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Can Your Business Model Benefit from ERP Cloud?

John O'Rouke and Karen Dale Torre

Introduction


Ask CFOs to state their biggest challenge and you will find that being able to own and adapt the business model in response to change is likely to be at the top of their list. In fact, 40 percent of CFOs and finance executives attending the Oracle CFO Summit at Leaders Circle this past fall ranked this as their top challenge. Savvy CFOs know that in an increasingly digital world, flexing the business model in the face of rapid change, new competition, and market volatility is central to competitiveness and sustainable growth.

But being able to turn the business on a dime to meet the unrelenting demand for innovation has exposed a yawning gap between customer expectations and what legacy ERP systems can actually deliver. As a result, CFOs are turning increasingly to ERP cloud services to solve this dilemma. For example, soon-to-be released research commissioned by Oracle and Accenture found that over two-thirds of the 975 CFOs and finance executives surveyed globally have either already adopted a cloud-based system for core financials (24%) or are planning a road map for doing so (45%). Similar research conducted by Forbes and KPMG showed that 41 percent of finance organizations surveyed are already using cloud-enabled services in finance, accounting, and financial management, with a further 35 percent saying they are likely to adopt such services in the next 18 months.

Clearly, CFOs see more scope for cloud computing to modernize their finance functions and execute on their new role as business partner and value creator. In particular, they see ERP cloud services as a way to quickly gain access to the advanced analytics, mobile, and social capabilities needed to deliver new insights and proactive guidance to the business; provide better service through new tools and functionality; and achieve greater operational efficiency and effectiveness through automation and digitization of finance processes.

Cloud Maturity is Underpinning a New Paradigm

As the cloud market continues to mature, two important new themes are emerging. First, larger organizations are transitioning to the cloud as part of a hybrid strategy to wind down legacy systems and simultaneously leverage new applications available in the cloud. Second, the modern finance organization has a more strategic view of the cloud as a springboard to drive transformation, innovation, and increased business agility. That view was reinforced by the findings of IDC's September 2013 CloudTrack Survey, which found that finance and accounting were the functions that stand to benefit most from an organization's cloud strategy over the next three years.

The immediacy, accessibility, and near-infinite scalability of the cloud lends itself to process transformation and more collaborative ways of working. It's a trend in the finance function that is supported by the greater breadth and depth of applications now available in the cloud as experienced software vendors such as Oracle put their full weight behind cloud deployment.

Cloud Enables Business Flexibility and Innovation

New insights through advanced analytics and business intelligence are becoming crucial to the real-time management of customers' online experience in many industries, whether it's encouraging people to upgrade and buy additional services at the point of sale, or to offer a unique product bundle based on how a customer navigates an online store-so called 'conversion optimization'. CFOs are quickly realizing that immediate access to more granular data on customers or products, for example, can have a profound effect on margins or even uncover new growth opportunities. New cloud-based financial applications like Oracle Financials Cloud have business intelligence embedded right into the workflow, to give employees real-time insights when needed for faster, smarter decision making.

New social and collaborative tools are also helping finance to be a better business partner by working more closely with lines of business. In the sales cycle, for example, collaborative tools embedded in ERP applications promote shared visibility of the process, allowing finance and sales management to ensure that the price of complex product configurations are quoted correctly and that engineering, service, and warehouse management are properly aligned to customer expectations.

As organizations continue to entice new customers through increasingly personalized and complex products and services, the pressure for automation is also increasing. Today's ERP systems need to be able to cope with both high transaction volumes and a broader spread of transaction types as well as dynamic pricing and promotions. Modern ERP cloud services can make a decisive difference since they can deliver the processing power needed where first-generation clouds simply could not cope.

The latest Oracle-Accenture research shows, however, that there is still a gap between the desire to invest in new technologies to automate key finance functions, and the actual level of adoption. More than four in ten (43%) still rely on business data and information that is a month or more old, and 59 percent concede that many finance processes remain predominantly manual or paper—based. Also, many organizations-especially those yet to embrace the cloud—still maintain a large number of disparate platforms, making it harder to provide data on a dynamic basis.

The Cloud Confers Business Agility and Choice

For many organizations, it is the increased business agility of the cloud—especially the accelerated deployment—that is particularly welcome. Cloud deployment supports acquisitions, mergers, and reorganizations where speed is of the essence and traditional rollouts of ERP systems cannot compete. As a consequence, organizations can enjoy more flexibility to test new markets and re-size operations, safe in the knowledge that short- to medium-term ERP solutions can be supported and that the business is not locked into a rigid long-term commitment.

It is this strategic element of cloud deployment and the inherent ability to reserve flexibility that is now coming to the fore. After all, the cloud's suitability at any given point in time depends on a variety of factors, including business maturity and growth plans. Ensuring flexibility and choice is why Oracle offers CFOs the same Fusion ERP applications through a variety of delivery options—from on premise to public SaaS cloud and private cloud—to accommodate a company's unique business imperatives at any given point in time.

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