Cloud ERPs: Will Adoption Increase?


There has been a steady increase in adoption of cloud-based enterprise resource planners (ERPs) these past few years, with the global cloud ERP market size expected to reach nearly $38bn by 2024, according to MarketsandMarkets. In a recent survey carried out by insightsoftware, which polled almost 500 financial professionals, just over 30% of respondents said their organisation is already using – or planning to use – a cloud ERP within the next year.

With the current unprecedented move to home-based working and companies having to close their books remotely, one effect of the coronavirus crisis could be that it encourages more organisations to move to a cloud ERP once we get back to a level of normality.

However, an expectation gap is materialising. That gap is best defined as what companies believe a cloud-based ERP can do versus what it can actually do, especially when it comes to native financial reporting.

In the same survey carried out by insightsoftware, nearly 40% expected faster reporting and 30% expected improved automated reports when migrating to a cloud-based ERP.

Sadly, these expectations are not being met and critical reporting capabilities are being left behind. But is this expectation gap worth delaying finance teams, who are already struggling to keep moving in this time of remote working and social distancing?

Why is cloud failing to meet expectations?

When considering cloud-based migrations, many of us think about other applications that have moved to the cloud with an ‘always on' and ‘always available' mindset. It is likely that there is an expectation that when core business applications move to the web, this enables better speed, reliability and performance – and we believe this is no different with cloud-based ERPs.

Many companies have legacy ERPs in place that have been built up over many years. These legacy systems directly suit the needs of the business because they are tailored and customised over and over again. When you control the ERP on-premise, you have the flexibility to extend, integrate and modify it, unlike a cloud-based ERP. As the pandemic continues however, with finance teams being based at home, accessing on-premise ERPs is becoming more complex, requiring virtual private networks (VPNs) and adequate bandwidth to ensure workers stay as productive as possible. This complex technology can cause frustrations among team members at a time when they are focused on managing costs and closing the books.

Before the current crisis , you would rarely hear “my life would be better if my data was in the cloud” from finance team members. We detect a shift now, with old opinions being set aside as those teams adapt to remote working and the new reality we are now facing.

Closing the expectation gap as more finance teams work remotely

Cloud ERPs provide basic financial reporting out of the box. For more custom reporting, many organisations are forced to dump data in spreadsheets, which is a manual and error-prone process.

For those teams working with cloud-based ERPs already, this will continue as finance teams function remotely, so consulting the right partner and identifying the right set of tools to help fill the gaps is key to maintaining productivity.

For those still using an on-premise ERP and who are also struggling with productivity, moving core financials to the cloud is a big, time-consuming migration project, and is not the type of risk or disruption many will be looking to make until business starts returning to normal.

However, in anticipation of a move to the cloud, Finance and IT departments should now begin talking about the reality of moving financials from on-premise ERPs. What new capabilities will they gain and what capabilities could be lost – particularly when it comes to native financial reporting? When Finance has a good understanding of these gaps, it can start to work sooner with independent software vendors (ISVs) to identify solutions prior to go-live (and not afterwards), to ensure a successful migration. A key requirement should be to ensure Finance has access to purpose-built tools that are optimised to deliver high-performance, automated, intelligent financial reporting from cloud-based ERP systems.

Planning for a different future

Companies often think there will be a massive shift when they move to the cloud. And the reality is that it does not turn out that way for most. However, with the crisis in full swing, we've seen that cloud-based ERPs can support remote teams well and help with business continuity, as long as the gaps are filled before go-live.

Addressing the expectation gap around cloud-based ERPs early on in the decision-making process is key to ensuring there are no interruptions to native financial reporting, especially at a time where agile financial reporting is playing a critical role in decision making.

Richard Sampson is SVP of EMEA at insightsoftware, a global provider of financial reporting solutions with more than 25,000 customers worldwide