By Johanna Brown-Lyons
With 2023 just around the corner, it’s worth taking a look at some of the biggest cloud finance trends, where they may impact key business processes, and what enterprises can do to make the most of the cloud — without increasing complexity.
State of the Financial Cloud, 2022
Put simply, the cloud has gone mainstream for finance. Initially driven by early adopters such as FinTech firms, cloud services are now the go-to option for many businesses to handle key financial processes such as invoicing, accounts payable (AP), and accounts receivable (AR).
Last year, companies focused on expanding their cloud footprint with services such as AWS and Azure, and 62% of businesses increased cloud spending through 2022. Remote work also played a significant role in cloud finance adoption as companies adjusted to the reality of non-centralized finance operations. From staff creating and filing invoices from home to vendors and partners billing businesses across desktop and mobile platforms, cloud services provided the flexibility and visibility required.
Challenges remained, however, with 58% of financial service firms struggling to effectively migrate legacy applications to the cloud. Other challenges included data privacy and security. Consider that 44% of companies suffered a data breach caused (directly or indirectly) by a vendor — with the sheer volume of cloud finance options available, 2022 made it clear that choosing the right partner was just important as finding the right features.
As a result, 2022 was a year of growing pains for cloud-based financial operations. While evolving technology infrastructure offered the potential for flexible and secure processes, the road to implementation wasn’t always so clear-cut.
Five Cloud Finance Trends in 2023
So what’s on the horizon for 2023? What do companies need to know about cloud finance, and how it will impact current operations?
Here are five trends to watch.
Making Multi-cloud Moves
First is the continuing move to multi-cloud. This approach uses a combination of private and public cloud services to create an environment ideally suited to finance operations — 90% of companies now say they’ve seen success with their multi-cloud strategy.
Put simply, the goal here is getting the best of both worlds. In practice, this means combining the scalability of public cloud services with the specificity and control of private cloud options. For example, companies might choose the public cloud for non-critical data storage and analytics processing power, but pick private solutions for handling secure financial data.
As a result, expect 2023 to focus on creating and maintaining the connectors that make this multi-cloud migration manageable at scale. This includes the development of customized APIs that allow cloud applications to “talk”, along with tools designed to manage the flow of data across multiple clouds.
Controlling Cloud Costs
Cloud solutions help companies make the shift from capital expenses (CapEX) to operating expenses (OpEx). By removing the need to buy and manage hardware, businesses can save time and money since all repairs, upgrades, and replacements are handled by their cloud provider.
But cost challenges remain, with 32% of companies saying they’re spending too much on public cloud services thanks to over-provisioning, under-use, or resources that are simply idle. While research firm Gartner predicts worldwide IT spending will grow 5.1% in 2023, increased budgets may not translate to increased purchasing power as inflation takes its toll. As a result, control of cloud costs will be a top priority next year.
Empowering Employee Efforts
Even the best cloud finance solutions won’t help companies achieve accounting goals if staff aren’t willing to use them. Familiarity is the common root of this challenge: Employees familiar with a particular system, even if it lacks the power and performance or cloud options, may resist changes to processes that would see this familiar system phased out. In fact, 42 percent of organizations point to cultural adjustments as one of their top three cloud challenges.
In 2023, empowering employee efforts will be a critical component of cloud success. In practice, this means easing into new solution adoption by providing staff the opportunity to see how new solutions work without the pressure to make the shift ASAP.
Prioritizing Predictive Operations
In finance, it’s not enough to know what happened — companies need to know what’s coming next. Consider business spending. If the average invoice value has been trending up for the past six months and current market conditions suggest continued inflation, in-depth data analysis can help companies predict future trends and reduce the risk of ending up in the red.
Realizing Reliable ROI
Finally, 2023 will come with an increased focus on reliable ROI. Gone are the days of companies taking a scattershot approach to the cloud. Now, businesses need targeted solutions that deliver measurable outcomes.
Making the Most of Cloud Finance
Cloud finance in 2022 was defined by broader adoption, underpinned by ongoing challenges. In 2023, expect companies to tackle these issues head-on with a focus on more multi-cloud adoption, improving cost control, enhanced employee education, predictive data processes, and end-to-end financial platforms that deliver reliable ROI.
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