Finance Transformation in the Cloud… Are you ready?
“By 2016, at least 25% of enterprise finance organizations will move to cloud for specific CPM processes, and many will use a hybrid approach through a combination of cloud and on-premises solutions.” Gartner 1
This prediction from Gartner makes me believe we are at the tipping point of a finance transformation in the cloud with the total cost of ownership for cloud computing 77 percent less than on premise software solutions.
So, what does it mean for finance organisations and what are some of the trends a Chief Financial Officer (CFO) needs to look out for?
Traditionally, less mature finance organisations gravitate towards spreadsheets as a platform for the majority of their budgeting and planning process. While a spreadsheet is easy to use and does not incur additional cost, it is not easily stepped up to store large amount of data or complex calculations. It is difficult to share and collaborate with teams, and it is not secure. Moreover, using spreadsheets is manual, slow, and error prone.
Moving beyond spreadsheets, organisations have the options to implement proprietary enterprise systems. Although these applications have powerful features, they are often cobbled together from years of acquisitions with technology dating back into the 90s. They are slow to deploy, costly to maintain and notoriously complex to upgrade.
Consequently, cloud based solutions have disrupted the market and are the focus of the next generation of applications. Cloud based applications are built specifically for the cloud not cobbled together and then pushed into the cloud. They are comprehensive and full-featured. Easy to use and quick to deploy. Because they are built for the cloud, all users are on the same software and software upgrades are automatic, taking a few hours, not weeks.
No more the single spreadsheet that sits on one computer, then emailed to another user, modified and emailed back. Cloud based solutions are collaborative and scalable. They are easily accessible from multiple computers and are based on a simple dashboard to assess different functions. And they can allow varying levels of access, so your precious 2017 predictions and calculations don’t disappear with the touch of a keystroke when you send them on for review.
So what is changing?
The market is changing rapidly with the desire to work more strategically within a finance organisation increasing. Companies have to react more quickly and accurately, needing a finance platform to take this desire into fast action. Finance’s influence over IT investment has also increased when compared to two years ago. Top finance trends in 2015 include real-time reporting, advanced analytics, system integration, customer focus, cloud and mobile.
If fulfilled, these trends and desires may enable finance organisations to move from Performance Measurement and Management Reporting (simple profit and loss, key performance indicators (KPIs), scorecards and metrics) to planning, budgeting, and forecasting (using rolling and collaborative forecasting, predictive modelling, and scenario planning), together and in real time.
Cloud security is an area not to be forgotten. Finance transformation in the cloud requires vigilant planning. The Australian Prudential Regulatory Authority (APRA) stated in July that risk management and mitigation techniques for public cloud arrangements may not have reached the level of maturity it requires and can potentially threaten the ongoing ability of an APRA-regulated entity to meet its obligations.
With this in mind, the key to select a cloud solution is to look for accreditation from an international community that has a rigorous standard such as the one set by the Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA)…
Finance organisations have always been strategic. The key to deliver even more value in today’s fast-paced world is through transformation. Finance transformation aligns people, process, data, and technology to streamline planning, reporting, and analysis. If executed tactically and well it could propel an organisation towards a more sustainable future.
- Gartner “Leverage a Hybrid Approach to Corporate Performance Management”, John E. Van Decker, Christopher Iervolino [03/31/2014]