Financial Management Finds a Welcome Home in the Cloud

Financial Management Finds a Welcome Home in the Cloud

Cloud Based Financial Management

The most cautious person in any organization is likely to be the CFO. After all, they’re the person who gets paid to ensure the company’s finances are protected from unwarranted risk. However, even the most risk-averse of CFOs are beginning to warm to the possibility of moving their firms’ financial management systems to the cloud.

One thing you can say about the adoption of cloud services by businesses: It’s unconventional. After all, the first people in the organization to use the cloud in their work were usually renegades who did so without the official sanction of their company’s IT department. Out of this “shadow IT” grew the topsy-turvy, bottom-up evolution of cloud migration in companies of all sizes.

You might say that the cart’s before the horse, or the tail’s wagging the dog, but however you slice it, cloud services are proving their worth to businesses in many diverse ways. Jeffrey Kaplan writes in an October 31, 2016, article on Datamation that the typical cloud-adoption pattern is for the sales and marketing departments to lead the way, initially in an ad-hoc manner but ultimately with the blessing of the IT department and the CFO.

Kaplan cites a recent CFO Signals survey by Deloitte that found nearly 80 percent of companies in North America use some cloud services, yet fewer than half have implemented any cloud-based finance and accounting analytics. The slow adoption rate of cloud-based financial solutions is due as much to lingering concerns about security and integration as it is to the generally conservative nature of the CFO role, according to Kaplan.

cloud-provider

The 30,000-foot view of data analytics in the from the enterprise perspective extends the model from mobile users and data sources to enterprise data and user directories. Source: IBM

New financial rules cause CFOs to reconsider the cloud

A potential source of motivation for companies evaluating cloud financial services is the need to respond to new guidelines issued by the Financial Accounting Standards Board, whose ASC 606 standard requires that firms identify performance obligations in all customer contracts and base revenue recognition on a contract basis rather than on a transaction basis. The new rules don’t take effect until late 2017, but it will take time for companies to make the necessary changes to their financial accounting procedures.

By slowly transitioning to cloud based financial management, CFOs hope to avoid the glitches that arose with the first round of cloud-migration projects. According to Mark Melin in a November 1, 2016, article on ValueWalk, a study by SunGuard found that 73 percent of companies spent more on their move to the cloud than they anticipated. In addition, 66 percent of the organizations surveyed eventually moved some of their early cloud applications back to their in-house infrastructure.

The switch from in-house financial management to its counterpart in the cloud is more difficult because the old and new have very different foundations. Traditional finance operations run on an internal grid designed from the ground up for risk calculations, portfolio pricing, liquidity analysis, and other high-performance workloads. The cloud, on the other hand, is optimized for scalability and agility, which introduces a high level of latency and scheduling that can spell trouble for financial calculations.

New approaches to intelligent analytics in the cloud

The problem of remote analytics may be solved by advances in telemetry: the collection, measurement, and monitoring of data from a remote source. In a November 7, 2016, article in Data Center Journal, Jonathan Donaldson describes an approach called Intelligent Resource Orchestration (IRO) that extends telemetry by enabling analytics in software-defined infrastructures. IRO relies on sophisticated pattern matching to automate much of the decision making, which reduces human interaction. For IRO to be successful, it must be able to discern which decisions can be automated, and which need to be made by humans.

The IRO model consists of four components that interact in continual loops:

  • Watch virtualizes and reviews data from compute, storage, and network resources using common APIs.
  • Decide determines the course of action in response to an event, such as a request or system failure, based on monitoring and analytics communicated via a dashboard interface.
  • Act responds in real time based on patterns learned from previous analyses that led to a positive outcome.
  • Learn is the application of machine learning and deep learning to identify areas requiring change and to recommend improvements.

Cloud Based Financial Management

In the IRO model, four modules continually interact to reduce the amount of human intervention required in cloud-based analytics. Source: Jonathan Donaldson, via Data Center Journal

According to Donaldson, IRO holds promise for addressing the performance needs of any “latency-sensitive” applications, including financial services and content delivery networks.

Automating financial drudge work via continuous accounting

Research firm Accenture estimates that by 2020, finance productivity will increase by a factor of 2 to 3 times, while financial-management costs will decline by 40 percent over the same period. The key to this productivity boost is automated decision making. A new approach to automated financial analytics based on a non-stop loop is continuous accounting, which Information Age’s Nick Ismael explains in an October 27, 2016, article.

