Many companies have embraced cloud technology for everything from human resources to 
customer relationship management, yet the finance department isn’t jumping on board. What’s holding them back and how can they benefit from cloud-based financial systems?
Well clearly finance professionals aren’t risk-takers – and that’s a good thing. We were taught to be conservative, questioning and good custodians of company assets. As the senior leader responsible for handling risk and compliance for an entire company, a CFO is often cautious when it comes to adopting new types of technology—especially for the core accounting operations.
Many CFOs believe that moving financial systems to the cloud means forgoing security, data ownership, and weakening internal controls and audit trails. These beliefs span the full spectrum. Some financial professionals solely believe in sticking with their on-premise software, some who believe in hybrid solutions, while others want a completely cloud-based environment. By myth-busting cloud concerns and clarifying the benefits of different IT environments, I hope to provide the information that resolves the concerns that many finance executives have about the cloud and better understand the upside benefits.
Security in the Cloud
Security concerns tend to be the greatest source of anxiety when it comes to adoption of cloud technology. Security is a valid concern, but moving to cloud-based financial solutions doesn’t mean increasing risk. Most businesses already conduct sensitive transactions such as banking and highly sensitive payroll via the Internet—meaning they’re using the cloud.
Cloud vendors are well aware of the importance of robust security and many have invested heavily in this area in order to offer the highest level of data protection and security. A cloud data-center will employ more advanced security measures, redundant power sources and multiple back-up systems that are often too expensive for single companies to deploy on their own.
Vendors often set up cloud data centers in a number of different locations to minimize the risk of disruption of service. If there is an outage in one location, the service can be automatically transferred to a backup data center, often with minimal interruption in service. Additionally, there are specific technology standards by which the leading cloud players secure their data centers.
For finance executives who may have concerns about internal controls and audits, there are standards to help ensure that a cloud provider has taken the proper steps to keep financial data secure and compliant. These standards—namely the Statement on Standards for Attestation Engagements No. 16 (SSAE 16) in the U.S., and its international cousin, the International Standard on Assurance Engagements No. 3402 (ISAE 3402)—provide guidance to accounting firms who audit a cloud service provider’s operations. When performing an audit, accountants must also assess the effectiveness of a provider’s internal controls and other measures to safeguard financial data from tampering.
Upon completing an internal controls audit, the cloud provider’s auditor will issue a report attesting to the compliance with the above standards to its customers and other external stakeholders. For concerned CFOs, these security standards help provide extra assurance that financial data is safe or compliant in the cloud.
Data Ownership
CFOs frequently believe that putting data outside of the company’s firewall means they forgo ownership. This is a common misunderstanding, since data in the cloud won’t be open to the public and ownership is not much different than when data is on-premise. Additionally, contracts for cloud services typically include language affirming a company’s ownership of data, guaranteeing return if the service is terminated.
Cloud technology also makes information easier to access, particularly for people who are frequently on the road. Cloud technology is delivered via the Internet and consequently users can access it from anywhere, as long as they have an Internet connection. Most cloud financial solutions also utilize embedded analytics that deliver intuitive reports and analytics to non-financial users when and where they want it.
Configuration
Some CFOs believe that cloud-based financial solutions are difficult to customize, and therefore are not a great fit for companies who want the flexibility to choose solutions that fit their unique needs. It is true that typical software-as-a-service (SaaS) solutions are not as customizable as on-premise solutions. This is a trade-off that needs to be considered.
Most SaaS providers offer tools to enable configuration, such as adding custom fields, tables and screens in addition to custom reporting options. In addition to configuration, the solutions themselves offer additional benefits that are not available on premise. One such benefit is the more rapid upgrade cycles. Supporting organization’s evolving needs, cloud solutions are often updated several times a year with new functionality while preserving existing configurations during upgrades.
Deployment Options—Peaceful Coexistence
The reasons behind cloud adoption will depend on each company’s business requirements. Many companies don’t want to rip and replace systems that are still supporting their needs. However, they can augment their existing solution landscapes by combining both cloud and on-premise systems, known as the hybrid option. The hybrid approach can provide more cost effective options and increase flexibility for companies who are not looking to replace their entire financial system. For example, many companies leverage cloud-based financial systems to run their subsidiaries and other operating entities, and integrate them with the on-premise financial management system.
A completely cloud-based option may be the right choice for companies who are growing quickly, such as Aasonn, a global systems and technology services consulting firm. Aasonn has experienced significant growth in the last few years and wanted to adopt a cloud environment that provided the flexibility to take advantage of best of breed solutions across all its business areas. The overall performance, adaptability and scalability of its old on-premise financial system couldn’t keep pace with its growth. By moving all its mission-critical systems to the cloud, Aasonn has improved its internal operations and is able to address system requirements in a much less disruptive manner.
Embracing the Cloud
As the need for businesses to be more agile increases, CFOs will increasingly look towards cloud-based financial management systems for the functionality they need. In the end, no matter what IT environment companies choose, the goal of CFOs should be to leverage flexible solutions that can constantly evolve to achieve financial objectives.