Although a growing number of organizations have been adopting a ‘cloud first’ approach to their business application and computing needs for a while, it has taken a long time for CFOs to feel comfortable migrating their own financial management systems to the cloud. However, a confluence of forces is finally driving them to make the move that could create additional momentum for cloud adoption across their operations.
The cloud has become the preferred platform for front-office applications for many years. Sales and marketing organizations have been relying on cloud-based, Software-as-a-Service (SaaS) solutions for many years. SaaS has also become a popular alternative for service and support organizations. And, the age of clandestine adoption of these SaaS solutions has given way to a more disciplined approach that not only includes help and advice from IT, but also financial approval from the CFO.
In fact, Deloitte’s most recent quarterly (Q3 2016) CFO Signals survey found that almost 80 percent work in North American companies that have implemented cloud solutions, but only about a third said they are using it broadly. And, although nearly half of the CFOs surveyed have already made substantial investments in customer analytics, only 45 percent reported they have made investments in cloud-based finance and accounting analytics solutions.
It isn’t surprising that CFOs have been slow to adopt cloud-based applications to support their own departments. They’re paid to be conservative and risk-adverse. They’re not only extra cautious about any application that could raise security concerns, they are equally reluctant to adopt an application that could disrupt their ongoing operations. So, given the historical questions about the security and integration aspects of cloud-based SaaS solutions it is understandable that financial departments would be hesitant to make the move to the cloud.
However, the accelerating growth of the cloud financial management vendors has clearly shown that CFOs are warming up to these alternatives. For instance, Intacct has experienced 40% growth over the past year. Intuit Inc. has over a million and a half cloud-based QuickBooks Online subscribers. And, the growing demand for SaaS financial management solutions was a key reason why Oracle decided to acquire NetSuite.
This trend was clearly illustrated at Intacct’s annual Advantage customer conference which saw a significant jump in attendees and sponsors.(Disclosure: Intacct paid for my travel expenses to attend its Advantage Conference.) What made the event particularly impressive was not its size – after you’ve been to Salesforce.com’s Dreamforce mega-conference every other event seems relatively small. Instead, it was the energy and enthusiasm of the Intacct customers and partners about the power of the cloud-based financial management applications and opportunity to redefine the role of the finance department because of this new functionality.
The Intacct customers were not only impressed with the functional capabilities of the SaaS solutions, but the ease of integration into their other systems and the added security that the cloud-based applications provided.
Because the Intacct software simplified many basic bookkeeping tasks, it also freed up CFOs and their staff to delve more deeply into the meaning of the numbers. And, because the SaaS solution has powerful, built-in analytic features, the financial managers can better understand what is actually going on within their business and provide more valuable insights into how they can improve their operations.
These capabilities are also coming just in time to help CFOs respond to new revenue recognition guidelines from the Financial Accounting Standards Board (FASB). The new ASC 606 standard will require companies to identify performance obligations in their customer contracts and approach revenue recognition on a contract basis, rather than a transaction basis. Although the new accounting standard doesn’t go into effect until the end of 2017, organizations need plenty of time to adjust their business processes to adhere to the new guidelines. Intacct’s SaaS solution has been updated to accommodate this shift, so organizations can focus on the procedural impact rather than the software modifications needed.
Of course, as CFOs get more comfortable using cloud-based applications to support their own day-to-day requirements, they become that much more inclined to encourage other CXOs to migrate to SaaS alternatives. So, even though we’ve been talking about the move to the cloud for many years, get ready for the cloud migration process to gain momentum in the years to come.
About the author:
Jeffrey Kaplan in the founder and Managing Director of THINKstrategies.