CloudTrade Podcast - Episode 9 - On-premise or in the cloud?
Watch the podcast here, if you’d prefer to read about what was discussed, please read on.
Steve Britton, Director of Sales, talks to CloudTrade Alliance Director Stewart Jacobsen about whether organizations looking to automate the processing of their documents should choose an on-premise data-capture solution or whether they would do better to opt for a cloud-based service. The pros and cons are discussed in detail.
Steve: Good morning Stewart. It's Monday the 19th of April. Bright sunny day here in Chesterfield. What's it like with you?
Stewart: Well down here in Cambridgeshire it's another bright sunny day after a bright sunny weekend, so I'm looking forward to a bright sunny week Steve.
Steve: Wonderful. Delighted that you're joining me this morning on what I'm calling CloudTrade TV, our weekly podcast. I think this is number 9 in the series. So delighted that you could join us. The subject of this chat is whether organizations who are looking to manage or automate the processing of documents in their business should implement an on-premise or cloud solution. You and I have known each other for 20 odd years and I know you've worked in this industry for most of that. Do you want to just give a quick couple of minutes as to your background and what makes you a subject matter expert?
Stewart: Thank you, that's very much appreciated. Yes, well, I started my career a long time ago. It was back in the days when microfilm was king and it was typically used for archiving. But then in the 1980s along came computers linking microfilm with the database and that kicked off innovation for the first time in around 100 years, believe it or not, and technology followed very quickly from then on. And I've taken that journey ever since through mainframes, optical disc, CD-ROM. I remember first seeing those on Tomorrow's World where they went "Oh yes, put marmalade on it and see if you can still use them." And now cloud storage.
It's been a really interesting journey. But looking at outsourcing, it's not new, it's been around for a long time, it's been widely used in the days of microfilm. Specialist equipment was required to capture the documents, and then you needed to develop the film with chemicals. And some of the organizations providing those services, grasped this new technology and put it into a new outsource model. I think if we look at it we've always been on this track, taking this new technology and enhancing it, and either having it in-house on-premise, or as an outsourced application.
Steve: OK. I'm interested to hear you talk about outsourcing. Let's think about our main business that we provide for our customers and that's around processing their inbound invoices and their inbound customer orders. I have an option really. Do I go and procure software, and everything that goes with it to make it run, and manage that myself, or do I put it in the cloud? And I suppose, do I run the cloud myself, or do I give it to an outsourcer to run the cloud? I'm really interested in that context to understand those options and what you believe, in your experience, given that here we are at the beginning of 2021 coming out of the pandemic, which is the best option and why?
Stewart: OK, it's a really good question, Steve, and it's not an easy one to answer because there are lots of pros and cons, but if you look at it, not the on-premise or cloud, but let's look at the technology that sits behind that, as I think that's really important. If we look at OCR or RPA capture solutions, because we've got to capture that data from a document and process it, if it's on-premise then the company has responsibility to make the software work, so they will buy that from a vendor and it's down to them to tweak it, etc.
“… on-premise you've got to check every document to make sure the information that's being captured is correct…”
And we know that those technologies are very labour intensive because you have to rely on the technology within that, and a lot of that underlying technology could be 15-20 years old. The quality of the data that it produces is not as good as you expect in today's technology set. What happens is that if it's on-premise you've got to check every document to make sure the information that's being captured is correct, and that takes away employees from value-added processes, so you're double checking and double touching these documents. And that's why companies are going to other sources of offshore processes here because a lot of companies find there's a lot of overhead and cost, and they ship that offshore.
“… if it's using OCR or RPA, you still need to touch every document… “
It's all about the overhead cost and the quality of the data that people want nowadays. They want data they can actually post first time into the target system, whatever that may be - accounts payable or an order processing system. So, if you look at cloud-capture solutions you do need again to look at the technology because if it's using OCR or RPA, you still need to touch every document. I'd say don't go there if it's anything important. If you're in a cloud, you want a solution that basically is lights out. You can correct your data, or you can have your information processed in the cloud, and have it delivered back to you as a clean data set. The only way to do that is to have constant technology refresh, which is really important because if you are on-premise you made the investment in all that technology and you may be writing that off over 3, 4, 5 years. So you're going to be stuck with that, and by the time you come to refresh it could be another 5-6 years.
“… With the cloud, …they're constantly updating their back-end systems…”
With the cloud, normally most organizations nowadays are more fleet of foot and the service providers say it's a one-year contract or a three-year contract, but built into that they're constantly updating their back-end systems to deliver faster solutions because they rely on transactions going through. The quicker the transactions going through, the less exceptions they have, the better it is for the client and the client will stay with them for longer.
“… CloudTrade threw away the rule book when it built their platform. “
What we did at CloudTrade, which is one of the reasons why I joined the business, is that CloudTrade threw away the rule book when it built their platform. Because they said why are we still OCR-ing the documents when the data is in front of us? As we know, all the other systems now generate a data PDF from the back end. And they are data rich. Within there you've got the underlying data sets. The CloudTrade technology is built from the ground up and it is world leading because it's only one of the few patented products out there for capture technology. And they're not easy to achieve.
“You've got a known price, you've got a known service, and it runs seamlessly in the cloud.”
Steve: Really interesting. What I take away from that, Stewart, is you can buy technology, run it yourself in-house, but you've got not only the cost of the buying, the capital expenditure, you've got the operating expense, you've got to manage data technology, and when you move to the cloud, you're going to leverage best of breed, latest innovative technology and, importantly, you agree with your service provider, who's running the cloud service for you, the output you require, and the terms of the contract, and they'll deliver it. You've got a known price, you've got a known service, and it runs seamlessly in the cloud.
