As seen on the Host Analytics blog (http://blog.hostanalytics.com/)
Have we arrived at the tipping point in the adoption of cloud applications in Finance? By all indications, it appears we have. This was further validated in a recent Gartner research report titled “Finance Moving to the Cloud: The Steps to Take and the Benefits You Can Expect.”
This is encouraging news and correlates with recent surveys of Finance executives on the adoption of and interest in cloud-based applications. Adoption appears to be accelerating as Finance departments are becoming more confident in the security of cloud applications and more aware of the benefits.
Gartner Sees the Tipping Point
So what did the Gartner research note say? Gartner clients can access the report on Gartner’s website, but here’s a quick synopsis. The report – authored by Gartner analysts Nigel Rayner, Chris Iervolino, and John Van Decker – 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.
The Gartner report goes on to recognize that, while financial management applications have been slower to move to the cloud than other domains, such as human resources and procurement, the market is at a tipping point. Gartner expects that spending on cloud or SaaS-based applications will increase from 30% of the total market spend in 2015 to 47% by 2020 – and that cloud will become the dominant deployment model across all areas of financial management applications by 2025.
Why Is This Happening?
There are a number of reasons for the accelerated adoption of cloud-based financial applications.
- Maturity – One reason is the increasing maturity of cloud-based core financial management applications for medium and large enterprises. In fact, most of the vendors in this market are now focusing their efforts on cloud vs. on-premises applications.
- Replacement Cycle – Another factor is the replacement cycle. Many organizations have had their current core financial management applications in place for 10 or 15 years, so it’s time for an upgrade or replacement. And many organizations are now adopting a cloud-first strategy for new applications, favoring them over on-premises solutions.
- Confidence – We’ve been seeing this ourselves in recent years, that CFOs and other Finance leaders are less concerned about the potential security risks of cloud-based applications. The increasing maturity of cloud solutions and proven track record on security is making CFOs more confident in the cloud option.
- Transformation – Maybe most importantly, many Finance executives see the opportunity to replace legacy applications with new, cloud-based solutions that can truly improve or transform key Finance processes. This is especially true in corporate performance management (CPM, a.k.a. EPM), where Finance leaders are replacing spreadsheets and manual processes that are being used for budgeting, planning, and reporting processes.
What Are the Benefits?