BY STEVEN MIRANDA

TECH STRATEGY

ERP in the Cloud: CFOs See the Value of

Running Enterprise Applications as a Service
Heading into 2013, it’s time to clear certainty and timely access to the lat- CAN ERP CLOUD SERVICES DELIVER
up some lingering misconceptions est software capabilities. ON EXPECTATIONS?
about chief financial officers and tech- The fact that traditionally risk- CFOs are becoming more actively
nology, starting with the belief that averse CFOs are open to moving their involved in the selection and deploy-
CFOs don’t “get” the cloud. The reality mission-critical ERP systems into the ment of ERP cloud services because
is that CFOs not only understand the cloud should be a clear indication to both they and their management teams
cloud’s benefits, but are embracing it all companies that ERP cloud services have high expectations for the benefits
faster and more broadly than many are fast becoming the go-to strategy for they can achieve with the cloud. The
originally thought possible, including finance executives looking to access Oracle survey of CFOs supports that
new services such as enterprise re- the latest technologies quickly and finding, with 68 percent indicating that
source planning (ERP) in the cloud. cost-effectively to support their corpo- they or their CEOs were responsible
The skepticism and uncertainty fi- rate objectives. for the acquisition or deployment of
nance executives felt at the beginning cloud services.
of this decade about moving their mis- However, along with that increased
sion-critical enterprise systems to the responsibility comes greater accounta-
cloud is fading, replaced with a grow- bility, especially when CFOs decide to
ing enthusiasm for the financial flexi- move core ERP systems into the cloud.
bility and freedom that comes from us- Though cost is clearly a primary
ing the cloud’s modular, pay-as-you-go driver for looking at ERP cloud servic-
approach to accessing the latest tech- es, other CFOs may be more con-
nology innovations. cerned with scalability, operational effi-
Several recent surveys detail why ciencies, compliance or access to cut-
CFOs are increasingly open to moving ting-edge technologies such as embed-
their enterprise applications into the ded business analytics and social col-
cloud. For example, a 2012 survey by laboration. When building the business
Financial Executives Research Founda- case for moving to ERP cloud services,
tion (FERF) and technology advisory it is important to determine upfront the
firm Gartner found that 53 percent of Carrie Dolan, chief financial officer, exact benefits and specific goals the
CFOs believe that more than half of Lending Club CFO aims to realize.
their enterprise transactions will be de- For San Francisco-based Lending
livered through software-as-a-service Club, the decision to use ERP cloud
over the next four years, up from 12 services was tied to the need for a ro-
percent today. bust technology platform to support its
In addition, almost 70 percent of fast-paced growth. The online financial
CFOs surveyed in 2012 by Oracle community — which puts lenders to-
Corp. said they would consider mov- gether with low-risk borrowers — more
ing to a cloud-based version of their than doubled the amount of loans it fa-
core enterprise software. cilitated in the past 12 months, to more
Some of the reasons CFOs cite in than $1 billion.
favor of cloud-based ERP services in- The ERP cloud service not only
clude the resource allocation flexibili- needed to scale, but also to integrate
ty that comes with avoiding large up- seamlessly with Lending Club’s own
front investments in the early phases of internally-developed online lending
an ERP deployment, the ability to Dan Knutson, executive vice platform, which won the World Eco-
avoid fixed capital investments during president and chief financial officer, nomic Forum’s Technology Pioneer
Land O’ Lakes Inc.
periods of corporate or economic un- Award in 2012. The firm wanted open

