Many financial services executives in several businesses (regardless of the size) are restructuring their technology strategy. For this, they are hiring tech-savvy finance professionals, integrating systems, adopting the latest technologies (primarily automation), and discontinuing legacy financial processes.
Amid all this, moving finance-related functions to the cloud is one of the most effective changes. However, companies now realize the core advantages of cloud adoption, so they put their best effort into overcoming multiple obstacles.
This article will discuss some of the most common challenges and benefits that companies can expect while making this much-required move.
Cloud Adoption Challenges that Companies Face
Compliance & Data Security Concerns
Fears about losing confidential, sensitive data and not meeting compliance requirements are considerable obstacles that companies face during cloud adoption. Here, the most common security concerns revolve around multi-tenancy.
Multi-tenancy is the storage of multiple companies’ data on the same servers. However, such concerns are incorrectly positioned and caused due to false understanding; or we should better say due to misconceptions about cloud solutions.
Cloud Migration Risks
After a company realizes that a cloud services firm can securely handle its data, the company must consider ways to technically migrate data from its systems to the cloud. This is the point where most companies become reluctant to proceed further.
Limitations and inefficiencies caused by outdated technology usage or irresponsible tech-related decisions can negatively influence technological innovation and hinder a company’s efficiency from meeting different business objectives.
Lack of a Company-Wide Cloud Strategy
For successful cloud adoption, there’s always a need for a cloud strategy that covers all aspects of the company. However, there are not many companies that have a cloud strategy that is followed across the company.
According to Gartner, “less than one-third of enterprises have a documented cloud strategy.” Source
Without a clearly defined cloud strategy (developed with the purpose of supporting the overall business strategy), cloud adoption initiatives may not succeed in the long run.
Dealing with the Financial Impacts
Companies might meet several other cloud adoption challenges, but in case their CFOs can’t find satisfactory returns on their investment in the cloud, there would be no point in going any further. Due to this, many companies prefer to choose firms providing cloud accounting services and get rid of accounting responsibilities.
The strategic move toward the cloud brings several benefits; however, before making a move, it is vital to consider the total cost that the company needs to pay.
Small Size of the Cloud Services Industry
There are not many big players in this industry that offer cloud services on a large scale. Consequently, there’s not much of a difference in pricing. Moreover, previously, IT professionals used to be required to handle networks and data centers; however, nowadays, they need to be experts in managing cloud service providers effectively. Also, this often leads to having multiple cloud subscriptions instead of depending upon only one.
For example, a company using four different cloud services will need a strategic and comprehensive system for cloud deployment and governance.
Top Reasons why Enterprises Choose the Cloud for Financial Services
Storage Space at an Ultra-Low Cost
Individuals and businesses require keeping large volumes of financial and tax data. Besides, businesses must follow applicable regulations that dictate what type of financial information they need to store and for how long. Keeping such a substantial amount of data becomes costly when done by using internal servers. Therefore, many companies move to cloud services as they offer more storage space at lower costs.
Faster Turnaround Time
Cloud platforms enable users to gain high-level computing capabilities. For example, to run credit risk simulations, many financial services firms use Amazon Web Services. Here, with the help of the cloud, this lengthy and time-consuming task takes around 20 minutes to get done. As a result, firms are able to make decisions faster and streamline financial functions; thus, having a positive effect on profitability.
Cloud Scalability Issues – Resolved
Instead of dealing with limited storage and less computational capabilities, companies using the cloud can scale up efficiently and quickly as per their business requirements. Besides, firms that offer finance and accounting services can fulfill client demands by subscribing to various cloud-based accounting tools on an as-needed basis. This not only allows firms to provide flexible services to clients, but it also helps achieve client satisfaction.
Many companies have compromised the security of their financial information by storing paper-based records and documents. These papers are prone to theft, and anyone (with bad intentions) within the company can manipulate the data and use them for their benefit. On the other hand, the cloud adoption reduces the risk of internal as well as external fraud. Cloud storage platforms usually have strong intrusion detection and fraud prevention systems and firewalls. Moreover, computer applications like QuickBooks cloud accounting software can be set to automatically run security audits from time to time in order to ensure data security.
Round-The-Clock Data Accessibility
Users can access financial data stored on the cloud at any time from anywhere. They can also use the subscription via their PC at home… the perfect advantage while working from home. The easy and round-the-clock data availability allows finance teams to collaborate more efficiently and update records in real time. There is no doubt that the cloud adoption fosters higher levels of collaboration, efficiency, and productivity.
In the event of a calamity, for instance, a flood or an earthquake, paper-based financial records can be damaged or lost. In contrast, data stored on a cloud platform is entirely secure regardless of anything. Thus, the cloud can help a company keep operating uninterruptedly, despite getting hit by a disastrous event.
Traditional computing and legacy systems can cost a company thousands of dollars, and the return on investment is also very low. On the other hand, the cloud comes up as a cost-effective solution as companies need not spend money on hardware, utilities, IT facilities, and staff, saving a considerable amount of capital that can be used for other core operations or improvements.
The cloud is likely to become more common in the financial services sector. However, companies will need to prepare and implement strong cloud strategies while addressing several other unanswered questions. Besides technical challenges, companies need to meet organizational challenges in order to ensure successful cloud adoption. Those who will efficiently meet all challenges will position themselves as leading industry players in the future.