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Finance might be relatively late to cloud adoption, but surveys and client experiences depict continued adoption of the cloud among finance leaders.
Previously, CFOs and other finance officers were hesitant to use cloud because of concerns around security and privacy, and due to uncertainty about return on investment (ROI). This viewpoint started shifting a couple of years ago as leaders started to recognize the competitive benefits of cloud beyond bottom-line cost trimming. In many cases, they have found that enterprise performance management (EPM) is a good place to get started.
In Oracle’s EPM Top Trends Report survey, more than half of respondents (62 percent) have moved or will move their EPM processes to the cloud within the next year. This is up from 46 percent in the same survey in 2017.
Overall, 79 percent of respondents said they have plans for EPM in the cloud within the next two years, versus 65 percent in the prior year’s survey. The top benefit of using EPM cloud is “staying current on technology,” according to 89 percent of respondents.
Better return on technology investment is another driver. Respondents cited these as their three top reasons for moving to the cloud: to avoid infrastructure investment (47 percent); to avoid on-premises upgrades (40 percent); and to lower total cost of ownership (38 percent).
Our assessment of these findings — reinforced by our experience with customers — is that the cost savings of cloud still attract finance leaders, but the pro-growth business benefits of better agility, flexibility, and always-current best practices are becoming more important.
EPM Cloud can deliver quick wins and help with change management
Despite this growing acceptance, finance leaders are still “cautious” compared with other business lines that were early cloud adopters, such as sales and human resources. Some finance executives remain concerned about moving general ledgers (GLs) — their core business files — to the cloud. Security and privacy worries linger, and it can be a big undertaking in terms of time and preparation.
Instead, we are seeing cloud adoption happen around the edges of GLs and aimed at specific pain points. These spots include planning and budgeting, account reconciliation, and any other work that often is still done manually with spreadsheets.
EPM can automate a lot of this manual work and deliver quick-win benefits in efficiency and speed. It can take as little as six to eight weeks to implement EPM cloud, and so it’s a way to spread cloud to many users who touch different lines of business without taking on a larger ERP migration right away. Such rapid returns can help demonstrate the benefits of cloud to those reluctant to change.
Curious about EPM? Get your guide on the Top 10 Must-Have Features of an EPM Solution here.
At the same time, once EPM is in the cloud, it’s easy to continue to add new capabilities and users when other opportunities to modernize arise. For example, one Oracle EPM Cloud client is the parent company of several well-known restaurant brands that is growing through acquisition. The company’s finance team started modernizing by moving planning and budgeting into the cloud. Soon after, they added capabilities to manage the consolidation of financials from the acquisitions. At this point, finance leaders realized that to fully benefit from modernization, they needed to replace their on-premises ERP and are now moving to Oracle ERP Cloud.
This stepped approach reflects what we are seeing in the market: Once companies get a taste of the full benefits of a cloud finance solution, they want more.
Game-changing start to a longer-term cloud journey
One such company is an online retailer of high-quality diamonds and diamond engagement and wedding rings. They used an on-premises ERP but recently implemented a cloud-based planning-and-budgeting solution. It was a game-changing move.
Prior, the finance team was heavily dependent on manual processes and spreadsheets for planning and reporting. The updating and distribution of files and data was very challenging and required a lot of version control. It was also difficult to keep up with fast growth and the changing business environment of online retail.
Because the team was limited by a tight timeline (nine weeks from requirements to go-live), they started with one module within Oracle EPM Cloud (planning and budgeting), with plans to implement a workforce planning module in the future. This ability to add only the capabilities that are needed and then expand when ready was paramount to the start of their cloud journey, allowing the company to align its resource expenditures to its unique business needs.
Today, data from the ERP system is automatically fed into the EPM cloud tool, which enables people to quickly produce customized reports for GAAP and managerial accounting needs — no more building reports manually or managing multiple versions. They can also use the tool for quick ad-hoc reporting, and it’s easy to do scenario planning and update assumptions based on analysis.
Take a small-but-meaningful step with EPM Cloud
Even though finance leaders are still reluctant to move the business’ “crown jewels” of GL files into the cloud, cloud solutions are becoming more commonplace in finance as companies discover the ongoing value of more flexible and agile capabilities. Fortunately, adding these capabilities can be done quickly, and the benefits start immediately.
If your finance team wants the advantages of cloud but prefers to start out with a small-but-meaningful step, take a look at solving your most pressing points with modern EPM solutions.
Researching cloud financial solutions? Check out our guide: Top 10 Must-Have Features of an EPM Solution.