For years, finance leaders have faced the cloud with trepidation, concerned about data security, the reliability of cloud infrastructure, the availability of applications and the costs of implementing cloud-based technologies.
However, those worries now appear to be subsiding within many finance organizations, according to the 2017 Benchmarking the Accounting & Finance Function report.
Robert Half and Financial Executives Research Foundation (FERF), the research affiliate of Financial Executives International (FEI) publish this annual report, which examines how companies are handling the critical, everyday workings of the accounting and finance function. How firms use financial technologies is one area of focus.
Research for the latest report suggests that there has been a tipping point over the past year or so in the use of cloud-based technologies, with more businesses in North America embracing the benefits of these solutions for their finance functions. For example:
- Seventy-two percent of U.S. finance executives said they are either using cloud-based solutions or plan to do so in the future, compared to 62 percent in the 2016 survey.
- Sixty-seven percent of Canadian respondents reported that they currently use some or only cloud-based technology in their finance function, or plan to in the future — that’s a 20-point increase from the previous Benchmarking survey.
And it’s not only large companies that have been embracing the cloud more fully lately: More than 50 percent of organizations in each company size category in the survey reported that they are already using cloud-based technology to some degree or intend to do so at some point. That includes 59 percent of businesses with less than US$25 million in annual revenue.
The potential benefits of the cloud for finance functions
The uptick in adoption of cloud-based technologies since the 2016 survey suggests that many finance leaders are more comfortable moving processes and sensitive data to the cloud. In fact, according to the 2017 Benchmarking the Accounting & Finance Function report, none of the executives interviewed for this year’s publication cited strong concerns about cloud security.
Some of the executives did say that they still saw some risk in moving data to the cloud, but it seemed to be tied more to concerns about being able to access data when needed. For example, one CFO from a Boston nonprofit said, “I’m not diminishing the importance of security, but downtime of internet and cloud services would be hugely disruptive for many companies.”
Safer data handling is one security benefit of the cloud, which provides an additional layer of protection above data stored on laptops or USB drives that can easily be stolen or lost. Cloud-based computing also lets businesses back up data off-site. That makes disaster recovery more manageable, as well.
Other benefits of cloud computing for accounting and finance functions include:
Cost and time savings
Businesses can expand their use of cloud services without extra hardware purchases and with little or no software costs or maintenance fees. Cloud services are typically subscription-based, and companies can scale requirements up or down according to their needs. Software updates, including security updates, are automatic. (For resource-strapped fast-growing companies, these are all major pluses.)
Reduced burden on core staff and enhanced collaboration
Automating manual tasks with cloud solutions frees up employees to focus on more value-adding activities for the business, including innovation. Cloud computing also helps to simplify and speed up workflows. And it supports anywhere-anytime working and collaboration by providing companies with a continuous, mobile-ready connection that syncs data instantly wherever there’s internet access. Document control is a lot easier, too, since all files reside in one central location.
Compliance efficiencies and big data insights
Some of the finance leaders interviewed for the 2017 Benchmarking the Accounting & Finance Function report said they hoped that using cloud-based tools would help their organization to stay on top of regulatory compliance demands, or enable them to perform data analysis projects. There are still compliance issues to be mindful of with the cloud, but leading cloud providers and other expert consultants can help ensure your business meets relevant regulatory policies and processes.
For more details on benefits of the cloud, especially for small businesses, see this post.
The legacy IT factor
Research for the 2017 Benchmarking the Accounting & Finance Function report also found that some finance leaders have decided to embrace the cloud because, well, they need to. Some reported that their contracts for on-premises solutions would soon be expiring. Others said their accounting systems were so old that their vendors no longer support them.
But some finance executives appear to view the legacy IT factor as an opportunity to change for the better. For example, the vice president of finance for an internet services and telecommunications company based in Canada said of his organization’s new cloud-based accounting system, “It’s much more flexible … and gives us a much better foundation for the future.”
Still, despite the cloud trend, there are processes that some finance functions aren’t moving quickly to change — namely, manual reconciliation of accounts. Well over half of U.S. companies (58 percent) and nearly two-thirds of Canadian executives (66 percent) surveyed for the said that they use a manual approach to this process. However, some executives who were interviewed for the report said they are using a mix of manual and automated processes for account reconciliation.
Deciding to make the move
If your finance function is among those looking to move to, or expand your use of the cloud, engaging business systems and IT consultants for assistance with evaluating and deploying cloud-based solutions can be a valuable strategy. These experts can also help you answer important questions you should consider before transitioning to the cloud, such as:
- Why do we want to move to the cloud?
- What data and which processes would we put in the cloud?
- What benefits do we hope to realize from moving to the cloud?
- How will the cloud change the way our accounting and finance team works?
- How should we manage the transition to cloud-based processes?
- Which vendors should we work with?
Business systems and IT consultants can also help you select a cloud model (for example, private, public or hybrid) that would be the most appropriate for your business needs.
In addition, these experts can assist you and your firm’s technology leadership in determining what impact the move to the cloud would have on your organization’s IT department. For example, would the firm need to hire professionals with cloud computing skills, either on a project basis or full time?
The IT resources issue is one that businesses eyeing the cloud should think about sooner than later: Research for Robert Half Technology’s recent IT Hiring Index notes that more than one-third of chief information officers at financial services firms said IT professionals with cloud computing skills are in demand.
The cloud is becoming harder for finance leaders to ignore. And as the latest Benchmarking the Accounting & Finance Function report shows, the number of finance functions not employing at least some cloud-based solutions is declining. Even if you’re unsure whether cloud-based technologies are right for your organization, exploring the option to determine what benefits your business might realize from making the transition is still worthwhile.
This post was written by Tim Hird, the executive director of Robert Half Management Resources.
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