Businesses have embraced cloud technology for everything from human resources to customer relationship management, yet the finance department is lagging behind, reluctant to jump on board – what’s holding them back and how can they benefit from cloud-based financial systems?
As the senior leader responsible for handling risk and compliance for an entire company, a CFO is often cautious when it comes to adopting new types of technology—especially for the core accounting operations. Many CFOs believe that moving financial systems to the cloud means forgoing security, data ownership and weakening internal controls and audit trails.
Jane Tweddle, finance industry principal at SAP UKI discusses what CFOs need to know when it comes to the cloud and dispels some myths that are preventing wider adoption in the finance industry.
Security in the Cloud
Security concerns tend to be the greatest source of anxiety when it comes to adoption of cloud technology. Security is a valid concern, but moving to cloud-based financial solutions doesn’t mean increasing risk. Most businesses already conduct sensitive transactions such as banking and highly sensitive payroll via the Internet – meaning they’re already using the cloud.
Cloud vendors are more than aware of the importance of robust security and so any good provider will have invested heavily in this area in order to offer the highest level of data protection and security. Furthermore, regulators are starting to consider the issues of data and security and this is an indication that cloud is here to stay and will most likely become more pervasive once these issues are accepted by both businesses and regulators.
CFOs frequently believe that putting data outside of the company’s firewall means they forgo ownership. It’s no surprise that this is a common misunderstanding. However, since data in the cloud won’t be open to the public and contracts for cloud services typically include language affirming a company’s ownership of data, this provides a guarantee that data will be returned if the service is terminated.
It’s a common misconception that cloud-based financial solutions are difficult to customise, and therefore not a great fit for companies who want the flexibility to choose solutions that fit their unique needs. It’s no surprise given that typically, legacy systems that have previously been implemented are inflexible.
That said, it is true that typical software-as-a-service (SaaS) solutions are not as customisable as on-premise solutions so this is a trade-off that needs to be considered. Most SaaS providers offer tools to enable configuration, such as adding custom fields, tables and screens in addition to custom reporting options. In addition to configuration, the solutions themselves offer additional benefits that are not available on-premise. One such benefit is the more rapid upgrade cycles. Supporting organisations’ evolving needs and best practice processes, cloud solutions are often updated several times a year with new functionality while preserving existing configurations during upgrades.
The reasons behind cloud adoption will depend on each company’s business requirements. Many companies don’t want to rip and replace systems that are still supporting their needs. However, they can augment their existing solution landscapes by combining both cloud and on-premise systems, known as the hybrid option.
The hybrid approach can provide more cost effective options and increase flexibility for companies who are not looking to replace their entire financial system. For example, many companies leverage cloud-based financial systems to run their subsidiaries and other operating entities, and integrate them with the on-premise financial management system.
As the need for businesses to be more agile increases, CFOs will increasingly look towards cloud-based financial management systems for the functionality they need. Sometimes it’s about cost savings, and sometimes it’s about predictability of costs, which for budgeting and planning purposes is important. In the end, no matter what IT environment companies choose, the goal of CFOs should be to leverage flexible solutions that can constantly evolve to achieve financial objectives.