Modern businesses are being faced with ever-increasing challenges—ones that are tough to meet when financial management is being done with disjointed financial management software. These “solutions” leave CFOs and their teams to manually complete processes—wasting countless hours on double-checking every field and correcting manual data entry errors.
To meet its goals, a business needs excellent financial controls and recordkeeping systems. It’s just that maintaining such systems in-house happens to be expensive, difficult, and time-consuming.
CFOs and other C-suite leaders need to be able to focus on their job duties—not on trying to rein in their finance management tools. On-premises financial management solutions rob CFOs of their free time (and their operating budget) for maintaining data centers, servers, OS licenses, app licenses, configuration, and constant updates.
Cloud financial management helps to automate financial resources and improve productivity while eliminating many of the headaches associated with on-premises financial management software. What is cloud financial management? How does it differ from on-premises solutions? More importantly, what are the benefits of using cloud-based financial management software?
What is Cloud Financial Management?
Cloud financial management is the term for a financial management SaaS (software-as-a-service) tools that companies can use to replace traditional on-premises finance management tools. It can be hard to generalize about cloud-based financial management systems because there are many different products available to enterprises. For example, one cloud solution may offer a comprehensive ERP system for your enterprise resource planning needs, while another may not have the analytical tools needed for this service.
As a financial management SaaS tool, cloud financial management typically works by licensing a set of software licenses and the resources to run them from the cloud service provider. Cloud computing allows companies to run apps that they need without having to invest in in-house infrastructure—which saves time and money.
On-Premises to Cloud Financial Management: What’s the Difference?
The biggest difference between on-premises and cloud financial management is that with a cloud solution, the software and apps are hosted on an offsite platform that is offered by the cloud service provider (CSP). This means that your business doesn’t have to manage its own data center, servers, and other physical assets. Instead, you can remotely access the software and services you need from a cloud-based platform.
Another major difference between cloud-based and on-premises financial management solutions is that with the cloud, the CSP does all the physical maintenance on their end. However, depending on the CSP, you may be expected to manage your app’s configuration and updates—it all depends on whether you have a complete or incomplete cloud solution.
What Are the Benefits of Cloud Financial Management?
Some of the specific benefits inherent to using cloud-based financial management software include:
- Easy Scalability with Your Enterprise’s Needs. A key financial benefit to cloud migration is the ability to easily scale your cloud deployment to your enterprise’s needs. This way, you only end up paying for the resources you actually need during any given month. Compare this to on-premises financial management solutions, where you would need to budget for expansions to your data centers every time your business grows beyond the capacity of existing systems. Instead of having to hire contractors, redesign server rooms, and physically install new computing resources, your CSP can simply assign more processing capacity with the click of a button with no extra costs for creating new infrastructure. And, if you need to scale back, you’re not stuck with wasted data center space or extraneous servers that aren’t generating any ROI.
- Increased Enterprise Mobility. With cloud financial management systems, the financial officers in your enterprise can access the finance data and systems they need from anywhere they can access the internet. This provides more freedom and mobility for your financial management team, making their jobs easier to do when they’re on the go.
- The Elimination of Server Maintenance. Keeping data centers and servers in top shape is a massive drain on resources that requires expert technicians, specialized tools, and potential downtime as repairs are made. With a cloud-based solution, the maintenance for the servers, as well as any relevant upgrades/replacements, are all handled by the cloud service provider.
- More Predictable Monthly Expenses. One of the big risks of running an on-premises financial management solution is the variable expenses they can introduce. With on-premises solutions, you have to periodically redo your data center, replace servers, license newer versions of your OS software and apps, and perform emergency maintenance. This leads to variable costs where things run well for one month and then the budget gets busted the next. Cloud financial management tools simplify things by accounting for these extra expenses in their monthly fee—leading to stable, easy-to-predict monthly expenses.
- Streamlined Data Management. With an on-premises financial management solution, your business’ finance data might be split among any number of assets on the network. This can be a problem that disrupts already-complicated financial transactions in your enterprise—reducing productivity and increasing the risk of bookkeeping errors. Consolidating your financial management systems with a cloud-based solution helps to eliminate redundant data so everything is easier to track for potential audits.
- Robust Security for Financial Systems and Data. Using a complete cloud financial management system where the CSP handles both physical server maintenance and software updates/patches helps to increase security. This is because regular software patching helps to eliminate security vulnerabilities in software that hackers might abuse to steal sensitive information. Additionally, CSPs may have a team of cybersecurity experts that can protect their financial management SaaS solution from intrusion attempts.
All told, cloud financial management software and systems help to make your business better by providing top of the line tools, eliminating busywork, and improving enterprise mobility.
Curious about what a complete cloud solution for your finance management can do? Read our guide to cloud migration to learn more.