Why CFOs Are Rethinking The Cloud (And Why You Should Too)

Richard McLean

Part 1 of the 2-part series. Read Part 2.

The tide is turning in the minds of CFOs. As recently as 12 to 24 months ago, when I talked with finance leaders about cloud computing, I often met with some skepticism. Concerns about cost, fit, and risk to data were front of mind. But in the last 12 months, the feedback has been quite the opposite.

I recently had a meeting in Sydney with the CFO of a business in the healthcare industry. The company is already set to deploy an HR cloud application and is considering going to tender for an enterprise resource planning (ERP) system, with a preference for cloud-based, rather than on-premise, solutions. This scenario is quite typical today. In time, we are going to see more and more businesses shift to cloud solutions, and research backs my assertion.

I read a study by IDC that looks at digital transformation and how small and midsize companies are applying technology to meet key business goals. In the Asia-Pacific region, decision-makers show an almost equal preference for on-premise and cloud solutions. The exception is China, which shows an overwhelming preference for cloud deployments.

Cloud versus on-premise application deployment preferences by Asia/Pacific country (%)

China Japan Korea Singapore
Prefer on-premise solutions in general 28.7 33.3 43.0 40.3
Prefer cloud solutions in general 56.0 35.3 42.7 42.3
No preference 15.3 31.3 14.3 17.3

 An unbeatable business case

It’s easy to understand why CFOs love the idea of cloud deployments; the business case is certainly there. The cloud brings opportunity for standardization and automation. By subscribing to a cloud solution and running on a cloud platform, you’re paying for a service that frees you from the IT burdens and business process complexity of the past, as there’s no infrastructure or customized software to maintain.

The big advantage, of course, is agility and access to ongoing digital innovation. By adopting standard solutions that are scalable, organizations can quickly meet business needs without the time or expense of implementing and customizing software. Plus, you don’t need to allocate your budget or people to building or maintaining a system. Licensing is relatively flexible, so users can be added easily as the business grows and changes.

There were, and still are, concerns around ensuring the security of data. Cybersecurity is a growing priority, and CFOs should consider the risk. But I find that many are concluding that it’s safer to trust cloud data center experts who have data security and providing state-of-art protection as a core aspect of their business model. Plus, as more and more companies adopt cloud technology, there are ample real-world examples and success stories that give them more confidence.

The importance of choice

Clearly, there has been a mindset change in respect to the cloud, not just within finance but within business in general. Businesses have accepted that the cloud is a viable and favorable solution to meet their needs. However, not everyone is ready to go all-in. Many companies prefer a hybrid landscape of cloud and on-premise solutions – and I think having this choice is important.

I believe we’ve always recognized the importance of choice at SAP. From the beginning, we have been agnostic in our go-to-market strategy. When the company first offered ERP applications, we let our customers integrate the database of their choice; we didn’t mandate that they use our data warehouse. We have a similar approach with the cloud. Companies can choose on-premise or cloud deployments of our applications – or both. SAP’s own internal landscape is running successfully as a hybrid environment. Why wouldn’t we offer our customers the same flexibility?

The bottom line is this: The cloud is quickly becoming the de facto deployment method for many businesses, and for good reason. It can be the catalyst for transformation to becoming a digital enterprise. But ultimately, you need to move at a pace and deploy technology in a way that’s right for your business.

 To learn how small and midsize businesses across the APJ region are digitally transforming themselves to advance their future success, check out the IDC InfoBrief, “The Next Steps in Digital Transformation: How Small and Midsize Companies Are Applying Technology to Meet Key Business Goals with Insights for Asia/Pacific,” sponsored by SAP. More great resources for CFOs are available now at the SAP finance page.

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Richard McLean

About Richard McLean

Richard McLean, regional CFO for SAP Asia Pacific Japan, oversees all key finance and administrative functions for field and regional headquarters, supporting more than 18,000 employees. He has more than 20 years of experience in senior finance roles with leading global companies across a range of industries, including financial services, investment banking, automotive, and IT. He joined SAP in 2008.