John Tate assesses the implications for charities of cloud technology developments.

My column last month provoked a lively reaction. In it I suggested there is a lot of hype around ‘the cloud’ at the moment (the cloud being a computer-industry term for running software applications on the internet).

In response to this a number of people – mainly it suppliers – suggested I was being over-critical of the cloud as a technology solution, and that charities can gain huge benefit from investment in this space.

Upheaval

I’m going to look at this in a bit more detail as the concept of the cloud, while not new, has the capacity to fundamentally change our IT infrastructure. It could mean:

• Our PCs are replaced by ‘thin clients’(a glorified screen and keyboard);
• Our locally-installed servers are replaced as we share huge banks of machines at third-party data centres; and
• Windows-designed software applications are updated to web-based products.

That would be just about as much upheaval with technology as could be possible.

My view that the IT industry is ‘over-hyping’ the benefits of the cloud is hardly surprising considering how much money it stands to make from people almost completely changing their current systems and applications.

However, just because the it industry is exaggerating the benefits doesn’t mean there are not advantages to be gained by its use.

Cost savings are often cited as a key benefit with the cloud. thin clients are cheaper to buy and run than a full-blown PC. economies of scale can be gained by running an application on a server that is shared by many people and organisations.

This can work well for small charities. However, the problem with this argument for established organisations is that their core transaction processing systems – accounting and CRM (customer relationship management) – were nearly all developed to run on PCs and will not operate via the web in a pure cloud model. So you cannot simply switch all your current systems to a web environment.

Technologies from vendors such as Microsoft, Citrix and VMware exist to allow you to run Windows applications via a web browser, but these are expensive and complex to set up and maintain.

On the other hand, most users are not particularly ecstatic about their current accounting and CRM systems and many would like to change them. The majority of these systems are based on products that were developed in the 1980s or 1990s. the core design weaknesses with these early products generally linger today.

So, for example, with accounting systems, the general ledger coding structures and reporting modules typically leave a lot to be desired.

As I write, dozens of software companies are writing cloud-based transaction-processing systems for accounting and CRM. There is an opportunity for these developers to address the weaknesses in the current products and develop world-class systems. The challenge they face is that the functional requirements of charities for accounting and CRM systems are complex, and so a huge amount of code needs to be written. In the rush to get product to market there is always a danger that the core design of the application may be weak.

Resources

The software companies which are developing cloud accounting products, that would be suitable for charities, lack the resources to do this quickly. So what we are seeing are a host of cloud solutions being released with limited capability – and being added to over time.

There are some larger vendors which have developed cloud solutions in the CRM space – for example, Salesforce – but these products typically lack the charityspecific features that are required. Third-party companies have been developing add-ons to fill these gaps, and these could ultimately provide a good solution.

Whatever one feels about these developments, the fact is that the bulk of new investment in software development is being directed at web solutions. So if we are going to see great new products for charity accounting and CRM they are highly likely to be cloud-based. 

John Tate is a business consultant, IT adviser to CFG and a visiting lecturer as Cass Business School