A 2015 study1 by IDC, the analyst, says that the worldwide market for financial application software grew at a rapid pace to reach $18.0 billion, driven by demand for public cloud offerings. Its author says, “The demand for the cloud is real as large organizations adopt new cloud applications that enable them to replace manual or spreadsheet-driven processes. Also, new purchase decisions for financial applications will be overwhelmingly in the cloud”.
It’s easy to see why businesses are so effusive about the cloud. The scalability, immediacy, and accessibility of the cloud removes many of the barriers to enterprise deployment, enabling businesses to distribute applications wherever they are needed and engage with larger populations of users, which enhances management visibility, control and accelerates decision making.
In an era in which modern finance organizations are striving to reduce business complexity and improve user productivity through process standardization, the ease with which cloud solutions can be deployed holds obvious appeal.
In practice, the financial close process embraces a large number of interleaved tasks, almost any of which has the capacity to disturb the smooth running of the financial close. But unlike many other business processes, the geographic spread, rigid deadlines, and accounting complexity of the financial close make it uniquely challenging and especially susceptible to reputational risk.
Typically, the financial close weaves its way from the corporate centre to the outermost fringes of the organization, transcending different geographies, languages, cultures and time zones. So the ability to leverage the cloud to connect all of an organization’s finance professionals to each other and to the process itself is a profoundly game-changing development compared to the fractured architectures of the past.
A unified environment coupled with a single view of the close process at the centre allows all of the key stakeholders to collaborate around, for example, intercompany eliminations, journals, and reconciliations all of which are well-known stumbling blocks that hinder the smooth running of the financial close.
Automated workflows in the cloud allow tasks and issues that cannot be resolved on the spot to be quickly escalated to the appropriate levels of management for remediation. The ability to connect the end-to-end process in the cloud helps to eliminate all of the spreadsheets and manual workarounds that organization typically use to pave the cracks in fragmented systems.
For those businesses that automate the close process the rewards are high. According to the Aberdeen Group2 Best in Class organisations (the top 20%) are 60% more likely to have automated their consolidation process and those that have invested in automation are able to deliver 19% more reports to managers when they need them.
Modern finance functions know that intensely collaborative processes such as the financial close require the support of an environment that enables high levels of user engagement and process visibility. CFOs are finding that not only are the most innovative applications to be found in the cloud, but the cloud itself is an essential ingredient in delivering process excellence.