A major shift is taking place in how enterprises select their financial management applications, with a migration to cloud applications happening faster than expected, according to Gartner, Inc.
A recent Gartner survey of senior finance executives found that by 2020, 36 percent of enterprises will use the cloud to support more than half of their transactional systems of record.
Gartner surveyed 439 global senior financial executives (including 410 who had implemented cloud strategic and financial corporate performance management solutions) from January through March 2017 to explore their technology perspective, influence of IT, needs and priorities in technology investment.
According to the survey, organizations of all sizes are moving to cloud solutions, such as core financial applications, for transactional systems of record. Cloud momentum is consistently higher across financial business applications year over year.
Top investment initiatives
Business analytics and enterprise business applications continue as top investment initiatives for senior financial executives.
According to the survey, smaller and midsize organizations are adopting cloud more rapidly than larger organizations, with 44.6 percent of smaller organizations, 37.7 percent of midsize enterprises and 40.4 percent of large organizations planning to move to the cloud over the next three years.
"We have found that most clients asking about these financial business application markets are solely interested in the cloud option," says John Van Decker, research vice president at Gartner. "Many enterprises that currently run on-premises solutions want to move to newer solutions that put more control in the hands of the end user, and reduce the effort required when compared with on-premises upgrades."
Gartner has found that the human capital management and procure-to-pay markets have already been migrating their business applications to the cloud, while the office of finance has been slower to move.
However, things are changing for the finance organization. CFOs are usually more conservative about moving their data to the cloud, however, given the current change in the market there will be a steady migration over the next five to 10 years.
Cloud solutions are still developing and do not have uniform capability to meet the needs of all verticals, company size and local markets, and clients will need to do their due diligence when evaluating cloud solutions in these markets.
"The Gartner survey showed that 93 percent of enterprises see the cloud being utilized for half of enterprise transactions in the future," said Van Decker. "The cloud has definitely changed the game for financial management business applications. Vendors have responded with new and rearchitected platforms in the cloud, and most have de-emphasized their on-premises solutions, in favor of cloud implementations, which are more profitable for the vendors, while reducing the effort of local IT support."