Cloud computing has fundamentally changed the way in which business technology is implemented and used, and it represents a huge opportunity for finance. The cloud brings tangible benefits, such as improved capability through new high-performance analytics, planning and reporting software, as well as improved efficiency due to the lower cost of implementing, maintaining, and extending cloud tools compared to older systems.
The Effects of Cloud Technology on Management Accounting and Decision Making, a new Chartered Institute of Management Accountants report, outlines these benefits, with the impact on decision-making being the most significant.
However, as the report also highlights, finance has been far slower to embrace the cloud than other business functions, particularly sales and operations. Security continues to be the biggest concern, though studies have shown that the cloud can offer greater security over critical data than older technologies.
Moving to the cloud
Cloud systems are delivered through the web as a service, characterised by a subscription model. The software vendor is responsible for performance and upgrades over time, shifting the burden away from the customer and thereby significantly reducing or eliminating the risk of investing in software that rapidly becomes obsolete. This opens up significant cost-saving potential and far greater flexibility and scalability to meet the changing needs of the business over time.
Benefits from the cloud
There are many reasons cloud is a massive improvement over the old ways of implementing finance systems, but the three reasons below together present a compelling case:
- The pace of change and development in IT is incredibly fast and shows no sign of slowing down. Cloud adoption pushes responsibility for keeping up to date with this technological change back to where it belongs – the software vendors.
- At the same time, the finance department faces ever-increasing pressure to enhance and extend its analytical skills so that it can truly act as a partner to the business. Older tools – those designed before the advent of Big Data – are simply not up to the task, and clinging to spreadsheets is no longer feasible. Today’s cloud software is built to feed in the vast quantities of available information and to provide the flexibility finance needs to meet potential future demands.
- Cloud technology is a key enabler for transformational change in the finance function. Many finance-change projects fail because older-generation software lacks the flexibility required. Cloud software also offers a dramatically improved experience for the finance teams using the system. And when people actually like using the system, the success rate is significantly higher.
Finance’s traditional disciplines of control and governance are still needed to bring about successful change. But there is no question that cloud solutions are helping finance to realise huge benefits in those organisations that have adopted them to date.
Implementing the cloud
Here are five steps you can take to begin implementing the cloud:
- Explore the market: New vendors are overtaking the larger traditional software houses, offering “born-in-the-cloud” solutions that may offer far greater capability and flexibility. It’s important that you seek advice on the kinds of features and factors that will be relevant to your software selection.
- Focus on processes: For far too long, processes in the finance department have been dictated by the limitations of the system. Take advantage of the flexibility of cloud systems by being clear on the right processes for your organisation from the outset. It’s only from process improvement that efficiencies and improvements will be achieved, not just from swapping your IT systems around.
- Reinforce data governance and password security: Security is the top concern of finance professionals with respect to cloud systems, yet most data breaches stem from basic failures to keep passwords private or setting weak login credentials. Reduce the risk of data loss or unauthorised access by ensuring everyone adopts basic password security disciplines. If you don’t have proper data control and governance in place, now is the time to implement improvements in this area. Dramatic benefits can be gained from basic data quality measures, which take very little time or effort to implement.
- Think big, but take one step at a time: Don’t start by assuming a cloud system should do what your current systems do. Look across a wide range of processes and functions that could benefit from improvement – then prioritise and achieve small benefits consistently. That will help to get stakeholder buy-in for greater change and will also help you to refine next steps and build on experience.
- Brush up on analytical skills: The future finance function needs to embrace the world of Big Data, and while cloud-based software offers the tools to help, it is by having the right skills that finance professionals will prove their value. Understand what skills are needed and seek out practical ways to improve analytical capabilities.
—Chris Hall, ACMA, CGMA, is a director at Gibbs Marshall Ltd., a finance transformation consultancy specialising in process improvement and cloud technologies.