“Is my sensitive data going to fall into the wrong hands?”
So, Stewart, the next question really that springs to mind, and you hear this all the time, is, "Is the cloud secure?" If I'm transacting sensitive data on an invoice, it gets hacked or with the service provider running it, you ask yourself – “Is my sensitive data going to fall into the wrong hands?”
“…CloudTrade has provided their solution for over 10 years.”
Stewart: Yes, we hear these horror stories, time and time again, about major organizations losing data, but you know there is no need to be scared of the cloud. It is mature, more mature than you may think. The first cloud solution I implemented with a pan European footprint was 23 years ago. That was back in 1998. And CloudTrade has provided their solution for over 10 years. So let's make that the baseline. It's been there for a long time. It's solid, it's robust. I think what lies on top of that, that you've got to understand, is that you talk about security. I think the other most important thing you need to understand is you need to do your due diligence with any organization and know what security procedures they have in place. I remember the good old days with ISO in 2010. CloudTrade has invested time and money in ISO 27001 which is a security standard and that is really at the core of it. Because it's about implementing, operating, monitoring and implementing the systems and security around that. And that's really important.
Steve: I was just smiling to myself when you talked about the ISO standards. You and I'll remember BS 5750.
Stewart: We do, yes.
Steve: When it first came out in our industry and all of the other requirements around image quality and use of scanners - yes, that was really interesting. So just thinking about that cloud connectivity, I agree with you, it's been around a long time and we all use internet banking today, we all use Amazon and lots of other media out there, it is common place.
So I've got a supplier sending me an invoice or I've got a customer sending me an order. What is the mechanism that you recognize that allows that sending party to deposit the document in my cloud service so that I can manage it and deliver the output into my back-end system?
“… if you look at your browser on your internet, you see the URL and you'll see the little padlock there, now that tells you it's secure, that's key.”
Stewart: If you look, there is a standard, really an international standard, that came out of California. It's been around for many years. It's SFTP - secure file transfer protocol. When I speak to clients, that's the first thing they ask. What method do you use? And if you look at your browser on your internet, you see the URL and you'll see the little padlock there, now that tells you it's secure, that's key. And everybody's familiar with that. You speak to the client, you've got that, that ticks the box. And then below that you have, "How is that data encrypted?" You have the SSH which is the secure shell security which is really important because that means the data within there is encrypted. I think they call it cryptographic encryption on there. And that is an internationally required standard that uses that.
So there is a backwards and forwards of data going into the client or coming back from the client where we have look-up tables, for example. Then that follows that same route. The days of having pipe to pipe connections into clients' back-end system, that is no longer required. You deposit it into a secure area in a server and they pick it up. So it's even more secure, they can run a virus check if needed. So really to be honest, Steve, the question of security doesn't really come up as long as you satisfy those two key requirements then everybody is very happy with that.
“I'm hearing some very strong messages from you that actually the cloud leading-edge technology is the way of the future.”
Steve: Fantastic. I am conscious of time and want to keep these short, sharp and snappy. OK so just to round things up, we talked about the difference between on-premise or in the cloud. I'm hearing some very strong messages from you that actually the cloud leading-edge technology is the way of the future. Sum it up and give me five bullet points then, as to what moving to the cloud would mean to me if I was a customer coming to CloudTrade, as an example.
Stewart: I've got five key points demonstrating why a cloud solution is the way forward:
So first of all, is the solution scalable? Has it got scalability to grow? And that's really important. And cloud gives you that because with CloudTrade we use Microsoft Azure. As the volumes ramp, the infrastructure can grow very quickly. So first one is scalability, because if it doesn't scale, then you’ve got big problems.
Then there is mobility. We've gone through this terrible pandemic recently and it's enabled people to work remotely. I deal with some clients in Australia, and you hear terrible stories where people can't get into the office and process the invoice to pay them. Whereas our clients have had the ability to work from home which gives them mobility to keep their business operating. So let's talk about operational. Will the business operate if I have a major disaster? That's really important.
The cloud gives you the fleet of foot to change very quickly. If you need to change something within the application, it's very easy to do for clients and for the service provider to do that. And if you've got a new product or new service, you can quickly deploy that. It doesn't take months and months to deliver that.
And efficiency and cost reduction. Again, we talked about the costs of using an on-premise solution: the licensing fee, buying the hardware, and the ongoing maintenance of that. Whereas, you talked earlier on regarding the cloud, about the importance of having a fixed known cost going forward, and how as your volumes increase, you know what that cost is going to be. There's no infrastructure that you need with the cloud.
And most importantly is that with the cloud you get the latest technology because these organizations in the cloud are constantly using new platforms, constantly tweaking the service to make it quicker and faster, and there's no impact to the client. From one day to the next, the service looks the same to the client, but behind the scenes there may be a technology refresh - as is the case with CloudTrade at the present time. We're upgrading everything because we see how it's moving forward.
So there are the key points: scalability, mobility, competitive edge, efficiency and latest technology.
Steve: Stewart, as always, it's been a great pleasure. I can hear the passion in your voice, and you've clearly displayed to the listeners your level of experience, and your time in this industry. You speak with authority when you discuss these subjects, so I really appreciate it.
Hopefully the listeners will have enjoyed it, and if anybody wants any more information about CloudTrade, about our cloud service delivering trusted data, then please go to our website. There are lots of rich information videos and you'll find our contact details. We will be delighted to hear from you.
Stewart, thanks again for your time and see you on the next one.
Stewart: Thanks, Steve. Have a great day, bye.