A cloud computing cost analysis from Infosys, the big outsourcing provider based in India, came up with interesting results. In the first year, the on-premise system appears much more costly than the hosted cloud-based system. By the third year, the cost gap between the two is not substantial. By the fifth year, the on-premise system actually looks better. However, when you figure the costs for license renewal and a hardware upgrade that fifth year, the on-premise system will lose its cost advantage.

A McKinsey report in 2009 also looked at the payback from cloud computing and, according to a review of the report by Bernard Golden, came to the opposite conclusion: that cloud computing is more expensive. Golden’s interesting analysis is here.

The truth is that every organization will come up with different result when it plugs its own data into a business case for cloud. To figure out whether cloud computing is right for your organization, wiredFINANCE suggests evaluating three areas in both quantitative and qualitative terms. more

IBM made a big announcement today involving its mainframe computers — the $16 billion-a-year business everyone thought went the way of the dinosaur yesterday. Yet here is IBM announcing a new mainframe that is more powerful and less costly per pound of computing capacity than anything that came before.

The new mainframe, called the IBM System zEnterprise 196, packs a lot of leading-edge technology that amounts to techno-babble for most executives. It is easy to understand why the hardcore techies, especially the mainframe bigots, are excited. But why should the CFO and other C-level executives care?

Here is a report on the new mainframe that may get you thinking. wiredFINANCE can think of three reasons: reduced costs, risk mitigation, and service delivery performance. Each is key to the bottom line. more

IT optimization is a big thing these days, part of the getting more bang for the buck, working smarter, and doing more with less management mentality. Nobody quibbles with the need to get the most you can out of your IT investment. The question is how.

The IT vendors have jumped on the IT optimization bandwagon in a big way. IBM simply calls it IT optimization and focuses on IT efficiency. HP calls it cost optimization and focuses on IT costs, including visibility into IT financials. For others, IT optimization means the virtualized data center.

The above are all fine, but the financial organization’s concern with IT optimization needs to have a different focus. That’s why wiredFINANCE offers the following five-part guide to IT Optimization for Finance. more

So what is it about software-as-a-service (SaaS)? Does it deliver the killer cost advantages as presented in a recent Hurwitz & Associates study or should organizations reevaluate their use of SaaS as Gartner suggests? The answer, like so many IT questions: It depends.

What it depends on is the organization’s size, its IT capabilities, the particular software category, the specific product under consideration, and more. The concept of SaaS certainly makes sense: software delivered on demand over the Internet as a service. The organization pays only for what it uses or adopts a pricing model that allows a predictable monthly or yearly cost. And there is no investment in IT hardware required; the SaaS vendor takes care of that. (In truth, the organization actually needs, at a minimum, enough IT in-house to ensure that it has a sufficiently fast and reliable Internet connection to the SaaS provider and interoperability with whatever other systems it may use.)

Hurwitz, which focused mainly on midsize organizations, found that the cost advantages of SaaS solutions are significant across all deployment sizes evaluated, ranging from 10 to 100 users. Gartner, despite its recent reservations about SaaS, expects it to likely penetrate every company at one level or another, and advises organizations to take a few precautions. more

What would it take for your organization to give up the paper payment habit? Or at least cut it back a little? That’s the message from Aberdeen Group’s third annual payments report titled “Global Payments: Maximizing Cash Flow with Electronic Payments and Process Automation”. The study was jointly underwritten by Sage Payment Solutions and Syncada, a joint venture between Visa and US Bank.

According to Nasreen Quibria, senior analyst at Boston-based Aberdeen, businesses that adopt electronic payment channels have been able to achieve a 16 percent decrease in accounts receivable (AR) processing costs and a 14 percent decrease in accounts payable (AP) costs year over year. Given recession-driven mandates to reduce costs and preserve cash during the past 2 years, you might think that this alone would be a compelling incentive.

In a different study, the largest U.S. companies, according to REL Research, saw working capital performance deteriorate by over 8 percent in 2009, the largest decline in more than 5 years. These companies now have up to $740 billion in cash unnecessarily tied up in working capital, which can be freed up by improving their operations in collections, payables, and inventory management. Furthermore, REL found that top-performing companies collected from customers 17 days more quickly than typical companies in 2009.

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