Recent research by Gartner predicts that the Cloud is likely to become the dominant deployment model for financial management applications by 2025. The research report titled “Finance Moving to the Cloud: The Steps to Take and the Benefits You Can Expect” also said that spending on cloud or SaaS-based applications will reach 47% of the total market spend by 2020. Put together by Gartner analysts Nigel Rayner, Chris Iervolino, and John Van Decker, the report stated that, “After years of lagging behind other domains in cloud adoption, cloud is hot in all areas of financial applications. CFOs and IT leaders need to understand how to capitalize on the opportunities of transitioning finance systems and processes to the cloud without being caught out by the challenges.” If you are interested in how this can play out in the case of your financial institution, Cloud Computing Los Angeles can help with a free consultation.
The report does admit that financial management applications have been conspicuously slower than other industries in moving to the cloud. But it concludes that the market is definitely at a turning point with cloud adoptions progressively picking up speed. Going by the report or not, it is clear that finance applications are increasingly adopting the cloud-based approach.
The findings of the Gartner report are also in line with market surveys and customer feedback from a number of other sources. For instance, the Radius Global Research survey found growing interest in cloud-based EPM with adoption continuing to grow at healthy rates as 41% of people who took the survey reported to currently have a cloud-based EPM solution, 29% in the process of evaluating business fit, and 23% planning to migrate to the cloud in the immediate future. Of all the surveyed respondents, just a minor 2% reported to have no interest in cloud migration for their applications.
Why Is Finance Moving to the Cloud?
Consumers want Sophistication
Financial management applications are starting to become a compelling need for medium and large enterprises who prefer a more sophisticated user experience. In response, most of these applications are turning to the cloud, as companies seriously consider and fine-tune their strategies for cloud-based applications.
Increase demand for Security
Horror stories about long-standing Financial institutions of repute bowing down to a single major case of breach or malicious cyber activity are becoming increasingly common. One of the chief reasons why financial applications have been late to join the fray for the cloud has been their concerns about security. But cloud has more or less kept up a fairly pristine record of ensuring security for organizations compared to businesses who have insisted on onsite storage and traditional modes of work. This has resulted in a shift of mind-set among CFOs and other finance leaders who are clearly becoming less concerned about the perceived potential security risks of cloud-based systems. CFOs simply feel more confident about the cloud option now. This is a more mature outlook and is likely to continue as cloud keeps delivering on its proven track record for security.
Need for Systemic Upgrades
In a famously cyclical pattern, all financial organizations generally tend to upgrade core financial management applications in a time period of 10-15 years. As many companies are near the end of the cycle now, those organizations are considering an upgrade to the cloud as they veer away from on-premises solutions. A major reason behind this could also be the significant costs attached to deployment and maintenance of hardware needed for onsite solutions. As competition only gets fiercer, financial institutions are doubling down on the need for lean growth in the long term with cloud options.
Driving Business Transformation
Many CFOs and other Finance leaders continue to perceive cloud-based applications as a long-awaited opportunity to drive full cycle business transformation in their organisations as they focus on phasing out legacy applications. These leaders are optimistic about the chances of cloud fostering more rapid growth cycles with systems that truly improve and transform key Finance and business processes and streamline the end-user experience.
What are the benefits of cloud-based financial applications?
Improved Usability, Security, Process Improvement and Agility
With cloud, Financial institutions are guaranteed support for in-depth and faster reporting, monitoring, analytics, mobile support, cloud backup and much shorter planning cycles. Managed IT Services Los Angeles can provide you with a demo that lets you understand these improvements in depth.
Cost Savings
Cloud-based financial applications offer significant cost savings for organizations on subscriptions as compared to the licensing and maintenance costs borne by companies that maintain the onsite model. The move to the cloud also allows companies to significantly cut down on reduced infrastructure and upgrade costs and keep monthly outlays predictable and flexible as per demand.
Enabling Growth
Scalability is perhaps the most compelling reason behind cost savings for Financial institutions to consider cloud adoption. IT Consulting Los Angeles offers highly flexible packages that lets your financial institution scale on demand.
Faster Adoption of New Features
Cloud service providers are typically much faster in both addressing vulnerabilities and releasing new features with automatic upgrades. This ensures that companies stay ahead of an evolving list of threats as well as improvements in core processes.
Enabling Business Transformation
With cloud computing, organisations have an opportunity to upgrade finance systems and processes in a holistic manner. Gartner underlies the importance of this by recommending that organizations group their financial applications into two segments – Mode 1 and Mode 2. Mode 1 will include all core financial applications, and Mode 2 will include all additional applications and processes, such as budgeting & planning, financial consolidation & reporting, account reconciliations, and expense management. According to Gartner, implementing a structured approach to migrating Mode 1 applications will yield better results. But in case the organization is not operationally capable of moving its Mode 1 applications to the cloud in the shorter timeframe, moving Mode 2 applications to the cloud can also empower the organizations with enhanced process improvement benefits, and significantly lowered risk exposure in a short span of time.
About Brent:
Brent Whitfield is the CEO of DCG Technical Solutions LLC. DCG provides specialist advice and IT Support Los Angeles area businesses need to remain competitive and productive while being sensitive to limited IT budgets.
Brent has been featured in Fast Company, CNBC, Network Computing, Reuters, and Yahoo Business. He also leads SMBTN – Los Angeles, a MSP peer group that focuses on continuing education for MSP’s and IT professionals. https://www.dcgla.com was recognized among the Top 10 Fastest Growing MSPs in North America by MSP mentor.