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Cloud + CFO = Love Or Hate?

In his article, “9 Reasons CFO’s Love the Cloud (or should!)”, John Hoebler, a technology adviser out of DC, spells out the benefits of a cloud-based financial solution over an on-premise solution.

What makes this a very interesting article, is the comment he received from David Manhal, a senior member of PeopleSoft support OIB at ING. He has a refuting question for eight of the nine reasons.

The author has yet to reply to the comments.

Here is the short version of the list of nine reasons with the comment/question in red, and my answers immediately following.

1. Reason number one why CFOs should like the cloud: Avoid time-sucking upgrades. Rather than having to pull people away from their regular duties to perform the every-three-year or so update to your ERP system, a cloud based solution is always on and often updating, requiring no special team or transition period.

What is forcing you to upgrade? Upgrades are not mandatory.

Indeed there are no forced upgrades with on-premise solutions, however support starts to fall off and soon other software is no longer compatible.

2. Reason number two why CFOs should like the cloud: Version uniformity of cloud based offerings. All users are on the same version so once a bug is fixed, it is deployed company wide. On-premise systems have a number of customizable elements, such as the hardware it’s ran on, the database and server configurations, the operating system and the actual version and it’s last update. This translates into the need for an in-house support team as the challenge to the vendor’s level of knowledgeable support increases with the amount unique elements. No comment was submitted here, or see number five.

3. Reason number three why CFOs should like the cloud: Real-time visibility into the financials. No more waiting until the next day to see what a day’s worth of logging invoices has done to the financials. No more waiting for currency conversions. And in some cases, with the right cloud-based reconciliation tool, no more waiting to see how the foreign entities’ account reconciliation process is going.

Isn’t there a reason behind processing the data in batches – other than just performance limitations? Batch process used to be done primarily to put less strain on the network. Instantaneous recording of invoices (for example) is preferred as it is better to see the real-time revenue, on demand. Any ideas of later correcting an accounting entry made at 9 AM real quick before the batch is processed is not a benefit as it may count as a second entry and auditors like to see what undid the first entry. An audit trail will save the accounting team a lot of headache and the auditor a lot of time.

4. Reason number four why CFOs should like the cloud: No need to add additional infrastructure. More and more cloud applications are systems agnostic allowing you to begin testing and establishing compatibility almost as soon as the contract is signed.

Your data are not in your possession. They are stored somewhere at cloud. How easily can you switch to different cloud application provider? Most cloud vendors should not be in the business of holding your data hostage. You’ll want to ask this question up front when conducting your vendor analysis.

5. Reason number five why CFOs should like the cloud: Upgrades equal improvements sans a transition period. Often cloud-based applications have a testing period where you can see and use the new features, determining how to best utilize them.

Does it mean you must adapt to new version at least twice a year? Rewrire interfaces, train users, change business processes? Or, if you can choose if the new version/feature will be implemented, how does it correspond with point 2? This will be vendor specific. Again, something to look for in your buyer’s checklist. In cases where a new version contains a bug-fix or a new report, users may not even be aware that an upgrade took place and may be surprised to find the new feature available.

6. Reason number six why CFOs should like the cloud: Customization remains an option.When implementing cloud applications, organizations are given a wealth of configuration choices that they can choose from for core finance processes.” Finance teams need to ask themselves if their needs are indeed unique. Customizations equal expenses, time delays and can introduce risk. Cloud vendors tend to keep them to a minimum as a result. Additionally, vendors will likely maintain and upgrade these customizations.

Are the organizations really the same? Isn’t there a good reason they are adapting ERP software to their business instead of adapting business to software? With the ever increasing financial reporting regulations, many finance teams from like industries have similar financial system and reporting requirements. Compliance, passing the audit and always improving internal controls are presumed goals of all accounting departments whether public or private. FinTech cloud vendors’ offerings should be optimized to help teams meet these goals.

7. Reason number seven why CFOs should like the cloud: Better security, disaster recovery and up-time. Cloud vendors will not survive without tight security. They must obtain and continually be strengthening their physical and application “security protocols”.

Are cloud apps really more secure than ERP’s running in private data centers, not accessible from internet??? Loose security measures whether on-premise or in the cloud translate into losses. Disgruntled employees can strike anywhere. With cloud-based applications, the onus is on the vendor to maintain the strictest standards. Whether they have a public company’s financial data on their servers or a small manufacturer’s payroll, both customers will benefit from the strictest standards available. On-premise data security breaches as well as any power outages, hardware malfunctions or disaster recovery plans are entirely the responsibility of the in-house IT team when not using a cloud based application.

8. Reason number eight why CFOs should like the cloud: Reduction in end-user training. The consumerization of many cloud applications has rendered them easier to use. Many are programmed to work via mobile access.

So cloud apps are intuitive and non-cloud ones aren’t? While both on premise and cloud based applications strive for ease of use, having to make your application work via a shrunken keyboard as found on a smart phone, almost makes the cloud app work harder to be more intuitive.

9. Reason number nine why CFOs should like the cloud:Highly compatible.Regardless of the solution, they have a common architecture that allows them to share data with each other. These APIs allow you to develop integrations with your application eco-system efficiently using common technologies.”

I saw many interfaces processing and transferring a lot of data between different systems. It is quite difficult to me to imagine how such interfaces can be processed between cloud apps over internet in reasonable time. And providing the cloud apps are subject of change in short periods, isn’t it costly to keep the interfaces adapted to latest releases of involved cloud apps? The beauty of the cloud app’s compatibility is that it is the concern of the cloud vendor, not it’s customer, to ensure continued compatibility, speed and security.

Here is  the complete article “9 Reasons CFO’s Love the Cloud (or should!)“.

By |2023-03-11T18:43:04+00:00December 11th, 2014|Blog|0 Comments
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