What were you doing 11 years ago? Perhaps your children were still young – or had MySpace accounts – or maybe you hadn’t even met your partner yet. Back in 2006, cloud computing had just become a mainstream commercialized Web service. But a lot has changed since then. While the cloud has been advancing and becoming more secure and sophisticated, some of our human perceptions about it haven’t. In fact, many CFOs I speak with still hold a view about the cloud from 2006. That was fine for then, but not for today. It’s just not tenable for finance systems to remain on premises. Let me explain why.
There was a time when data privacy and security outweighed the benefits of cost, access, scalability, flexibility, capital expenditure, and competitive edge of the cloud. But those obstacles no longer exist for finance teams – or anyone else, for that matter. (If you think they do, your assumptions are outdated). Even analyst firms are now saying the cloud is more secure than on-premises systems, and financial regulators – some of the most security-stringent organizations in the world – have given banks the green light to move to the cloud.
Why? Because today’s cloud-based security capability embeds state-of-the-art cyber and physical security that most companies would find prohibitively expensive to implement on-premises. And no matter how proficient your internal IT department is, they can’t build equivalent systems with the same rigor around today’s security, whether they are cloud or not.
Yet for some CFOs, myths remain that cloud computing is inherently less secure than traditional approaches. I think this is largely due to data being stored on servers and systems you don’t own or control. But control does not mean security. The physical location of your data matters less than the means of access – which is the case for both cloud and traditional enterprise systems.
For finance, it used to be the case that there was no compelling need to be cloud-based. But that too is now changing. With the march of digitization and the speed of commerce, every other line of business is going through a digital transformation – some for competitive edge and some just to keep pace. And from a business perspective, survival depends on automation, agility, and flexibility – particularly in the middle and back office. For example, controlling costs, forecasting revenues, and controlling commercial tasks – the main pillars for CFOs – are faster, easier, and more accurate in the cloud because it provides access to real-time information. An on-premises finance system risks becoming the weakest, most outdated link in the digitally agile chain, hindering flexibility, competitive advantage, and growth.
In my own experiences working with customers, I’m seeing the gradual transition from cloud skeptics to cloud converts – not everyone, of course, but the tides are definitely changing. It’s probably driven by cloud education, market momentum, and the sweeping disruption of competitive threats. Many customers I speak with seem to have a much clearer understanding of what digital transformation looks like for their own businesses compared to a year ago.
At SAP, it’s something we’re now reflecting in the way we as a finance team support sales contracts, catering to different business models and requests. In my own department, we’ve made the conscious decision to provide dedicated “cloud-enabling experts” in our commercial teams to help sales shape specific offerings from a financial, legal, and software-bundling perspective and to provide a single point of contact around cloud. These cloud-enabling experts represent a new and necessary skill set for finance as more and more CFOs realize the need to deliver financial strategies and processes to support a digitally fluent business.
It’s also one of the reasons why CFOs are reporting significant investment in cloud-based systems to help their companies improve operational performance and decision-making. If you’re not one of them, you’ll soon be in the minority. While it’s in our nature to be conservative, there’s a big difference between being cautious and being blinkered. If your view of the cloud is still based on a perception from the last decade, it’s time hit the refresh button.
You can find out more about the advantages of the cloud for finance teams here.