Why CFOs are embracing Cloud, BU, CPM and ERP

18th August 2015

FSN writer Lesley Meall explores some of the details behind increased CFO acceptance of cloud-based software






Ask cloud software developers and industry analysts why business uptake of public cloud software is increasing and you may end up with a very long list. Data access from anywhere at anytime, closer to real time and more accurate financial analysis, better supply chain visibility and control, dwindling support for legacy systems, operational agility, less training required, and the scalability to match business growth are all popular. Then there are the ‘harder’ financial benefits, such as an end to costly software upgrades, reduced hardware and infrastructure costs, lower opportunity costs for access to mobile/social technology innovations, and reductions in the cost of implementations and administration. But what is behind the growing CFO acceptance of ‘on demand’ cloud-based software and services? 

The changing roles of CFOs may be contributing. The Accenture report The CFO as architect of business value found finance chiefs increasingly accepting and exploiting digital technologies: with  85% of companies investing in cloud computing or ‘software as a service’, 82% in big data and analytics, and 65% in mobile. The Gartner Financial Executives International CFO Technology Study offers  insights into the transition roadmap and highlights increased use of cloud for budgeting/planning/forecasting, consolidation, and corporate/enterprise performance management (CPM/EPM). The Empowering Modern Finance study, conducted by Longitude Research, found that around two-thirds of executives have or are planning to adopt cloud-based systems for core financials and/or performance management. 

Many CPM/EMP providers are cloud natives that have emerged during the 21st century. However, their popularity and the spreading acceptance of cloud (even among CFOs) has prompted traditional vendors such as Oracle and Tagetik (with long histories in on-premise CPM and business intelligence; BI) to also offer ‘on-demand’ cloud deployments  – with some success. For example, during Q2 of FY 2015 Oracle gained 250 new customers for the Oracle ERP Cloud and the Oracle EPM cloud – and 150 of them were ‘net new’ and replacing their legacy solutions. “This growth reflects the investment we’ve made to build solutions that work together seamlessly in the cloud and that anticipate the needs of CFOs,” says Rondy Ng, senior vice president of application development at Oracle. 

BI and CPM specialist Tagetik announced record results for 2014, including 35% growth in revenue, 36% growth in cloud revenue and 115 new customers globally. Growing CFO acceptance of cloud helped Tagetik to plan for ‘significant global growth’ over the next year – and to refresh its corporate identity and logo. “It is important that our corporate identity conveys our passion and dedication to customer success and reflects what we do best: address the challenges and needs of modern finance organisations so that they can streamline processes, reduce risk and deliver tactical and strategic results,” says Manuel Vellutini, co-chief executive of Tagetik. The Italian heritage-inspired tagline ‘Performance with passion’ has been replaced with ‘We get finance. You get results’. 

The devil is in the detail. So what reasons do CFOs - who have or are in the process of implementing cloud-based systems for ERP or CPM/EPM - give for their leap into the cloud? Elaine Kitagawa, the CFO of the online learning company Lynda.com, which recently replaced its legacy systems with a cloud ERP says: “We are growing quickly and expanding internationally. Functionality and scalability were major factors in our decision.” Lynda.com also wanted an integrated cloud solution with a strong, cohesive and complete set of features, and it wanted to get that solution from a provider that understands the needs of fast-growing companies. “We selected Oracle for its superior analytics and reporting, and completeness of its offerings for our finance organisation,” says the CFO. 

The Australian day-hospitals group Nexus had a different set of reasons. It needed a post-acquisition CPM that could produce monthly management reports using models developed during due diligence. “Our hospitals all use different operational and financial applications, so I needed software that could very easily collect data from multiple systems, then consolidate and produce highly formatted reports,” says Steven Evans, Nexus CFO. Implementation speed was also a factor. “We ended up going live using the proof of concept model created for our executive and board reporting,” he says. Because Tagetik is available in the cloud, ‘go live’ was almost immediate, despite zero IT involvement. “The fact that the system works through Microsoft Excel enabled me to begin using it with virtually no training,” adds Evans. 

Of course, some CFOs will have other reasons for taking the public cloud route; some will choose different software developers as their companions on the journey. Just as some will have their own particular set of reasons for taking the (in-house or managed service) road to the ‘private cloud’, or opting for a mixed public cloud and private cloud hybrid. Earlier FSN articles have highlighted other perceived barriers to public cloud including (but not restricted to): concerns about levels of ‘integration’ between cloud applications and the associated data, hidden costs, lack of control, security and privacy fears, and technology assets that are not even approaching the end of their ‘useful life’. Acceptance of cloud may be growing among CFOs, but so is their awareness that cloud does not offer a ‘one size fits all’ solution.