Just a few years ago, it seemed that many CFOs were wary about moving to the cloud and just beginning to grasp the potential of cloud technology. Since then, as cloud adoption has grown, organizations have made it a priority to optimize their strategic use of the cloud’s capabilities. Indeed, the vast majority of business executives who participated in Deloitte’s 2018 global outsourcing survey – 93% – said their organizations are adopting or considering the cloud.
In a poll of nearly 3,949 executives conducted during a Deloitte Webcast, 24.4% of respondents indicated they have cloud technologies in place and functioning, while 20.8% reported they are in the process of implementing cloud technologies, and another 17.9% indicated that they are assessing cloud options.
For CFOs, the cloud offers a number of opportunities, including improved efficiency, quicker access to data, and the ability to use time savings to develop insights for the business. Indeed, of 3,127 executives polled during the Deloitte webcast, 24.4% reported that cloud technology would be highly critical to the performance of their finance organization two years from now and 44.4% indicated it would be critical.
As CFOs further explore cloud adoption and investigate a thicket of cloud solutions, whether for accessibility, scalability, or other benefits, it’s important that they stay up to date on the cloud’s expanding capabilities and ask the right questions. Below we discuss questions we encounter about CFOs’ evolving use of the cloud.
For CFOs, what’s new and different about the cloud now?
About two years ago, CFOs were looking to see if they should start embarking on the cloud mainly around the core components of an ERP: accounts payable, accounts receivable, fixed assets, etc. Some were looking at other areas, such as procurement and financial planning and analysis. Since then, a multitude of vendors have come onto the market with maturing and new cloud solutions, and many organizations have embedded them into their core finance functions.
Some cloud vendors also are integrating artificial intelligence (AI) and predictive analytics into their platforms to provide users with proactive alerts for various transactional activities and automation capabilities such as reconciliation processes.
Even more interesting is that vendor solutions are now maturing to the point where they focus on specific industries and sectors. As additional customers deploy cloud solutions, new features can be applied to a whole ecosystem of customers. This, in turn, has allowed software vendors to focus their R&D spend appropriately and allow their customer base to influence their roadmap of enhancements.
When considering cloud for ERP, what are some issues to think about?
While most cloud platforms today meet the basic needs of an ERP, it’s how they meet them that can make a difference. Many of the current solutions offer a heavier lean on functional users – versus those with deep technical expertise – for administrative functions like modifying workflows, creating reports, and other items that formerly required code modification. This is a factor to consider as you think about required skillsets for your sustainment organization.
More broadly, many CFOs are considering a best-of-breed approach for certain edge portions of an ERP, like treasury, tax, or procurement if they are seeking deeper capabilities in certain functions. In some cases, the best-of-breed approach is about functionality that the ERP may not yet have, but in other cases, it could be about the user experience. In any case, it’s important for CFOs to understand that they can integrate and orchestrate the cloud platforms together into a seamless business process.
Whether or not to implement ERP in the cloud depends on the organization, its industry, and legacy systems. In some cases, CFOs may think there isn’t enough of a burning business reason to move to the cloud – yet. But if a company is going through significant M&A or the costs to maintain its own servers are becoming exorbitant, that can cause management to look more closely at a cloud-based ERP system.
Does the abundance of cloud offerings make the decision overwhelming for CFOs?
The cloud decision can be overwhelming, but often for reasons other than the sheer number of options. Prior to the cloud, when finance executives looked at a product, they generally knew what they were buying and that it would evolve during the next two or three years. What’s becoming clear to many CFOs as they evaluate cloud ERPs is that vendors update the software more frequently, some on a quarterly basis, some on a semi-annual basis – changing the product to eliminate gaps, add new functionality, or remove less-desirable features.
So it’s possible that CFOs could be looking at demos of products they won’t be implementing for a year. They should take that possibility into account in their decision-making and ask how the product might be upgraded or could be changed to address their organization’s needs. With the cloud’s capabilities in nearly constant flux, CFOs should expect that every cloud-related decision could be that much more challenging.
What other challenges do CFOs need to be aware of as they consider the cloud?
The cloud platform provides the capability to go fast, but the organization can only go at the speed at which it can absorb change, and CFOs need to remember that. It’s not as simple as just installing the technology and assuming the company is ready to go. There’s a risk for companies in believing they can get a cloud implementation up and running in a few months. Can you design your new chart of accounts in less than three months? Probably not. And can you test that design? Not likely.
Having a solid understanding of the technology architecture across the enterprise is also key, as there are risks to moving data and orchestrating it across the enterprise. For optimum effectiveness, CFOs should consider establishing a functional administration team within the finance function to not only drive governance over a cloud implementation but also to manage overall changes in configuration.
While CFOs need to think through what the finance organization wants to deliver in terms of reports and analytics to serve as a better partner to the business, they should also understand that insights from finance data alone aren’t going to be as powerful as leveraging data across the organization. It’s critical that finance has people from the business and other functions who are aligned to cloud implementation to gain as many benefits as possible from the cloud’s capabilities. Finally, it’s up to CFOs to make sure finance is measuring any value the organization is realizing as a result of moving to the cloud.
Download our practical guide to learn more about how to create value with Intelligent Cloud ERP.
This article was originally published in the Deloitte Module in CFO Journal, an online publication of The Wall Street Journal.