If you are considering converting your systems to cloud-based solutions, you are one of many globally. Some reasons are company benefits such as decreased manual maintenance, increased productivity, and greater access to reliable data. However, a more significant focus is on the automation of processes to increase business agility and effectiveness. Therefore, we see the finance function and cloud technology as an inevitable pairing.
The finance sector to lead the digital transformation
Digital transformation – the development from manual to automated or digitalized tasks – is a hot topic across industries, especially in finance. It is important to note that we do not discuss replacing the people but rethinking the working processes. In finance, digital means transforming manual and repetitive processes into real-time data insights. As a result, we can use our resources for a higher quality of analysis and strategic decision-making.
Cloud in finance was already on the rise before the pandemic.
We have seen a tremendous increase in finance departments using cloud computing in the last few years. Already from 2017-2019, PwC reported a rise. In 2017, only 34% of financial departments used cloud computing as a part of their digital infrastructure. In 2019, more than 50% were using cloud computing for storing financial data, software, tools, and systems. When the pandemic hit, we saw a clear distinction between companies that had already started their digital transformation and those that had not. Most of the companies already on their digital journey experienced positive revenue.
It is no more about whether we agree upon digitalization but more how
Today, digital transformation is on top of almost everyone’s agenda. So, when we hear everyone in finance talking about digitizing the finance function and making cloud strategies, we understand why. But one challenge is how. How do we best implement and choose the right new software to strengthen business value? We recommend that in finance, you look at these two top priorities:
- Automation of processes
- Data-driven management
Both are areas we already can see the benefit of in our ERP and accounting systems, and even better when these systems talk with, for example, your CRM system. Suddenly we have gone from manually sorting invoices and expenses to automating these processes. And it is the same with many other repetitive and standardized tasks.
How does your outlook look?
If there is one thing we have learned from the pandemic, it is to be prepared and create a strong outlook. So before looking into software, go in-depth with your outlook. What did we do before the pandemic? What made us come through it? And where were our vulnerabilities? More importantly, what do we need to improve in our business model? These questions are all part of the outlook in finance and can be combined into the question: how do we best move forward? If you ask us, it sounds like both a simple and complex question. But there is one thing that can make it even more complicated – if you do not have time to analyze because you keep simple, standardized tasks manual.
The 5 key areas that will strengthen your resilience
Fujitsu published an interesting research paper based on a rather extensive survey, where you can read about the five key areas companies focused on after the pandemic, which are:
- Strengthen digital muscles to build resilience
- Reimagine the way people and technology work together
- Design seamless customer experiences that cover both online and offline
- Improve employee wellbeing
- Align business goals with societal goals
If you want to mirror yourself in other companies and learn more about the digital muscles required to build up resilience, read the report here (Pdf):
What you ought to know about ‘The Cloud’ before deciding on new software
Are you part of the 82% planning to increase investments in business process automation? The biggest appetite is actually from the fiancé sector. Cloud and cloud computing are standard terms for software and services, for instance, financial tools or communication platforms available online. We often use the cloud as a metaphor for working with a program, service, or platform online instead of it being locally installed on our desktops. In that sense, the cloud is a new way of acquiring and using software.
Definitions of different software types
There is a clear divide between on-premise, cloud, and hybrid. So let’s clarify the distinctions here:
- On-premise (legacy software): you will almost all know on-premise. It is hosted locally on your computer, and you can only access it on your work computer or at your workplace. Since research shows that a third will continue to work from home in the future, we need to think differently.
- Cloud: You can access it wherever, whenever you want. Instead of installing the software locally on your desktop, you buy it online, access it, and store it online. And this makes it easy to integrate with other and existing systems. This way of purchasing software has multiple benefits; You save the cost of expensive hardware, you save the cost and time spent on manual maintenance, and you gain increased mobility and flexibility because of the easy accessibility truly cloud-based software provides.
- Hybrid: most of you who have had legacy software will have moved to a hybrid version. In its most simple terms, it is half cloud and half on-premise. Since larger organizations still have on-premise, the move to the cloud has to be a bit slower, which often results in a mixture.
Value in integration possibilities
In finance, we will have legacy software, for example, ERP or an accounting system. Since we saw the introduction of digital software, we have been convinced that customized software – with all-in-one features – is the best. So this is what we often want in finance. But do we know why we like this? If all your systems integrate, the value lies in how they solve your problem. And it is rarely the ones that try to do everything that solves it the best. Think of your own personal competencies: you might be brilliant in some tasks, but in others, you rely on the expertise of a colleague.
To mention two benefits of choosing cloud here. One advantage of the cloud is that you only pay for what you use. The second benefit is that the software is standardized. As deliverables in finance often are standardized, it does not make sense to customize things that are better to buy with a provider who is specialized in exactly the area you need help in the presentation of data, data analytics, ERP, Consolidation, etc.
Challenges
So, what are the challenges? The biggest challenges recorded are complexity, cost of data movement, security management, and controlling cloud costs. Interestingly, these challenges are also some success areas recorded after the pandemic. As this sounds contradictory, let’s explain more in detail. It depends, as with everything, on the digital mindset installing the software and the software provider’s business model. For example, the cost of data movement is only a problem if you do not choose a software provider with a subscription model. A subscription model means you pay only for what you use, and the provider pays for the data transfer as part of your subscription. The same applies to controlling costs. If you want to read about security and complexity. We have made an article based on the common misconceptions about these two areas: Two misconceptions – moving your financial processes to the cloud
Take a closer look at truly cloud-based software for financial consolidation and reporting
Digital transformation is changing the world of finance. All research shows that automation and the cloud were the most significant reasons behind the effective response to the changes that the pandemic caused. If you are a finance manager, controller, or even CFO within a corporate enterprise, you are probably looking for tools that will help you digitize manual, repetitive tasks. You are also likely looking for ways to find time to focus on more in-depth data analysis and make strategic decisions based on the insights of your analyses.
Having read this blog post, you know why truly cloud-based software is changing finance functions. You know the cloud offers flexibility and easy access to your data at a low cost.
Finance professionals worldwide are working with truly cloud-based software with everything from ERP systems to invoicing systems to financial consolidation systems. Regardless of your industry or service, the cloud seems to be the answer and the way forward.
At Konsolidator, we offer truly cloud-based software for financial consolidation and reporting.
Contact us to learn more about moving your finance function to the cloud or read more about truly cloud-based software solutions for financial consolidation at www.konsolidator.com