In the last blog post, we discussed the CFO's role in digital transformatio and how CFOs can start applying digital technologies in Finance function. We outlined innovations such as real-time in-memory platform, modern user experience, and cloud deployment that are critical enablers. Let's now take a closer look at cloud deployment and how it can help CFOs think about a next generation finance solution to support digital transformation starting with their own department.
Though many analyst firms agree that finance applications are gradually moving to the cloud, the concrete benefits might not be equally understood. Apart from the benefits of lower TCO, cloud deployment of financial applications primarily provides three strategic benefits:
- Adopt new innovations fast to constantly transform the finance function
- Connect and emerge as strategic partners to other business units
- Engage next generation finance professionals with built-in mobile experience
Fast and continuous adoption of innovations
Most CFOs and Finance managers may not care about the nuances of technology and hence, it's easy to dismiss cloud as yet another technology buzzword, but as we have discussed previously, cloud is more about business results and pace of innovation than about infrastructure layers or the 'xaaS' acronyms. Cloud deployment does bring in a financial benefit to the CFO in shifting CapEx to OpEx, but more importantly, applications in the cloud are about delivering the latest and greatest features to the end-users continually ensuring the best user experience. They inspire the teams to adopt the innovations constantly.
Why is it important? It is a dramatic shift from the way many finance departments were often stuck in the past of application innovation. Since on-premise implementations took a long time, IT would often decide to implement at a slow pace, often leaving the finance department behind by several releases, even when the vendors introduced new innovations. Finance was considered too mission-critical to frequently tinker with, while at the same time, it was too low on the priority list compared to customer-facing and revenue generating functions (e.g., Sales, Marketing) that got the bulk of the IT investments and attention. Even when HR and CRM applications started moving to the cloud to meet the evolving needs of the business and the rising demand of the end-users (large employee/ casual user population), the overarching perception was that Finance IT systems are mature and stable only used by professional users, who didn't want changes.
The result was that Finance was left in the wilderness of IT application innovation. Any millennial user who started in the Finance department often struggled to reconcile his consumer software experiences with the workplace reality. Even more damaging was the lack of financial IT innovation effectively available to the end-users. Professionals were stuck with decades old screens and outdated functionality to enter transactions or view reports and perform closing operations, even when the vendors continued to innovate.
Cloud deployment has the potential to change all of that for finance departments. Once financial applications are consumed from the cloud, all the professional users will instantly get the latest and greatest experience and features, typically every three months. It is a catalyst for innovation within finance department.
Imagine your ability to start using a new simulation and forecasting capability made available in the latest release to predict and evaluate new business models based on ad-hoc financial statement structures and hierarchies real-time? What if you can do this now ahead of your competition instead of waiting for the IT organization to implement planning application updates and build the data warehousing infrastructure to transfer the data? The new breed of CFOs and finance professionals with finance and business acumen will be in a much better position to emerge as strategic partners to the business.
Another example could be a new dynamic discounting capability in the cloud that lets your accounts payable department start utilizing discounts aggressively with your suppliers. That translates to concrete dollar savings immediately. Or imagine a real-time cash management application that lets you view the latest cash position and optimize constantly based on your cash needs and currency exposure in multiple markets. Such new innovations are constantly made available to end-users in every release in cloud applications.
Digital transformation is not one 'big bang' project, but a series of innovations by which you continue to reinvent your department, the company, and the industry. Cloud deployment gives you a great vehicle to do it starting with your own finance department one release at a time.
Emerge as strategic partners to the business units
Cloud can also be a game changer in your ability to connect with other enterprise applications. Unless you have standardized all of your processes from one single ERP Suite, you are likely to go through several integration projects. Cloud does not eliminate the need for integration - unless you have a modular cloud Suite from a single vendor that comes with pre-delivered integration- but cloud-to-cloud integration can simplify the effort involved in maintaining interfaces and reduce the complexities associated with connecting to an on-premise financial system. This might appear to be a technical benefit, but the real value of simplified integration is for finance to connect with other enterprise applications, and as a result, with other departments within the company. More intelligent integration with other applications beyond just recording financial transactions - for example, being alerted of the financial impact of an HR headcount plan, even before any transaction occurs - will enable finance to play the role of a strategic business partner with other departments such as sales, marketing, and HR, instead of just being the bean counters.
Engage next generation professionals with mobile
The conventional wisdom says that finance users don't really need mobile access since they always sit in front of a desktop keying in transactions. This is an outdated assumption in today's mobile-first world. Almost every finance user role can benefit from mobile apps either for analytical views (e.g., spend analytics or receivables/ collections status) on the go or for quick approval actions (e.g., invoices and purchase orders). Even for classic data entry transactions, mobile could be an additional channel to quickly complete the task. Finance departments were historically focused on entering data into the system, while the consumption options were limited to a few reports. Mobile opens up the consumption channels universally and makes it possible for anyone to consume and slice and dice the data anywhere and anytime. Of course, millennial users fully expect all applications to be mobile-enabled.
How does cloud change the game for mobile? With on-premise deployments, mobile access was often an afterthought - something that had to be built separately with expensive infrastructure and services projects. On the other hand, most cloud applications today rely on responsive web design (or even adaptive design ) that elegantly render the applications to your mobile devices automatically for the optimal user experience. There are no additional deployment or technical implementation hoops to jump through. Of course, you can complement it with additional native mobile apps for certain use cases, but for the most common finance use cases, a responsive-design-based cloud application will already enable you to be mobile ready.
We have just outlined a few distinct advantages of cloud deployment for financial applications - such as fast adoption of innovations, connecting to other LOB applications, and built-in mobile - that forward-thinking CFOs and IT organizations are beginning to adopt. Does it mean on-premise deployment of financial applications is irrelevant? Absolutely not. There are many reasons why an organization can still choose to deploy its core financial applications on-premise, but you should carefully start evaluating where a cloud deployment makes sense.And we are in a cloud first environment in finance area as well.
In the next post, I'll discuss some more benefits of cloud in driving digital transformation within finance (e.g., best practices content, extending application using a platform-as-a-service) and will also respond to some of the common misperceptions about finance solutions on the cloud.