It’s official – CFOs are now putting their full weight behind the cloud. The findings of FSN’s “Future of Finance Systems” research, released this month, finds that a resounding 80% of senior finance professionals expect to have all or the majority of their finance systems in the cloud within the next 5 years. Only 8% of say they will not be implementing any cloud-based solutions.
It’s a remarkable turnaround from the position that existed just 5 years ago when organisations were reticent to invest in the cloud. So why has there been such a major change of heart?
1.The cloud gives CFOs what they want from future finance systems
When asked what features are most desirable from their future finance systems, the ability to expand systems dynamically on-demand i.e. processing speed, adding users, expanding data sets and increasing data volumes features very high up the list.
The ability for systems to grow with the business, without interruption is prized above all other features and is perhaps unsurprising against the backcloth of a doubling of data volumes every two years and a period of unrelenting change and uncertainty.
Cloud processing lends itself to these dynamic environments. In public-cloud processing (and often private-cloud situations) responsibility for provisioning capacity, vests with the vendor. In fact, 81% of CFOs say the cloud has already helped save them time by reducing systems maintenance and backup, while three quarters of CFOs say the cloud has enabled their business to operate more agilely.
Cost savings and the ability to reduce the finance function’s reliance on the IT function, both early reasons given for investing in the cloud, do not feature so prominently. They are no longer the main drivers for investment in the cloud although 67% said moving applications into the cloud had saved them money.
Overall, only 17% of senior finance professionals say the cloud has failed to deliver on the benefits they were expecting.
2.The cloud helps organisations break free from legacy systems
There is now a wide choice of ‘Best of Breed’ and unified application suites in the cloud. Organisations that are struggling to break free from legacy systems can more easily try cloud-based solutions on a more limited basis, perhaps one division or subsidiary, before committing more comprehensively to the cloud. Encouragingly, 59% say they have improved their processes as part of their cloud-migration, a figure already up on the 55% we found in our research two years ago.
3.The cloud opens up new opportunities for insight and benchmarking performance
Cloud software vendors, especially public-cloud vendors of multi-tenanted solutions (shared with thousands of users) find themselves in a uniquely powerful position. The technology that underpins the cloud allows them to draw on, store and correlate vast quantities of data, which provides insight and value that finance functions can bring to the top table.
As more companies move their finance systems into the cloud, the amount of data generated by the financial and operational activities of these businesses grows. This provides the capability to benchmark performance from one company to the next, distilling best practice and comparing similar processes.
There is the means to do this, but for the moment there may not be the will or the knowledge. Benchmarking from cloud data requires companies to give permission for their own data (anonymised) to be used for comparison. In an echo of the security concerns from the early days of the cloud, CFOs are not quite ready to tick the consent box on a business-worth of data, even if they could ultimately benefit from it. And many CFOs just don’t understand the concept yet. 59% of senior finance executives just don’t know enough about benchmarking in the cloud or its availability to want to build it into their own finance system plans.
That said, there is some nascent interest. More than half of CFOs said they would welcome the opportunity to use anonymized data to benchmark both the financial performance of their business along with the operational performance of the finance systems they use. And 36% went so far as to say they would pay for such a service.
Cloud processing doesn’t suit everyone. For sensitive industries the cloud will never be a viable option, but for more than 80% it is the way forward, providing obvious advantages over on-premise processing, a migration path that can ease legacy concerns and, through benchmarking, potentially new vistas of insight and opportunity.
By Gary Simon, CEO FSN Publishing Limited and Leader of the Modern Finance Forum on LinkedIn.