Finance is one of the last major business functions to get serious about adopting cloud technology. Despite the potential cost efficiencies, the risk-averse nature of many finance organizations puts CFOs at risk of being late to the cloud party.
This is changing. Cloud technology today is mature enough –and secure enough – to merit CFOs’ consideration. Industry analysts project that at least 50% of BI and analytic technology purchases in 2016 will be “in the Cloud,” and technology giants like Oracle now acknowledge Amazon Web Services and Salesforce as major competitors.
Finance organizations are always on the lookout for opportunities to reduce costs and do more with less, and increasingly reliable and secure cloud environments can provide significant savings, along with tremendous operational flexibility.
A Growing Body of Cloud-Based Financial Applications
Until recently, the cloud has been characterized by horizontal providers like Salesforce, Microsoft, and Amazon, offering one-size-fits-all cloud solutions that didn’t address specific issues. However, more specialized Software as a Service (SaaS) offerings have proliferated lately, addressing the most popular financial applications, like ERP (Workday), financial consolidation software (Host Analytics), and budgeting and planning/EPM (Adaptive Insights).
Analytics: The Next Frontier on the Cloud
These specialized cloud offerings offer potential cost savings, but finance departments are starting to realize that the Cloud can also support analytic technologies that help drive revenue growth and competitive advantage. Leading CFO organizations realize the need to innovate faster and integrate financial data with a broader range of structured operational data and unstructured “big” data, and their IT departments know that the cloud offers a flexible infrastructure that adjusts dynamically to changing business needs. Capacity-on-demand allows companies to calibrate infrastructure in near real-time for both transaction processing and analytics, at reduced cost.
While analytics in the cloud offer great potential, some CFOs still have reservations about migrating analytic databases and technologies to the cloud. These concerns include:
• Accepting the cloud platform as a safe and reliable environment.
• Optimizing the significant capital invested in current on-premise environments.
• Scrutinizing the tangible, measurable value to be gained from moving to the cloud.
While the evolution of the cloud market itself addresses most security concerns, the integration of cloud-based applications into on-premises infrastructures is a genuine challenge requiring new levels of collaboration between the CIO and CFO. And while cloud-generated IT savings are relatively straightforward, finance professionals will need to partner more closely with line of business peers to measure business value. Teradata will be working hand in hand with leading finance organizations and their IT peers as they tackle these challenges.
So, What Should Finance Do Now?
Making informed choices about developing and running analytics in the cloud requires several early-phase steps. Based on what we see our clients doing, we suggest you consider:
• Working with IT to develop a comprehensive strategy around your cloud architecture, along with the standards the organization needs to follow.
• Simplifying and centralizing your financial systems, including establishment of a single chart of accounts (COA) or leverage of technologies that enable a single view across multiple COAs.
• Determining how much experience a vendor has integrating its cloud finance application with your brand of ERP.
• Asking vendors probing questions about cloud-based finance implementations that went wrong, why they did and how they have subsequently course-corrected.
• Performing due diligence on potential vendors’ disaster-recovery capabilities.
• Ensuring that cloud services procurement includes the involvement of legal, accounting, and compliance departments to ensure the business can assess and mitigate the inherent risks.
Informed use of the cloud is only now beginning to crest, making this a great time for Finance to evaluate its utility in their systems environment. When properly planned and implemented, cloud technologies can help cut costs, enable scaling-in and scaling-out of capacity, accelerate time-to-market for deployment of analytic solutions, maximize user access to data and enhance Finance’s ability to leverage analytics that improve management’s decisions. It’s no wonder that some CFOs now answer the question “Why cloud?” with the question “Why not?”
As your finance organization continues to think – and act on – Cloud, watch this space. I’ll be sharing the experiences of finance leaders who are adopting cloud technologies and leveraging them for a range of analytic use cases. Together we can learn from their best practices, innovations – and missteps.
Wayne Thompson is Business Consultant at Teradata Corporation with over 26 years’ experience working with business technology to help companies adopt forward-looking applications to improve and enhance operational and financial efficiencies. Wayne has advanced degrees in finance and information technology, and is focused on helping CFO organizations embrace Cloud and analytic technologies to more effectively analyze financial and operational data.