Chief financial officers face tough economic and competitive challenges, but using the right technology, they can get ahead of the game
CFOs face a wide array of challenges. On the economic front they’re worried about continued uncertainty, while in politics they are confronting the potential impacts of Brexit, the US election result and geopolitics in the Middle East.
More directly the digital economy and technology innovation is creating new competitive threats as well as exciting opportunities. In addition, the response of legislators worldwide offers a constant challenge.
For many organisations it is up to CFOs to respond to these challenges, and they can only succeed by making their companies lean, agile and responsive.
Cloud computing is essential here. A recent study by Frost & Sullivan shows that more than two-thirds of businesses using cloud believe it has given them substantial competitive advantage.
Now a daily reality in finance, the cloud enables large companies to be as nimble as smaller firms. Some 56 per cent of businesses use the cloud for some part of finance and accounting.
Equally, smaller companies can gain the flexibility and agility from cloud to scale quickly without significant IT resources and make a major impact. “Smaller companies want to act big, developing their product rapidly and commercialising it quickly, globally,” says Mark Woodhams, senior vice president and managing director, Europe, Middle East and Africa, at cloud enterprise resource planning software specialist NetSuite.
One such business is DWA Media, a London-based media agency which expanded rapidly into seven countries and struggled to get the visibility and control needed. After implementing cloud technology, the CFO was able to ditch the company’s mass of linked spreadsheets and reduce financial close from weeks to a day.
DWA worked with NetSuite to unify its entire business on to a single cloud platform and the agency is continuing to grow rapidly around the world.
The reality for many companies attempting this with traditional on-premise systems is that software deployments are slow and problematic. Such firms then end up relying on spreadsheets instead, risking many more errors and providing little control or visibility.
Larger companies, attempting to be agile and adapt to new business models, often turn to substantial technology deployments to help manage the change.
But such systems can be a barrier. Mr Woodhams says: “Large businesses are often restricted by systems that are high cost, take months or years to roll out and are impossible to upgrade. There is a risk that the technology actually stops them from effectively entering a new business area or responding to competitive threats.”
Smart enterprises turn to the cloud and PageGroup is one such firm. After growing organically for 40 years, this £1-billion turnover recruitment specialist had multiple accounting and business systems worldwide. The set-up created a headache for the finance team and restricted the agility, scalability and flexibility needed to enter new markets, expand operations and grow revenue.
PageGroup is now implementing a single cloud system from NetSuite that will allow it to manage critical business processes better, including accounting, global financial consolidation, reporting, budgeting and analytics.
The cloud is enabling CFOs to have the agility, visibility and control they need
“We’re intent on simplifying and modernising our global financial system to better support our finance team, our recruitment consultants, and ultimately our clients and candidates,” says Mark Hearn, group services finance director at PageGroup. “We recognised that only a cloud-based system could achieve this for us.”
Such examples in both small and large businesses demonstrate just how the cloud is enabling CFOs to have the agility, visibility and control they need.
And there is yet more potential as cloud transformation enables businesses to overturn their very business model. “Services companies are looking to create products and product companies want to create services,” says Mr Woodhams. “Cloud software is enabling this agility and change in a way that traditional systems struggle with.”
Product companies are shifting from selling one-off items to either delivering added services such as maintenance or creating recurring subscription revenue. “Companies such as Rolls-Royce no longer just sell aircraft engines; they rent them by the hour of flying time,” explains Mr Woodhams. “Think of mobile phones being given ‘free’ with line rental or a monthly subscription for disposable razors. It’s a whole new way of selling products.”
These changes create complex new financial demands around invoicing, and recognising recurring and service-based revenue. With constantly evolving regulations worldwide, a cloud-based system gives the flexibility and continuous functional updates to keep on top of these complexities.
Likewise, services companies are using the cloud to help sell products, such as packaging their intellectual property as a downloadable “how-to” product, or offering a previously one-off service on subscription with recurring billing. The right cloud software can help them process the payments and handle new legislation on revenue recognition.
There is no doubt that CFOs face incredibly tough economic, political and competitive challenges. The difference now is that cloud computing enables them to adapt and grow when, where and as quickly as they need to, while maintaining proper control of their finances and operations.
Indeed, CFOs’ common conversation around cloud has shifted away from simply cost-savings to this ability to adapt and grow, with proper visibility and control, even overturning business models in the process.
“For these businesses, using the cloud means technology powers growth rather than holding them back,” says Mr Woodhams. “It is enabling true agility, visibility and control, so that they can operate and adapt as they need.”
For CFOs, making the simple transition to cloud computing is essential for their business’s survival and growth.
To find out more about NetSuite and how it can help CFOs visit www.netsuite.co.uk/cfo