Join the cloud: 9 reasons CFOs are modernizing ERP

John Hoebler
John Hoebler
Partner, CrossCountry Consulting

John Hoebler is a strategic advisor to CIOs and CFOs for both large enterprises and growth companies. He works with them to leverage technology to meet their business objectives and goals. He leads the technology solutions practice at CrossCountry Consulting, a Coupa partner.

Read time: 10 mins
Cloud shaped like a heart.

According to a January 2014 Gartner study, Adoption of Cloud ERP, 2013-2023, 47% of companies plan to move their core ERP systems into the cloud by 2018. If your systems can’t keep up with your business objectives or your old on-premise ERP system requires another expensive non-value added upgrade, then you should strongly consider joining them. Here are nine compelling reasons for CFO’s to deploy cloud applications:

  1. No more costly upgrades. Most organizations need to upgrade their applications and the infrastructure they run on every three years to stay current with the vendor’s latest release. The upgrades are expensive in money and opportunity cost, with little tangible benefit offered to your organization. While your IT team and key business users are spending months upgrading the application they are not focusing on key organizational objectives. Why spend time catching up to your vendor’s release when you could be improving your business?
  2. One version of the software. In traditional on-premise applications, once you buy the software it becomes unique to you – there is no one else running your exact implementation. You chose the hardware to run it on, how to configure the database and servers, what operating system to use, what version, and when you upgrade. Each of these makes your installation unique, and makes it difficult for your vendor to provide effective support, requiring you to staff a team of professionals to maintain your installation. With the cloud, all users are on the same version, so they can optimize performance because they control the technology stack. Once they find a bug, they fix it once and deploy it to everyone instantaneously. The end result is an application that just works, taking the burden off of you and your team.
  3. Better financial visibility. Old on-premise software was built on the concept of modules or sub-ledgers. Users enter transactions in AP or AR, but the transactions do not post in the general ledger immediately. Users have to run a batch process (nightly, weekly or monthly) to pick up these transactions and post them in the ledger. In addition, old systems require special processes that are run periodically to perform other tasks, such as consolidation and currency conversion. In new cloud based applications, the concept of sub-ledgers and separate currency and consolidation programs are eliminated. As soon as transactions are entered and approved, you can see their impact on all financial reports. CFOs have real time visibility across all of their subsidiaries, currencies and transactions.
  4. No infrastructure. With most cloud vendors, you receive your production and test applications within 24 hours of signing your contract. You do not need to procure, install, configure, manage and upgrade any additional infrastructure. Gone are the days of worrying about databases, servers, operating systems and additional third party software required to run traditional on-premise applications. CFOs can focus on running their business rather than focusing on the applications the business runs on.
  5. Continuous opportunity to improve processes. Most cloud vendors push new releases out two to four times per year. These releases are typically packed with new features. A month before the upgrade, your organization can preview each new feature’s applicability to your business. This preview gives you an opportunity to determine if and when to implement each feature. The cloud vendor will then upgrade your application, and all other customer’s applications, typically in less than twelve hours.
  6. Limited ability (temptation) to customize. Cloud based applications rely heavily on configuration versus customization. When implementing cloud applications, organizations are given a wealth of configuration choices that they can choose from for core finance processes. For most organizations, these options are excellent and encourage a company to alter their process to meet the system versus altering the system to fit the process. Some vendors provide limited ability to customize their application to meet your unique business needs; however, organizations should ask themselves, are my core finance needs really that unique? By reducing customizations, organizations can implement cloud solutions faster, less expensively, and with less risk. Organizations also will not need to maintain and upgrade these customizations over time, vastly reducing total cost of ownership.
  7. Better security. Cloud applications are highly secure. Cloud vendors invest heavily in high tech physical and application security protocols. Your applications are running in secure data centers around the world, providing you with peace of mind for the security of your data. Cloud vendors also provide better “up-time” and disaster recovery than most companies can deliver internally with on-premise solutions.
  8. Less training required. Most cloud-based applications are built with the latest advancements in usability. This includes designing applications so they are not only intuitive to use, but also so they work effectively on both web browsers and mobile applications. By extending business processes to mobile devices and consumeresque interfaces, organizations can reduce the need for end user training because your finance applications function much the same as every-day consumer applications.
  9. Easier integration. Cloud applications come in many sizes. Some are meant to be comprehensive business applications that cover most of your needs, while others are point solutions that solve a specific business problem (e.g. spend management, or budgeting). Regardless of the solution, they have a common architecture that allows them to share data with each other. APIs (Application Programmer Interfaces) allow you to efficiently develop integrations with your application eco-system using common technologies. In addition, since there is only one version of the cloud software, vendors only need to build an interface from their latest version to the other vendor’s latest version, making them easier to build, more efficient and easier to deploy. You can easily plug and play additional applications to meet your unique business needs.

All in all, the cloud helps finance organizations run leaner and refocus resources on strategic initiatives. With nearly half of organizations planning to take ERP to the cloud, finance leaders should compare their plans for cloud ERP to those in the survey based on industry and company size to make sure they keep up with the competition.