By Jeffrey O. Henley
As the managers of risk, planning, and investments in a business, chief financial officers have had two main responsibilities: manage the departmental financial function and advise the company’s other business leaders on reducing costs and increasing efficiency. Today’s successful CFOs are also modernizing their departments while partnering with the CEO and line-of-business leaders to find new growth opportunities.
Now, CFOs can use digital technologies—big data, mobility, social media, cloud computing—to drive growth and value both within the finance function and to the rest of the business.
The Move to Cloud ERP
Within the finance function, companies of all sizes are transitioning their enterprise resource planning (ERP) systems to the cloud. In a May 2014 Forrester Research survey, 24 percent of respondents from midsize and large enterprises said they planned to replace their ERP systems within two years; 41 percent said they planned to move to a hybrid solution within two years.
CFOs stand to attain a number of benefits from moving their ERP systems to the cloud. The most important is that they gain a robust, modern system at a lower total cost, producing better economic value, which is a CFO’s #1 priority. With the cloud, not only do CFOs save on the capital expenditures of on-premises software, but they also save on the people costs of maintaining that infrastructure.
Cloud ERP systems also offer finance organizations constant innovation, via regular, automatic upgrades that deliver the newest capabilities. And then there’s the flexibility: With on-premises software, it was difficult to grow or downsize your IT infrastructure based on business changes. Now, you can just increase or reduce the number of users on your contract. The finance function effectively becomes more agile and adaptable to change.
A Strategic Leadership Role
As different functions in a company move to the cloud, CFOs can also help other departments make better decisions. Marketing departments, for instance, are spending their increased budgets on modern software that leverages data from social media. The CFO can provide valuable perspectives: Should the chief marketing officer be investing more in certain areas than others? What’s the return on investment?
These technology decisions will affect not just the CMO, but also the CFO—resulting in an outside-in effect. Moving to the cloud is about enabling the flow of information, and CFOs have a vested interest in making data available across the enterprise. That marketing software will tie into other systems, including finance, so CFOs need to make sure they are getting a 360-degree view of the customer across all lines of business—from sales to service. The better information they have about customers as well as the company’s operations, the better they can do their job and serve the business.
The key to doing all of this successfully is to have a roadmap. Most companies aren’t upgrading all of their systems to the cloud immediately; they are addressing one function at a time. This has the potential to introduce all sorts of integration complexity, interfering with that complete view of the organization that’s vital for a successful move to the cloud. So it is vital to have a multiyear plan for making that transition and building the right cloud architecture—and to stick to that plan.
With the cloud, CFOs have the opportunity to stimulate growth throughout the organization while managing costs. By being strategic partners with the rest of the business, they can play a key role in driving the success of their organization.
Jeffrey O. Henley is executive vice chairman of Oracle. He was previously Oracle’s chief financial officer.