Why and How Executives Should Be Ready for Accounting and Finance in the Cloud

If you haven’t migrated already, chances are good your company is headed toward moving accounting and finance functions to the cloud. Why? Many CFOs and CIOs feel that cloud-hosted systems are the way of the future because they allow companies of any size to store and manipulate data remotely, as well as outsource some or all of their IT infrastructure.

Fifty-one percent of financial and IT executives polled in a study from Saugatuck Technology said they feel limited by their current finance management systems. Legacy systems require a company to buy, install and upgrade software regularly, not to mention train their employees in how to use it. The company is then solely responsible for maintaining and troubleshooting, both of which are expensive and time consuming.

The shift to the cloud is already underway. Eighty-two percent of the executives surveyed in the Saugatuck report say they have either considered or planned a system overhaul, or it’s in progress or already completed. This is as major of a shift – and just as inevitable – as it was to go from paper ledgers to personal computers.

What’s driving the transformation?

CFOs aren’t moving to the cloud just because it’s the trendy thing to do. Accounting and finance needs are driving cloud computing. Executives in the Saugatuck report indicated dissatisfaction with the current IT capabilities of their finance departments, specifically:

  • In-house systems are expensive to maintain and upgrade.
  • They don’t do a good job of integrating data.
  • Their functionalities are inflexible.

In addition, accounting and finance need to adapt to evolving environments, some within and some outside their control:

  • New and emerging regulations
  • Evolving technology and usage
  • Accelerated company growth
  • Global company expansion

How the cloud provides value

Cloud computing delivers value to accounting and finance departments in a number of ways. The major driver is cost: There is nothing to buy except a subscription – no hardware, no upgrades, no maintenance. Companies pay for only what they use. By not having to spend money on such infrastructure, businesses are able to sink the savings into growing, diversifying and adapting to changing market conditions. This cost savings can be a definite boon for small businesses.

Larger businesses may have the wherewithal to absorb the costs of buying, maintaining and upgrading in-house systems, but there are several other benefits besides saving money. Because big companies often have branches in many locations, including overseas, they benefit from the increased flexibility and ease of access that cloud computing provides. This is particularly true for global companies whose sales and marketing departments have different needs in different locations. 

Overcoming potential drawbacks to cloud computing

One of the main reasons some accounting and finance executives are not sold on the cloud is security concerns. In essence, by moving to cloud computing, they’re entrusting customer data to third-party vendors and trusting that those systems are secure enough to deter hackers. Security breaches are a serious problem, but one could argue reputable cloud servers have more robust and updated security systems in place than in-house servers.

Companies can choose either a public or private cloud server, depending on their security and privacy needs, or even a combination of the two for different groups within the organization. For example, research and development could utilize a public cloud, but customer data could be stored on a private cloud.

Secondly, some companies are concerned that they will be locked into a permanent relationship with their cloud provider. However, when contracts are carefully negotiated, it is not difficult to make a smooth transition from one vendor to another.

When to move to the cloud

Although in many ways there’s no time like the present to move data to the cloud, especially when the pros outweigh the cons, you may want to take the leap when:

  • Your company is experiencing substantial business growth and thus outgrowing the present in-house system.
  • The old system is nearing its end of life or requires a major upgrade.

If your company is ready to transfer data to the cloud, be sure to get bids from several vendors that provide the range of services your company requires. The cloud is a powerful tool. If and when you make the transition, you are laying the groundwork that can help almost any business grow, adapt and thrive in today’s fast-changing marketplace.

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Photo source: By ?rate, via Wikimedia Commons