In part one of our blog series on the CFO’s road ahead, we looked at four leading business priorities that are reshaping the role of the CFO: growth, the regulatory environment, business insight, and continuous innovation. In part two, we examine why CFOs are increasingly looking to cloud-based finance systems to help them with these priorities.
According to Gartner, by 2018, at least 25% of new core financial application deployments in large enterprises will be public cloud SaaS. (Source: Gartner, “Predicts 2016: Financial Management Applications,” by John E. Van Decker, Nigel Rayner, Christopher Iervolino, Nov. 23, 2015.) In many instances, this direction is coming from the top: CEOs surveyed by KPMG for its “The View from the Top” report said that leveraging technology, such as cloud-based ERP systems, should be the main focus of CFOs in the future.
Finance needs to be able to quickly adapt to changes and support new strategies.
Why are business leaders choosing cloud-based systems? Because legacy finance systems were designed for basic accounting and reporting requirements, not to help companies look forward and keep pace with the continuous change of today.
Here’s a deeper look at why adoption of cloud-based financial systems is on the rise.
Real-Time Data and Analytics
To support their companies’ growth goals, finance teams are being asked to focus on analysis and planning, and to find the answers to “What if?” questions. This requires finance systems that can quickly provide accurate, real-time data and insights about the current state of their businesses. It’s a poor use of time for finance professionals to manually reconcile different numbers from different systems to get to consensus.
Cloud-based finance systems can provide an agile and scalable technology foundation to better support fast growth and change.
Salmat, an Australian marketing and communications company operating across four countries, has moved to a cloud-based finance system. As a result, CFO Rebecca Lowde has greater insight into financial data across the organization. Before moving to the cloud, her team was spending “thousands of man hours every month doing manual reconciliations across multiple geographic locations, with limited business insights provided from any of our systems,” says Lowde.
Finance teams are also looking to empower other business leaders with access to real-time finance data and insights that help them react at the speed of business. Sharing this information outside the finance organization also improves collaboration across the enterprise. With greater insight into current performance, leaders are able to continuously strategize and course correct when needed.
Flexibility and Scalability
The pace of change keeps accelerating, and businesses must adapt to the realities around them. Outdated business processes and systems can be a huge hindrance. With CEOs looking at growth through multiple vectors, such as expanding into new markets or acquisitions, finance needs to be able to quickly adapt to changes and support new strategies.
A cloud-based finance system can provide an agile and scalable technology foundation to better support fast growth and change. It can eliminate most of the offline processes, downtime, manual reconciliations, and other big process management issues around system change that are typically associated with legacy systems. For example, setting up a new entity in a cloud-based system can be done within hours, if not minutes. With legacy systems this can require software customizations and the need to reconcile multiple systems offline, adding up to months of work.
Nick Pointon, VP of finance at King Digital Entertainment Plc, says he moved his finance organization to a cloud-based finance system to “create a technology foundation that can support our rapid growth and drive business forward.”
CFOs and finance organizations are finding cloud-based finance systems are more efficient, enabling them to spend less time on managing transactions and more time on value-add activities. Cloud systems can help streamline business processes and offer real-time reporting—for some finance teams, this has resulted in a 20 percent reduction in time-to-close for financial reporting.
Cloud-based finance systems with built-in workflows and controls are also helping internal auditors to become more efficient and effective. Internal auditors, who often spend significant time working outside legacy systems to gather information and verify processes, can now access information about a process in seconds, versus weeks in a legacy system, enabling them to spend more time collaborating with others across the business on future initiatives.
It is an exciting and challenging time for CFOs as their role evolves in a dynamic, ever-changing business environment. To help keep pace with change and drive growth in their companies, CFOs will continue to look inward at their finance systems and evaluate if they can support business demands today and in the future.
For more information on how cloud-based finance systems are helping to support the evolving role of the CFO and business demands, check out the feature story, “Driving the Strategic Agenda: The CFO’s Road Ahead.”