The ability to keep up with the unprecedented pace of business change, such as implementing the latest best practices and innovations on a regular basis, is something that is fairly new to the back office environment. In the old world of on-premise (licenced) systems, it was unthinkable to update ERP at such pace – years would pass between upgrades, and with every passing year the risk of the business falling behind competitors continues to grow.
The majority of respondents in our recent ERP Trends Survey listed the ability to address this challenge as one of the key benefits of moving ERP to the cloud. In this new operating model, innovation would be rolled out to the finance function several times a year by a cloud provider – dropping the risk of technology obsolescence to zero and putting the business on a more solid competitive footing.
1. Cloud ERP is the new standard
Historically, the perceived effort of migrating a core financial system has left ERP as one of the last technology systems running on premise. Yet the vast majority of survey participants find that the benefits of such a move outweigh the potential pitfalls, with just over half of respondents already running ERP in the cloud, or planning to do so within the next 12 months. A further 25% said that they plan to do the same within, or after two years.
2. Economics, innovation the primary drivers
With the average age of an on premise ERP system approaching 20 years, respondents cited economic considerations, including avoiding infrastructure investments and lowering the total cost of ownership, as key considerations for making the switch. However, while economic motivations are a primary driver, the continuous innovation that comes with the cloud also plays a significant role.
3. Being always up to date
In one of the more surprising discoveries by the survey, it was found that while organisations initially thought they were moving to the cloud for economic benefits, finance leaders have since found that the competitive advantage gained through having access to always-new technology outweighed everything else.
4. Emerging tech to transform finance
The cloud is the primary delivery mechanism for new and emerging technologies: blockchain, artificial intelligence, machine learning, cognitive computing, intelligent process automation, and the Internet of Things (IoT). Finance professionals are exhibiting a keen interest in these technologies, and – in keeping with their desire for innovation and new capabilities – roughly 4 out of 10 are already exploring these areas.
5. Delivering more meaningful insight
While the majority of respondents are generating reports directly from ERP systems, nearly half still make use of spreadsheets, with data pulled directly from systems of record. This indicates that the reports delivered by current ERP systems are not delivering meaningful insights, and that additional, ad hoc analysis becomes necessary to find answers. With cloud, CFOs can analyse data, perform what-if scenarios – a key benefit of EPM cloud applications – and uncover new possibilities and even create new business models.
According to the IDC, the Middle East, Turkey, and Africa region will see annual spending on digital transformation initiatives cross the $20 billion mark by the end of this year, and will double to over $40 billion by 2022 as the pursuit of game-changing innovation accelerates to keep pace with evolving demands. The research firm adds that given the unprecedented level of disruption, it is imperative that organisations make the right decisions today to ensure they remain competitive tomorrow¹.
Switching to a cloud-based ERP application is an opportunity for companies to re-invent and transform their business processes. CFOs and finance leaders will be well-positioned to lead this transformation, with this next generation of ERP equipping them to be more strategic, and provide meaningful insight and guidance to the business.
With the pace of business change accelerating, finance leaders recognise that they can no longer rely on the tools of the past to keep up with the competition. The right ERP cloud not only provides new capabilities, it is a vehicle to deliver a regular cadence of new and innovative technologies going forward.
By Oludare Ogunlade, Sales Director, West Africa Applications at Oracle