Finance transformation more efficient through cloud ERP

01/04/21

Cloud has many advantages, certainly for finance and HR processes

Transferring business processes to the cloud has many advantages, certainly when processes in the field of finance and HR are concerned. But according to Alexander Staal, partner and finance transformation leader at PwC, the extent to which an organisation actually 'outsources' all of its processes depends very much on the market or sector in which it operates.

'Business processes in the cloud lend themselves extremely well to the financial and HR modules within a company, because those processes are relatively generic. Every organisation has more or less the same finance and HR processes. On the other hand, production or logistics processes are often specific to the particular company, and therefore difficult to incorporate into a standard process in the cloud.' Staal explains that hybrid models are then more suitable. 'Meaning that you only position of your ERP (enterprise resource planning) system in the cloud.'

Alexander Staal, partner and finance transformation leader PwC.

Popularity of the cloud is still increasing

The popularity of the cloud is still increasing. Global spending on cloud infrastructure services rose 33 percent last year to EUR 142 billion, compared with EUR 107 billion in 2019. The COVID-19 crisis will have played a role in that. Working remotely forces organisations to speed up digitalisation.

In doing so, they increasingly choose to position all or part of their processes in the cloud and to leave management of these processes to cloud service providers. This covers all ways of using the cloud, so also switching infrastructure, software and hardware to the cloud, but not always including the company’s business processes. Staal believes that this development is in fact a logical one, because it offers numerous advantages.

The advantages of operating in the cloud

'When a company positions its entire ERP system in the cloud, it means that it no longer adapts that system to its processes. From then on, its processes will be adapted to the process that’s already in the cloud. A big advantage of this is that it’s a best practice process – it’s already proved its worth and updates are easy to implement centrally. In the past, a new release of a system meant that a company had to redo all the changes that it had made to that system. That could sometimes take months, but in the cloud, it happens in a flash.'

'A cloud application also makes it possible to easily benchmark a company’s results against those of other customers of the supplier concerned. That’s because they are using exactly the same process. And a big advantage of the cloud is that a company doesn’t needs to make the major investment involved in purchasing a new system for its finance processes, for example. After all, with the process in the cloud you mainly pay just for using it.'

Responding to changes fast

Where the rapidly-changing financial function is concerned, Staal sees the cloud ERP solution as a great way to improve efficiency. 'Nowadays, it’s not just the CFO but the entire financial column within an organisation that has to be able to respond fast to changes. And these days a financial transformation is also needed in which the CFO increasingly looks ahead. An efficient way of working in the cloud helps with that.'

Staal has noted, though, that despite the advantages of cloud solutions, some companies are still apprehensive about making the change. 'That apprehension is understandable, because you are after all putting your own system and data in the hands of the supplier. Some companies are afraid of becoming too dependent, or they’re concerned about protection of their data. I don’t think they need to be. For cloud providers, the service they provide is their entire raison d’être. I don’t think a provider secures its systems any less effectively than you could do yourself.'

Entirely focused on cloud solutions

According to Staal, organisations won’t have much choice in the future. Software suppliers are gearing their products and services entirely to cloud solutions. 'Most providers have already announced that they will stop maintaining traditional ERP systems within the foreseeable future. By doing so, they are in fact forcing their customers to switch to the cloud.'

PwC – which has alliances with SAP, Oracle, and Workday – can help with those implementations. 'Especially because we’ve got a lot of functional know-how,' says Staal. 'With cloud implementation, technical know-how is less important. You mainly configure and you program much less. When a company positions its financial function in the cloud, for example, then it’s above all know-how about the financial processes that’s important. We have more of that know-how in house than the traditional system integrators.'