Interest in finance cloud solutions has been steadily increasing. Gartner research predicts an impressive 16.5% compound growth rate (CAGR) for worldwide public cloud services: from $175 billion in 2015 to more than $204 billion in 2016.
Finance departments, being more risk averse, have not been as fast to make the cloud move as other functions. You could say such is the nature of accounting. Many finance executives still have concerns about the maturity of solutions and risks such as security. However, the benefits of moving to cloud, the flexibility, scalability, standardization, and easy pace of adoption are proving more compelling. Vendors are also making the move to the cloud easier, providing deployments that help minimize disruption.
With this in mind, I asked Tony Klimas, global finance leader at EY, and Pras Chatterjee, senior director of Product Marketing, EPM, at SAP, for their perspectives on opportunities for finance departments in the cloud.
What opportunities do you see for your customers and clients in the marketplace relative to adoption of cloud solutions in finance?
Klimas: As the technology matures, people can better understand the different options to secure their data in the cloud. This will open many opportunities for finance, including deploying apps via the cloud, which keeps maintenance and operational costs down. The general benefits of cloud include scalability, ease of maintenance, upgrades, and the ability to secure data to benefit finance.
- The deployment of a control environment for finance – data that is kept up to date in a more timely manner helps ease the audit process
- There is a single version of the truth, data is just available, accessible, and secure, which helps with reporting and analytics and frees up finance teams to focus on data quality, not reconciliation or version control
- It can host the central repository for finance and accounting policies, such as separation of duties
- Finally, as cloud instances can be leveraged to increase the speed in which changes are implemented and disseminated across the organization, compliance becomes easier
Chatterjee: I would like to add another area; in large enterprises there are often CFOs throughout the organization. These technologies now make it easier for areas outside of the head office to deploy the latest technologies (in-memory, real-time, advanced visualization, collaboration enabled) without incurring large capital costs and in a shorter time frame. This ensures an increase in time to value for the entire enterprise.
What concerns or challenges do you hear most about moving to the cloud?
Klimas: Of course data privacy, security, and understanding the threat environment are always issues for any function (including finance) adopting the cloud. However, more executives are starting to understand that if implemented correctly, it can actually reduce threats, increase security and control, and in general provide an environment less susceptible to cyberattacks. That’s especially true for those involving “phishing” and human engineering, where people are manipulated into providing access to attackers without knowledge.
Another concern is the tendency of finance to move into the cloud environment slowly and in moderated steps. Although being careful and thoughtful is important, understanding the big picture and the overall strategy is, too. There are definite “switching” costs if changes are desired later. So having a long-term vision of private versus public, what remains “on-premises,” and a clear migration strategy is critical.
Chatterjee: I agree. I hear a lot of concerns on how the future of the (cloud) platform will align with overall enterprise architecture. However, concern has been somewhat mitigated, as the latest cloud platforms often allow for almost seamless integration with established on-premises platforms. As Tony mentioned, migration from the legacy platform to new cloud-based platforms are also a point of concern. This may involve a re-implementation, which can incur costs. Yet migrating to new cloud platforms often provides an opportunity for complete finance transformation.
What excites you the most about the value of cloud solutions for the finance department?
Klimas: Speed, agility around deployment and operations, security, and the ability of finance to focus on more important things.
Chatterjee: Faster deployment with potentially much more bells and whistles. I see the overall potential for finance transformation as one of the most understated benefits. Finance can evolve to the latest platforms and really be a steward for the business. Finance departments can take advantage of the ease of use of cloud tools and the instant insight available to provide true guidance versus reporting on past results.
Do you see cloud solutions providing the level of flexibility, such as customers moving from one vendor to another?
Klimas: With the amount of data and effort put into SLAs and contracts, not to mention the effort required to migrate, changing vendors is difficult today. But over time, it will become easier to do. A good proxy for this would be the change that has occurred in general in the BPO industry or with other less-complex hosted software.
Chatterjee: Cloud solutions are built with simplicity and user experience in mind. Moving platforms and vendors may be a challenge at the moment, but experience is growing with system integrators and vendors, and this will change quickly.
What do you predict will happen with cloud adoption over the next three to five years?
Klimas: I think we will see more things moving to the cloud as security concerns ease. The technology itself will become more seamless and integrated. Major software providers, including SAP, will further integrate the cloud into their offerings, making ease of implementation and use much better. As the technology becomes easier to use and implement, the focus will shift to further leveraging the technology in new and innovative ways that add more value. Here, I believe that early adopters will have some competitive advantage due to having a robust and stable environment in place and being further up the learning curve. Those who take a “wait and see” approach might have an easier time implementing the basics, but they will be behind on the more advanced uses of the cloud and in their understanding of how to leverage the technology to maximize value.
Chatterjee: Exactly. I also believe the adoption of cloud will continue to accelerate. Finance departments will believe business and competitive pressures to be enabled with the latest technology. They will need them to be deployed quickly versus drawn-out selection cycles dependent on software, services, and hardware. One key reason for these pressures will be to provide the real-time, relevant insights and foresight to their business constituents internally and be relevant as a function.
This will be an exciting area as the solutions mature and confidence grows.
If you want to continue the dialog, Tony Klimas and Pras Chatterjee will be discussing how planning can ignite digital transformation on September 15 at 11 a.m. EDT, including how these solutions can be delivered in the cloud or on-premises. Join them for an interactive call and submit your questions via Twitter with #askSAP. Register here.
More great resources on financial planning and analysis for CFOs are available here.