As demand for greater analytical maturity from financial planning and analysis (FP&A) teams grows, financial application leaders realize they are at a tipping point. The question now is less about the merits of moving financial apps to the cloud and more about how best to do it.
Gartner research shows that 72% of organizations have plans to leverage the cloud for financial applications in the next three years. As organizations evaluate solutions that promise to be the building blocks of their digital transformation strategies, many are finding unexpected challenges with scalability and integration.
Although new capabilities such as AI are attractive for application leaders, they must keep business value front and center
“While deciding to take the first step toward leveraging the cloud is significant, financial application leaders need to think through their full strategies before they implement the technologies to ensure they avoid chokepoints with the technology or the people required to utilize it,” says John Van Decker, VP Analyst, Gartner. “Gartner forecasts that 60% of organizations will struggle to integrate their systems as they expand to cloud financial applications, while 75% of FP&A app environments will require specialized data skills by 2022.”
To succeed in deploying financial cloud applications that meet the needs of today’s finance function and will stay relevant for tomorrow, financial application leaders must consider some key issues that will shape their strategy, teams and solutions going forward. To move forward effectively, they must be clear on three things in particular.
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Maturity of the technology
Financial management solutions (FMSs) are being transformed by a series of new technologies and capabilities. New capabilities, such as predictive analytics and potential integration with artificial intelligence, machine learning and robotic process automation (RPA), mean current set-ups relying on a patchwork of third-party applications may soon become obsolete.
In addition, FMS application capabilities that used to be considered distinct, such as core financials and financial close solutions, are increasingly converging. As FMS capabilities grow, integration will become a critical strategic consideration.
Cloud solutions put finance, not IT, in the driver’s seat, which will become an increasingly important differentiator
“Although new capabilities such as AI are attractive for application leaders, they must keep business value front and center,” says Van Decker. “A common mistake we see is jumping on a certain technology’s bandwagon and then searching for a problem to solve with it. Instead, they should focus on what the business needs, and then build out the FMS solution from there.”
Full benefits of moving to the cloud
As digital transformation and the need for predictive analytics intensifies, the temptation to sit out moving the cloud and staying “on-premises” for the next upgrade persists among some organizations. Without realizing the full range of benefits of moving to the cloud, organizations risk stagnating in their capabilities as technology — and the competition — transform around them.
“Gartner found that cloud solutions are easier to implement, require no major future upgrades and offer capabilities on par with on-premises solutions, which will soon be surpassed,” says Van Decker. “Perhaps most importantly, cloud solutions put finance, not IT, in the driver’s seat, which will become an increasingly important differentiator as finance develops artificial intelligence strategies.”
Remaining on-premises means a continuation of legacy processes (instead of best practices), an overreliance on third-party relationships and the use of Excel, while competitors begin to harvest better insights from integrating AI capabilities and gain advantage.
Best practices to select and implement cloud
The key to a successful cloud deployment begins with the understanding that upgrading financial applications should be a finance-owned process. While collaborating with IT is a critical piece of the process, only finance will know the business objectives, skill and role requirements needed to optimize the selection process.
Finance application leaders should be prepared to be rigorous at every step of the selection process to ensure best fit.
- Application selection. Simplicity rules here. Ensure your applications match both your organizational structure and overall strategy for FMS. Limit customizations and implement systems of record as “neutral” as possible. Speak with unbiased references on solution capabilities and understand that utilizing cloud applications is ultimately a form of outsourcing. In other words, you need to have confidence in all aspects of your chosen application provider.
- Selecting an implementation partner. Has your implementation partner worked with the most recent updates of your chosen application? Are they aware of the key differences between the on-premises and cloud solutions? What is their track record on working successfully with software vendors?
- Implementation process. During implementation, avoid the risk to make this a “technology only” upgrade. Develop a project plan that spans multiple phases, identify workarounds and ensure that change management rules are followed.
- Post-implementation. As the solution becomes integrated in day-to-day processes, be ready to evaluate current organizational capabilities and identify areas where new investments in skills will enhance new technological capabilities.