The time for cloud-based enterprise performance management (EPM) has arrived. After over 10 years of incubation, the year 2015 may be remembered as the “tipping point” in the adoption of cloud-based EPM solutions for Finance and Operations.
Industry analysts have been predicting it. Now customers are voting with their pocketbooks. And the benefits are clear – deployments are faster, costs are lower, innovations come faster and the cloud is more secure than on-premises systems.
Finance is Warming Up to the Cloud
What is cloud computing or Software as a Service (SaaS)? It’s the modern way to deliver software and it’s transforming the enterprise. It’s a huge technology trend similar to the shift from mainframe computers to client/server technology. Companies are voting with their pocketbooks, and are swapping out their old legacy software to gain the advantages of the cloud.
Sales leaders are transforming their sales departments with Salesforce.com. Over 100,000 companies have chosen the cloud for their CRM system.
HR leaders are transforming their organizations with Workday. Large companies like DuPont and HP are choosing the cloud for their Human Capital Management system.
Now Finance leaders are also transforming their enterprises with cloud-based EPM solutions. They are replacing spreadsheets and manual processes. They are replacing legacy applications from Oracle/Hyperion, IBM/Cognos, SAP and others. And they are swapping out low-end tools that their organizations have outgrown.
Validation from the IT Analysts
Recent IT analyst reports highlight the increasing adoption of cloud-based EPM solutions. One example came in the BPM Pulse Survey 2015, published in May 2015. In this survey of 260 Finance and IT executives, mostly in North America, 26% responded that they already have cloud-based BPM/EPM solutions vs. 13% in the 2014 survey. Meanwhile, those respondents saying they would not consider cloud-based solutions dropped from 26% in 2014 to 13% in 2015.
We also saw this trend validated in the Gartner Magic Quadrant Report for CPM Suites, 2015. Gartner Research Director Chris Iervolino commented “This Magic Quadrant stresses capabilities in three primary areas of market evolution. The first is the cloud. The CPM suite market is shifting toward cloud-based solutions that deliver a shorter time to value and improved ease of use.”
In a 2013 report, Forrester VP and Principal Analyst Paul Hamerman said “We expect [Cloud] SaaS to become the primary FPM deployment model within three to five years.” And in the April 2015 EPM Market Landscape report, he said “As SaaS broadly gains momentum in many business application areas, the appetite for EPM delivered as SaaS is increasing rapidly.”
Why Cloud-Based EPM Makes Sense
Finance has been slower than other functions to embrace the cloud — market penetration today is on the order of 13%, according to Forrester Research. But adoption is accelerating as Finance has become more confident in the security of the cloud, and aware of the benefits to their business. Here’s a quick summary of the key benefits of cloud-based EPM solutions. An easy way to remember these is by using the mnemonic SAINTS.
Speed of Delivery – With cloud-based applications, the effort and costs of setting up infrastructure is eliminated. So you can be up and running with your EPM applications in 3 – 6 months vs. 6 – 12 months for on-premises applications.
Autonomy – The cloud empowers Finance to drive and control the initial implementation as well as ongoing maintenance of the EPM applications. You no longer have to tie up your IT resources in setting up infrastructure, doing database backups and other tasks. And when you need to create new reports or update a business rule, Finance can handle these tasks on their own, without getting in the IT queue.
Innovation – A key benefit of cloud-based EPM applications is continuous innovation. New feature releases come out more frequently - typically quarterly. On-premises applications typically have release cycles of 12 – 18 months. With cloud-based applications, updates are pushed out to customers automatically. They don’t require you as the customer to plan for and spend resources on the upgrades – they are the vendor’s responsibility.
No Hardware or Software – As I mentioned earlier, to adopt or upgrade with the cloud, there’s no hardware or software to set up. You are leveraging existing infrastructure, and this infrastructure is designed to grow and scale with your needs. You eliminate the need to upgrade your hardware and infrastructure every 4 – 5 years, which can be costly and time-consuming and can delay software upgrades.
TCO is lower – Cloud-based EPM suites are typically one-fourth the overall cost of on-premises software. This is clear when you compare initial implementation and ongoing subscription costs of cloud-based suites vs. the implementation, up-front licensing and ongoing maintenance of on-premises software. And in the cloud model, the vendor is responsible for the infrastructure, maintenance, and upgrades. You get the value to of the software without all of the hidden costs.
Secure – One of the main concerns by Finance executives has been the security of cloud-based applications. But now the industry is realizing that cloud-based applications are more secure than on-premises systems. See our prior blog article on this topic. The recent data breaches at Target, Home Depot and others were on systems running in their own data centers. Cloud platform vendors like Amazon, Salesforce.com and others have a lot riding on the security of their platforms and are continuously working to ensure their security.
What Are You Waiting For?
As a former Accountant myself, I know Finance executives can be conservative and risk-averse. We are often laggards when it comes to adopting new technology. (Hey, I’m still using an iPhone 4s.) Let someone else try it, let them shake out the issues and prove the value. Give it to Mikey, see if he likes it first.
Well folks, Mikey likes it! In fact thousands of Mikey’s like it. The tipping point has arrived - the cloud is here to stay. Your colleagues in Sales, Marketing and Human Resources jumped on the band-wagon early and reaped the benefits. Now it’s your turn.
- Time to kick the habit of spreadsheets and email for planning and financial reporting.
- Time to shed those legacy applications that aren’t even supported by the vendor.
- Time to break loose from those low-end EPM applications that are holding you back.
Time to embrace the cloud and make your life a lot easier. Save your company money. Provide relief to your IT staff. Want to learn more about how cloud-based EPM can bring the power of SaaS to your organization? Check out these resources:
Don’t Outgrow Your EPM System – Blog Article
Selecting EPM Software – White Paper
By John O’Rourke, EPM Channel Contributor, from: http://blog.hostanalytics.com/cloud-based-epm-the-time-has-come?utm_campaign=Blog+Campaign&utm_source=hs_email&utm_medium=email&utm_content=20569919&_hsenc=p2ANqtz-HzKmq9AlxMJVfumDzVJnAM8wvk9n-Dr7iJLvdgfPQtxDI10Bikt5x1uX_uP7fJR4SXRuAXEBu7-ru8URF56gNgR8LdSRWTWk7CiZFaeOZUKHGXSo&_hsmi=20569919
John O’Rourke is Vice President of Product Marketing at Host Analytics. With a background in accounting and finance, John has over 30 years of experience in the software industry, and over 16 years of experience in EPM Product Marketing at Hyperion Solutions and Oracle. He has worked with many customers and partners on financial reporting and planning initiatives and has spoken and written on many topics in enterprise performance management. John has also held positions in strategic marketing and product marketing at Dun & Bradstreet Software, Kenan Systems and Decisyon. John has a BS degree in accounting from Bentley University and an MBA from Boston College. See John’s articles on EPM Channel here.