As Ismael points out, only the agility and flexibility of cloud-based services make it possible to replace manual accounting methods, freeing financial analysts to focus on fraud detection, compliance, and other strategic matters rather than spreadsheet updates and weekly reports. These are the same reasons companies of all sizes are turning increasingly to services in order to automate uptime monitoring of IT systems of all types: databases, app servers, web servers, and message queues, all viewed in a single app.

By Brian Wheeler

About Brian Wheeler

Brian oversees the technology team at Morpheus Data (https://www.morpheusdata.com).Prior to Morpheus, Brian founded a software development consulting firm which designed and developed solutions for a variety of industries including power grid management, ticketing systems, online trading, social networking and gaming, SOX compliance, and e-commerce. Brian holds a bachelor’s degree in Chemistry from Pomona College.

View Website
View All Articles

Sorry, comments are closed for this post.

Comics
Four Trends Driving Demand For Data Security In 2017

Four Trends Driving Demand For Data Security In 2017

Data Security Trends 2017 will be a hallmark year for security in the enterprise as all industries have reached a tipping point with respect to cloud and mobile adoption, forcing more and more data beyond the corporate firewall. Over 100 IT executives weighed in on their plans for 2017 in our latest survey; buried among…

What the Dyn DDoS Attacks Taught Us About Cloud-Only EFSS

What the Dyn DDoS Attacks Taught Us About Cloud-Only EFSS

DDoS Attacks October 21st, 2016 went into the annals of Internet history for the large scale Distributed Denial of Service (DDoS) attacks that made popular Internet properties like Twitter, SoundCloud, Spotify and Box inaccessible to many users in the US. The DDoS attack happened in three waves targeting DNS service provider Dyn, resulting in a total of about…

Two 2017 Trends From A Galaxy Far, Far Away

Two 2017 Trends From A Galaxy Far, Far Away

Reaching For The Stars People who know me know that I’m a huge Star Wars fan. I recently had the opportunity to see Rogue One: A Star Wars Story. While I won’t give any spoilers away for the few who haven’t seen the movie yet, I do want to mention a couple of trends from…

Choosing IaaS or a Cloud-Enabled Managed Hosting Provider?

Choosing IaaS or a Cloud-Enabled Managed Hosting Provider?

There is a Difference – So Stop Comparing We are all familiar with the old saying “That’s like comparing apples to oranges” and though we learned this lesson during our early years we somehow seem to discount this idiom when discussing the Cloud. Specifically, IT buyers often feel justified when comparing the cost of a…

How The CFAA Ruling Affects Individuals And Password-Sharing

How The CFAA Ruling Affects Individuals And Password-Sharing

Individuals and Password-Sharing With the 1980s came the explosion of computing. In 1980, the Commodore ushered in the advent of home computing. Time magazine declared 1982 was “The Year of the Computer.” By 1983, there were an estimated 10 million personal computers in the United States alone. As soon as computers became popular, the federal government…

Cloud Security Risks: The Top 8 According To ENISA

Cloud Security Risks: The Top 8 According To ENISA

Cloud Security Risks Does cloud security risks ever bother you? It would be weird if it didn’t. Cloud computing has a lot of benefits, but also a lot of risks if done in the wrong way. So what are the most important risks? The European Network Information Security Agency did extensive research on that, and…

Ending The Great Enterprise Disconnect

Ending The Great Enterprise Disconnect

Five Requirements for Supporting a Connected Workforce It used to be that enterprises dictated how workers spent their day: stuck in a cubicle, tied to an enterprise-mandated computer, an enterprise-mandated desk phone with mysterious buttons, and perhaps an enterprise-mandated mobile phone if they traveled. All that is history. Today, a modern workforce is dictating how…

The Future Of Cloud Storage And Sharing…

The Future Of Cloud Storage And Sharing…

Box.net, Amazon Cloud Drive The online (or cloud) storage business has always been a really interesting industry. When we started Box in 2005, it was a somewhat untouchable category of technology, perceived to be a commodity service with low margins and little consumer willingness to pay. All three of these factors remain today, but with…

The Key To Improving Business Lies In Eye-Interaction Tech

The Key To Improving Business Lies In Eye-Interaction Tech

Eye-Interaction Technology Analysts at Goldman Sachs predict virtual reality revenue will surpass TV within the next decade. More than just some gaming fad, VR represents a whole new way for organizations to train, research, and explore vast amounts of data. Despite its popularity, however, VR is still not in the hands of the majority, and…