Finance departments have lagged behind some other corporate functions in moving technology systems to the Cloud. But one IT leader suggests that for small and midsized companies, planning, budgeting and forecasting systems as a good place to start.
CFO recently sat down with Jerry Irvine, CIO of Prescient Solutions, a Schaumburg, Illinois-based IT consulting firm and member of the National Cyber Security Task Force, to discuss risks and opportunities of such systems in the Cloud.
CFO: What do you consider to be the main benefits of cloud-based planning systems?
Irvine: Obviously agility, especially for the small-to-medium-sized companies just entering into new budgeting and forecasting applications, without anything integrated into their existing ERP solutions. There are products out there that they can get into pretty quickly.
CFO: Any other benefits you can tout?
Irvine: Well, security, particularly in a private cloud environment, even though this is considered by some people to also be one of the risks of cloud-based systems.
CFO: Does it make sense for a company that already has a planning module in the ERP system to consider migrating that module alone to the cloud?
Irvine: Not too many ERP systems have a specific budgeting or forecasting app that you can easily export into the cloud. You may need to migrate the entire ERP system to get the functionality you want. That can be a time-consuming and expensive mission, to say the least. A better alternative would be to purchase a stand-alone planning, budgeting and forecasting system in the cloud and then integrate it with the on-premise ERP system. That way, you can have your own IT people doing the implementation, without the cost of consultants overseeing the entire migration.
CFO: Would it make sense to migrate pieces of the ERP system to the cloud, as opposed to the entire system at one time?
Irvine: That sounds reasonable. In fact, planning, budgeting and forecasting would be a good place to start since it is a smaller function. You could integrate it into a hybrid cloud environment and the back end of the system; that way it is running parallel with the ERP.
CFO: So what are the risks in migrating planning, budgeting and forecasting to the cloud?
Irvine: They’re the same as the risks that have historically challenged finance to move systems to the cloud. Finance is lagging ]customer relationship management] and HR in moving systems to the cloud, fearful of putting proprietary financial information and intellectual property out there. This is rightfully a concern. Yet, companies that do their due diligence to ensure they are going into a secure, stable environment should be comfortable with the risks.
CFO: Any parting words?
Irvine: Yes, I would advise readers to stringently examine the financial stability and security of vendors. Some companies have been around forever and lots are startups in the space. Not all will survive. It reminds me of the dotcom era—literally hundreds of companies hanging out their shingles as cloud providers. They may be here today, but will they be here tomorrow?
This article first appeared in the newsletter CFO 360 newsletter “Planning, Budgeting and Forecasting.”