As cloud technology matures, an increasing number of companies are migrating financial functions away from on-premise systems. In our most recent Finance Trends survey, more than half (58%) of the respondents said that they plan to increase their spending on cloud applications in 2020 — indicating that they either have already migrated and or are planning to do so this year.
The movement of sensitive financial data and critical applications to the cloud is a significant milestone for most organizations. Here are some things finance leaders need to be aware of to execute their migration plans successfully.
The pressure pushing customers toward the cloud comes in large part from vendors who are warning that they will no longer support on-premise licenses, and from internal stakeholders who view cloud migration is part of an overall digital strategy. Most ERP vendors, such as SAP and Oracle, already have mature all-cloud environments. That’s where their R&D dollars are going, and that’s where all of their new capabilities and enhancements will be introduced. There’s no doubt that cloud is the future, and finance is not going to have many other options.
Here is a fun fact: It’s not just the ERP platforms that have settled comfortably in the cloud. Individual parts of finance operations, from CRM to reporting, reconciliations and payment processing, have been migrating, sometimes as part of a plan, and sometimes in an opportunistic or ad hoc manner. Since data workflow and connections are more seamless within cloud apps, companies that insist on keeping their ERP on-premise are going to find it more cumbersome to connect seamlessly to these applications.
Making the Case
The benefits of the cloud — reduced maintenance of servers and data centers, efficiency and universal access to information — are what is driving most companies to migrate. And, as I explained above, at this point cloud migration of the finance ERP is no longer a question of if, but when. Processes and functions like financial planning and analysis and human resources — are already in the cloud because that’s where all the tools and resources are. Migrating the finance team is a logical next step.
For those finance organizations still trying to make the case for migration the challenge is how to convince the board and key leadership to come up with the necessary funding.
Questions organizational leaders are likely to ask are: How soon will this happen and in what stages? and Who will drive that change? We recommend a staged, or phased, approach, starting with a pilot or proof of concept — perhaps with a single process, such as travel and expense, before moving on to more vital areas like general ledger.
It helps to vest your target audience in the outcome of the investment you are requesting. The most effective case is one that is less tactical (“I want to move onto the cloud because everyone else is”) and more strategic (“I could provide you and the rest of the organization with quicker access, self-service proactive insights and a less burdensome process when it comes to financial reporting”). Some cloud migrations have even been stakeholder-driven, for these exact reasons. It is important to recognize and draw momentum from the expectations of internal customers.
Moving to the cloud is a journey, and it is important to remember that there is likely to be some resistance. Remember, there was a time when many people were skeptical of using cell phones for fear of electronic eavesdropping. That fear dissipated over time; desk phones have disappeared from many offices, and employees hardly even noticed.
A Collaborative Approach
Collaboration is key to success. Internal and external partnerships should be leveraged to develop a migration strategy that is context-aware. A context-aware strategy takes into account the complexities and unique use cases of the organization. This context can be obtained through collaboration with the right stakeholders. Specifically, finance and IT teams should be aligned in their expectations for securing company data and making sure the transition happens in the most thoughtful and well-executed manner.
Finance leaders don’t have to become cloud technology experts. Most of the day-to-day migration will occur below the CFO level. Business use cases should be developed by the people who will actually be using the tools and technology. The business and IT and security are not only knowledgeable resources but can be powerful allies, and the collaborative approach will facilitate user acceptance.
Making a decision to place a company’s financial operations in the cloud may seem like a foolhardy leap of faith, but that is rarely the case if proper migration is achieved. A well-formed strategy, strong controls, strong internal communications and plenty of due diligence can help finance organizations make the migration to the cloud to become more agile, responsive and aligned with the digital initiatives of their organizations, as well as leading competitors. Following solid change management practices and thinking strategically rather than tactically will go a long way toward mitigating risks and ensuring a smooth transition.