www.financialexecutives.org FinancialExecutive • JANUARY/FEBRUARY 2013 65

 What Functionality Should an Enterprise-grade services to address strategic opportuni-
ERP Cloud Vendor Comprise? ties for the business. The $13 billion
• Subscription-based (SaaS) deployment model with easy, predictable dairy and agricultural services compa-
pricing. ny recently upgraded to centralize and
• Complete ERP services, including financials, planning and budget- optimize its procurement processes.
ing, risk and controls management, procurement and sourcing, The new procurement solution will co-
inventory and cost management, product master data management exist with its current ERP systems.
and project portfolio management. “We are running our new procure-
ment solution in a managed cloud fash-
• Applications engineered for global enterprises, with multi-GAAP,
ion because we think that it is better to
multi-currency, multi-language and multi-subsidiary capabilities.
have our resources focused on strategy
• Modern user experience and socially-enabled business processes, and our core competencies and let our
optimized for today’s collaborative, hyper-connected and mobile vendor manage the hardware and soft-
workforce. ware for us,” says Land O’ Lakes Chief
• Business intelligence for everyone with pervasive, in-context Financial Officer Dan Knutson.
analytics. The company has targeted millions
of dollars in savings by automating
• Global data center coverage using compliance-certified “Gen 4”
data centers, for improved security and performance. process flows across the procure-to-pay
cycle, improving negotiation capabili-
ties and increasing visibility of company
spend across categories and suppliers.
architecture, scalability, highly intu- to survive in today’s nimble, more
itive user interface and high data secu- modular IT world. Now, the advent of SHIFT MORE IT RESOURCES
rity and disaster recovery features. ERP cloud services has sparked TO INNOVATION
"We were looking to improve deci- renewed interest in integrated ERP Land O’Lakes’ Knutson is one of many
sion-making and workflow, implement suites among small and large firms progressive CFOs who see the value in
robust reporting and take advantage of alike. They see the ability to access using cloud services to free up IT
the inherent scalability and cost sav- enterprise-grade functionality and best- resources to focus more on IT-led inno-
ings provided by the cloud," says Car- practice business processes through vation. He and Chief Information
rie Dolan, chief financial officer of the cloud with less cost, risk, time and Officer Barry Libenson are redirecting
Lending Club. labor than ever before. IT resources into transformational proj-
"Since Lending Club’s online lend- Smaller firms that traditionally ects at their firm that use Big Data and
ing platform is internally developed, viewed ERP software as too expensive business analytics to gain insights into
we also needed a cloud ERP service and labor-intensive to install and man- solutions for major global problems,
that would integrate with current sys- age can take advantage of preconfig- such as how to feed the world’s grow-
tems easily, keep IT resources focused ured templates in cloud ERP solutions. ing population in the face of increas-
on the organization’s own platform and These solutions are built based on in- ingly scarce water and arable land.
reap the benefits of cloud scalability dustry-specific best practices and They are on the leading edge of
with lowered costs and the high data country-specific requirements, thus re- the new technological shift being
security and disaster recovery features. ducing project implementation time wrought by the cloud and other
“Lending Club is creating a more ef- and addressing specific business emerging technologies that are con-
ficient model, and the cloud is support- process requirements. verging to change how we do business
ing our efforts through automation, Large global enterprises can adopt now and in the future.
communication and collaboration fea- a hybrid approach to ERP cloud servic- Savvy CFOs will follow their lead,
tures that help us achieve better work- es where it makes sense. They can de- leveraging the cloud and new ERP
flow, increased efficiency and greater in- ploy specific ERP modules in bite- cloud services to tap into these game-
sight into our financial data," says Dolan. sized chunks to address specific pain changing technologies and help fi-
points, or run entire divisions or sub- nance set the agenda for their organi-
ENTERPRISE-GRADE ERP sidiaries using ERP cloud services zation’s success.
CLOUD SERVICES while keeping their core ERP systems
Not too long ago, headlines pro- for the corporate office. Steven Miranda (steven.r.miranda@ora
claimed that ERP was dead, and that Minnesota-based Land O’Lakes cle.com) is executive vice president,
suites of integrated ERP applications Inc. is an example of a company using applications product development for
were too expensive and cumbersome this type of hybrid approach to cloud Oracle Corp. in Redwood Shores, Calif.

66 JANUARY/FEBRUARY 2013 • FinancialExecutive www.financialexecutives.org

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