The economy is flat so why are financials Cloud vendors growing at more than 90 percent per annum?

5th March 2013

A procession of breathtaking growth rates from cloud vendors such as Adaptive Planning (CPM) and Financial Force (Financial Management) is in stark contrast to the underlying ‘growth’ of the global economy.  Whilst the Eurozone struggles to show any growth at all and the US is limited to a couple of percent, both Adaptive Planning and Financial Force reported growth rates of 90 percent per annum.

 

 

 

Of course the Cloud vendors are starting from a very low base.  Mathematically they have an advantage since adding one more customer when you only have one under your belt automatically gives you a growth rate of 100 percent.  But the Cloud vendors have many hundreds of customers and in some cases thousands.  Take for example Adaptive Planning which has 1,500 customers and 45,000 users worldwide.  And while some ERP/Financial Management vendors are languishing with meagre new customer sales to show for their efforts, Cloud vendors like FinancialForce.com are able to illustrate that there is a demand for new systems or replacement systems after all.  So what is happening? 

The advantages of moving to the Cloud are well established.  The notion that somebody else can do the ‘heavy lifting’ when it comes to provisioning applications and infrastructure is appealing for organisations that wish to focus on their core business and avoid the distractions of information technology.

In essence operational responsibility is ceded to a third party organisation that maintains the application in the cloud, i.e. off-promises over the web in a dedicated and secure computing facility. This confers a number of advantages over traditional on-premise approaches.  For a start, users can access the applications using nothing more than a web browser on a low specification computer, laptop, mobile device or smart phone and the applications are available on-tap 24/7 from anywhere in the world. This freedom to access applications on demand is not only hugely convenient but also has advantages for organisations with mobile workforces.

Take for instance, ICEF GmbH, a leader in the educational sector.  It credits FinancialForce with enabling it to double its revenue in three years without adding to its headcount.  Before the advent of FinancialForce which integrated the CRM and billing systems, the administrative side of the organization struggled to keep up with the demands of the business – a situation exacerbated by the global spread of its operations, events and sales personnel.  Remote workers had no access to customer account history and current issues. Invoices were error prone and took anywhere from 5 to 15 minutes to prepare and an over-stretched finance department faced more than 20 -30 queries a day.

 “The Cloud means that the finance function and around 20 sales personnel can view account history on-demand from anywhere in the world.  And it’s easy to use as well. We can give the software to new employees and they become familiar with it very quickly without lots of training because the user interface is so easy to understand,” says Jibran Sarfraz, Finance Director, ICEF GmbH.

James Love, VP Sales & Marketing, ICEF GmbH adds, “The salesmen have responsibility for managing their accounts and the increased visibility of account history means that they now have access to the information they need.  The finance department are not being rung up every two minutes with invoice queries.  As a result we are working more efficiently,” he says.

It was accessibility and speed of implementation made possible with a Cloud-based budgeting solution that proved pivotal in Working Links’ decision to implement Adaptive Planning.  Working Links is a delivery specialist focused on enabling the UK Government’s Work Programme, and worked with Adaptive Planning partner, Clear Plan, to implement a cloud-based CPM solution that met Working Links’ complex budget modelling requirements with multiple partners and stakeholders.  

Adaptive Planning’s modelling and forecasting capabilities made it possible to build a solution that precisely matched Working Links’ specific needs in an impressively short timescale. The cloud-based Adaptive Planning solution replaced Working Links’ legacy Cognos TM1 system that wasn’t fast or flexible enough to support the company’s evolving budgeting and forecasting needs.

“We were determined to have a new CPM solution in place in time to deliver our next annual budget, however we only had a limited window to source and implement such a solution,” commented Rebecca Phillips, Systems Accountant at Working Links. “Adaptive Planning’s speed of deployment and ease-of-use were key factors in our decision to go with its cloud-based budgeting, forecasting and planning solution.”

For David Smith, Alternative Futures Group’s Head of Finance, a cloud-based subscription model proved financially attractive and lowered the risk for the charity.  “We did not want to be tied into an expensive legacy system. Clear plan had already built a proof-of-concept which illustrated that Adaptive Planning could do what we wanted.  The set up costs were low and with a subscription model we could stop the arrangement if we wanted to,” he told FSN.

Jeremy Roche, CEO of FinancialForce.com agrees that the subscription model is very attractive to CFO’s.  He told FSN “It’s not only the comparison of licence fees that is important, you have to look at the total cost of ownership (TCO) over five to ten years compared with the on-premise alternative. Think of the costs of upgrading an on-premise solution, the consulting and re-training days.  With FinancialForce it is all done for you.”

Adaptive Planning estimates that the TCO of its cloud-based CPM system is around seventy five percent lower than the on-premises equivalent.

Faced with austere times and more testing economic conditions it is perhaps unsurprising that Cloud-based solutions are proving a draw for organizations of all sizes.  Growth rates of 90 percent per year may just be the start.

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