Top CFOs see themselves as catalysts of enterprise-wide collaboration and seek to empower business units with self-service analysis and predictive "what if" planning capability to anticipate future challenges to success. The status quo of using spreadsheets for financial performance activities is no longer acceptable due to their inherent risks and limitations. Just run a Google search on "spreadsheet errors" and you will read about some of the catastrophic outcomes that companies have experienced due to their reliance of spreadsheets. With spreadsheets having been identified as a significant risk factor in effective financial planning and analysis, why do so many organizations continue to rely on them.
We see three main misperceptions preventing organizations from moving to more appropriate technologies:
1. Investment in the latest technology is too expensive – Businesses spend significant amounts on GL systems and other transactional systems. Ironically, when it comes to spending on the critical value-added activity of financial analysis, planning and budgeting, many organizations fail to get executive-level consensus to invest in point solutions that contribute to competitive advantage.
2. Implementation times are too great – Traditional on-premise systems often require in excess of 12 months to implement. By the time the time the deployment is complete, the underlying financial models are obsolete; or worse, the projects never get completed due to constantly changing requirements.
3. Resources are too constrained – Finance and IT teams everywhere are overworked. They simply do not have time to commit significant amounts of effort to large scale implementation projects. Furthermore, they are weary of the learning curve for re-engineered business processes that often come with a new system.
All of us at CMC have experienced these challenges firsthand at one point or another during our careers. However, these are exciting days in the field of finance. The finance technology landscape is being disrupted by Cloud-based corporate performance management (CPM) solutions, with a growing array of full-featured options. The adoption of Cloud CPM technology is quickly growing for several reasons:
- Improved Business Flexibility and Scalability
- Elimination of data silos and islands of knowledge
- Continuous innovation
- Lower Total Cost of Ownership
- Ability to free up IT resources
- Improved data and information security
"Best in class" Cloud-based CPM solutions are designed to offer maximum flexibility to adhere to the way your business functions, while offering a path toward process improvement (e.g. rolling forecasts). While the Finance office has been a bit slow to embrace the Cloud and SaaS solutions due to largely unfounded data security concerns, the capabilities and benefits of these tools have finally tipped the scale in their favor. More and more companies are making the transition to Cloud platforms that allow them to deliver on the promise of FP&A excellence.
Let’s re-examine the previously discussed misperceptions in the context of Cloud-based CPM solutions.
1. Investment in the latest technology is too expensive – According to most independent surveys, Cloud solutions are 60-75% less expensive than on-premise solutions when factoring in the total cost of ownership (TCO). Furthermore, if you consider the leverage subscription pricing gives you as a customer, the benefits are even greater. The subscription pricing model offered by most Cloud vendors lowers the barrier to entry and allows you to validate that the software will deliver on your expectations before you would have written a check for a traditional perpetual license. Not only do you have the lower price of entry, you have a lower price of exit. Cloud vendors are keenly aware of this and need your renewal to make their business model work. The end result is a much more responsive and equitable vendor-client relationship.
2. Implementation times are too great – Cloud solution projects are usually quoted in weeks, not months or years. At CMC, we have been able to deploy fully functioning transformative financial models on a Cloud CPM platform in as little as 3 to 4 weeks for mid-sized organizations. The ability to quickly deploy is a huge advantage that allows you to gain value from your investment almost immediately.
3. Resources are too constrained – From a technical perspective, a Cloud system should be able to be deployed to the customer within hours of signing an agreement since the vendor takes care of all of the IT overheads and headaches. Cloud solutions are hosted by the vendor and accessed with a Web browser by the customer. There is no need for IT to architect systems and purchase new hardware. Also, Cloud solutions typically only require configuration, not custom development, which enables end users to typically learn the system with just a few hours of training.
As early adopters of Cloud technology here at CMC, we are gratified to see the ever-increasing momentum of Cloud solutions gaining traction in the office of finance. If your company is mired in a morass of spreadsheets, it's time to consider a Cloud-based CPM solution to elevate your own FP&A team to a higher level of performance.
If you are interested in developing finance leadership through technology, contact the experts at CMC. We have a proven methodology for systems evaluation and can help you select the most appropriate solution to achieve your goals.