The functions of the Chief Financial Officer go beyond balancing the books and comparing inflows and outflows. Increasingly, the CFO has become a crucial partner in determining the direction of the firm, especially in terms of what it invests in and how soon it realizes returns.
Finance leaders always aim for “efficient growth” where they successfully increase revenues or gross sales while reducing costs. This performance trajectory, according to Gartner, a leading research and advisory company, allows companies to translate long-term growth into sustainable profitability.
“Efficient growth companies outperform across business cycles, reinvesting cost savings to fuel innovation and growth. How CFOs (chief finance officers) drive decision making on costs and growth will drive shareholder returns for the next decade,” a Gartner study showed.
However, most CFOs have a difficult time creating conditions for efficient growth, especially during times of macroeconomic uncertainties when they tend to focus on cost-cutting efforts instead of looking at innovation costs as investments.
Such is the case on whether to adopt cloud-based solutions as part of enterprise resource planning (ERP) system to run the business.
According to CIO of IDG Communications Inc., a global data intelligence platform, spending on cloud-based solutions at the enterprise level will grow over the next decade. By 2020, cloud-specific budgets of companies is expected to grow six times faster than other technology spending.
Adopting cloud-based solutions and ERP software then becomes a question of when and not if.
“Businesses that opt for cloud over on-premises deployment are able to tap into lower cost computing power at any given time. The fact that cloud software gets regular automatic updates is another benefit.
Cloud-based ERP systems can also use machine learning to help customers not only run their existing operations more efficiently, but potentially also identify ‘next best actions,’” Constellation Research founder Ray Wang says.
Oracle chief executive Mark Hurd adds cloud ERP enables financial leaders to get faster and more accurate reports while ensuring better regulatory compliance.
“The compliance world is increasing. All of that has to be automated. And artificial intelligence-driven reporting dramatically cuts the time and resources needed to meet compliance requirements,” Hurd says.
And then, there is also the advantage of business continuity given the disaster-recovery capabilities provided by a cloud ERP compared to an on-premise ERP system. The time when shifting to a cloud ERP was a daunting prospect has passed. Companies that have taken the leap, after understanding the financial ramifications of switching to the cloud, have reported increased savings because of drastically reduced capital and maintenance costs as well as faster start-up times.
With its competitive up-front costs, hands-off maintenance and automatic updates, cloud ERP is a sound investment that will help companies build scale, with an eye on long-term profitable growth.