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Should You Send Your Budgets to the Cloud?

Slowly but surely, many CFOs have realized manually updating spreadsheets is incredibly risky. Several studies have shown close to 9 in 10 spreadsheets contain errors. JP Morgan Chase was just one of the many firms that have learned their lesson the hard way, as the financial services firm recently revealed it had experienced a trading loss of $6.2 billion due to a faulty spreadsheet system. 

Wary of making more mistakes, some companies have modernized their budgeting processes and integrated their spreadsheets with enterprise performance management (EPM) tools.

Budgeting in the Cloud
The common adage "time is money" is one of the main reasons why CFOs make the decision to migrate their financial management to EPM software housed in the cloud, according to companies that work in the space. During a recent Proformative webinar, titled "3 Reasons to Replace Spreadsheet Budgeting," Bryan Dehmler-Buckley, director of product management at cloud company Host Analytics, said those businesses that have not made the change are wasting their finance organization’s precious hours with manual collection and inputting of data into spreadsheets.

"Unfortunately, it is a personal productivity tool, and it's not a system," Dehmler-Buckley said. "Therefore, you have expensive resources – your people – who are well-educated and well-trained, who spend a large amount of time performing manual operations of little or no value. They have been hired and they have been trained to analyze the data. So their skills are being wasted."

Beyond the Basics: What Does the Cloud Offer Beyond Agility?
Most CFOs have already heard the cloud’s promise of better agility and speed, as well as the idea that it will lower their cost of ownership. What’s usually missing in this dialogue is specifics; in particular, they want to know how the technology can help their company, if at all. In the second part of the Proformative webinar, Roger King, corporate controller at SkyHawke Technologies, whose positioning systems are used on golf courses, listed some the ways his organization has been able to improve efficiency and productivity since fully transitioning to a cloud-based financial application:

  • The whole organization is able to work on one data set.
  • Reports can be created and accessed quickly.
  • Executives have access to historical numbers with just a few clicks.
  • Managers are the primary owners of budgets and forecasts.
  • Each manager can customize his or her desktop.
  • The company can redefine management goals based on performance.

But with these benefits, King cautioned Proformative members that there are caveats when switching systems. The business, he said, needs to implement the cloud-based solution properly and not rush through the set-up process. Skipping past key elements can throw off major aspects of an EPM solution.

"Pay very close attention to the customizable dimensions and to the account structure itself," King said. "Once you get married to those, you can change, but you really don't want to have to back up because you didn’t plan properly, or even have to start over."

When Analysis Is Easier with the Cloud
While spreadsheets may provide familiar comfort to CFOs and their direct reports, they can be limiting. A cloud-based solution can open up the possibilities of collaboration between members of the finance team or even those in the C-suite in a more manageable way as the tools may be easier to use for those in a non-finance role. According to study conducted by Longitude Research, 79 percent of CFOs said access to information is one of the key drivers that allow their firm to experience organizational agility.

"As the CFO agenda broadens, finance officers are leveraging back-office processes, controls, and analytics to provide insight and priorities for transformation," said Donniel Schulman, managing director of finance and enterprise performance at Accenture, a co-sponsor of the study. "This can allow them to successfully step up and fulfill their role as agents of change."

To do that, finance organizations do need to have flexibility, King cautioned. He said during his search for a service provider, he wanted to be sure he could create quick and powerful ad hoc reports that his finance team could output to Excel without having to manually plug in the numbers. 

Comments

Stanley Tan
Title: Head of Group Finance & Admin
Company: Tagit Pte Ltd
(Head of Group Finance & Admin, Tagit Pte Ltd) |

Well it is good that information on Cloud based platform can be assessed by a larger community within the Group of Companies. However, the article does not address nor caution the reader that you need to setup controls as to who can make the amendments. If two parties are assessing the same files and all updating their portion of information on the same file, it will cause conflict version. How existing tools handling such issues?

David Smith
Title: Senior Manager
Company: N/A
LinkedIn Profile
(Senior Manager, N/A) |

This article reads like a sales call. The "cloud" does not resolve issues related to managing via spreadsheets, EPM and BI do. The cloud may have benefits for geographically dispersed organizations, but simply stating that it eliminates spreadsheet budget model issues is not a selling point. Those assertions should not be included in any article about cloud computing benefits.