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Implications of the cloud on the finance function
Implications of the cloud on the finance function
Many finance departments have been slow to adopt cloud solutions, but its transformative impact can no longer be ignored.
Many finance departments have been slow to adopt cloud solutions, but its transformative impact can no longer be ignored.
A recent global KPMG survey of nearly 800 technology industry leaders ranked cloud as the technology that will have the greatest impact in driving business transformation for enterprises.
Driven by the demand of speed, flexibility, scale and anywhere access, many consumers have fully embraced a cloud enabled world. And in business, more organisations are relying on cloud to achieve benefits that extend far beyond cost efficiency. Executives are increasingly realising that cloud can be a catalyst for process improvement as well as a driver of business transformation.
Today’s CFOs have a lot on their minds. Common themes and associated issues include:
Cost efficiencies
- Cost allocation processing /intercompany processing is labour intensive and time consuming
- Inefficient or missing procurement processes leads to missed cost saving opportunities/risks
- Total cost of ownership for ERP is above peers
Enabling a mobile workforce
- Current systems do not provide an effective collaboration platform
- Remote and mobile access to current systems is limited, reducing productivity of the workforce
Leveraging data to provide insight
- No single source of readily accessible / trusted finance data
- Chart of accounts unable to support the business
- Long month end close cycle, missed reporting deadlines
- Inaccurate revenue and cost recognition
New Product Development / Innovation & faster time to market
- Business expansion creating challenges for finance function (processes, systems etc.)
- Sub optimal support for integration of acquired businesses into the finance function
New Business Models / Shift to Shared Service Models
- Finance function struggling to keep up with frequency of business reorganisation
- Inflexible revenue recognition support for new business offerings
- Aligning reporting with IFRS whilst supporting local GAAP/ different accounting calendars
- Controls and compliance proving an increasing burden on the finance function.
At the same time as navigating these types of issues, many CFOs are looking to help their businesses expand. Gone are the days where finance chiefs were confined to simple accounting functions; today’s CFO are widely seen as strategic partners to the general business, and are expected to participate actively in its transformation.
Transforming current finance capabilities can be a long and costly journey often constrained by the organisation’s ERP system and with the final result unable to meet the demands of the business. Traditional transition programme often lasts between 14-18 months, is complex, often delivered late and over budget due to existing architectures hungry for heavy customisation and expensive ongoing upgrades.
The Cloud and SaaS Model
Cloud computing and in particular Software as a Service (SaaS), now offers an alternative to this scenario. Cloud puts business at the forefront of technological change where they can benefit from “The Internet of Things”.
The cloud is touted as a true catalyst and enabler of transformative actions, such as the creation of an innovative workforce, ensuring the success of a customer-centric approach and making data analytics possible – all significant opportunities for the business. Such a backdrop adds new scrutiny to finance organizations, which are now expected to contribute more to the overall strategic direction of the companies they serve.
The cloud offers a service model based on
- Continually up to date software using world class secure data centre and service
- Enforces standardisation,
- Provides flexibility to diversify and scale operation in response to changing business circumstances
- Enables greater productivity through increased multi-device accessibility.
It is therefore no surprise that organisations are increasingly adopting the Cloud to transform business capabilities. In a survey by Gartner, 51% of organisations are expected to use the Cloud to perform more than half of their transactions by 2016, rising to 81% in 2017 or later2 . Many CRM and HR applications are already on the cloud – and we believe finance is next. Indeed, our 2014 survey indicates how the above issues influence cloud adoption to support business transformation.
Please see the Powered Finance section for an overview of KPMG’s pre-built, next generation Finance operating model combining its know-how across finance, technology, tax, controls and audit, built on an Oracle cloud platform-based system.
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