate to make the most of its existing ERP-integrated solution, whilst gaining visibility over the cash of any decentralised subsidiaries which are not on-boarded onto the ERP.
Elsewhere, the hybrid cloud model allows different departments to work in different systems, whilst still utilising the same set of data. There is no need for treasury to work in the ERP simply because the rest of the finance team chooses to. Instead, treasury can work in a modern cloud environment, with a user-friendly interface, whereby every transaction that is keyed into the cloud, and every approval that is made in the cloud is automatically updated in the ERP system, in real-time.
In the same vein, the accounts receivable and accounts payable departments, can continue to work in the ERP environment but have seamless visibility over all of the information and transactions carried out in the cloud. And any changes made in the ERP are instantly reflected in the cloud environment.
With the hybrid cloud model therefore, ERP and cloud users can see everything that has happened in both worlds, yet have one central source of data because both solutions communicate 100% automatically with each other all of the time.
Is this the beginning of a new era for ERP solutions, and Hanse Orga Group, then?
To be clear, there is still a strong market for ERP-integrated solutions but at the same time, treasury departments do not necessarily want to work in the ERP environment by default and corporates want to extend the value of their ERP. As such, we are seeing a growing demand for the core solutions in an ERP system and satellite solutions around these ERPs in a cloud environment.
We strongly believe that the hybrid cloud model is a great way to achieve centralisation without the logistical challenges of migrating multiple decentralised subsidiaries onto the ERP. It can also lead to less complexity in the overall IT infrastructure. To this end, we recently purchased a cloud vendor, called Tembit, in order to bolster our offering in this space. Our hybrid cloud solution works out of the box with SAP and other ERPs, so there is no complex integration to be done.