A major shift is taking place in how enterprises select financial management applications, with a migration to cloud applications happening faster than expected.
By 2020, Gartner research reports that 36 per cent of enterprises will use the cloud to support more than half of transactional systems of record.
Specifically, organisations of all sizes are moving to cloud solutions, such as core financial applications, for transactional systems of record, with cloud momentum “consistently higher” across financial business applications year over year.
Meanwhile, business analytics and enterprise business applications continue as top investment initiatives for senior financial executives.
According to research, smaller and mid-size organisations are adopting cloud more rapidly than larger businesses, with 44.6 per cent of smaller organisations, 37.7 per cent of mid-size enterprises and 40.4 per cent of large organisations 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,” Gartner research vice president John Van Decker said.
“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.”
In addition, Van Decker said that the human capital management and procure-to-pay markets have already been migrating business applications to the cloud, while the office of finance has been slower to move.
However, things are changing for the finance organisation.
“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,” Van Decker explained.
Van Decker said cloud solutions are still developing and do not have uniform capability to meet the needs of all verticals, company size and local markets, and customers will need to do their due diligence when evaluating cloud solutions in these markets.
Gartner research also showed that 93 per cent of enterprises see the cloud being utilised for half of enterprise transactions in the future.
“The cloud has definitely changed the game for financial management business applications,” Van Decker added.
“Vendors have responded with new and rearchitected platforms in the cloud, and most have de-emphasised their on-premises solutions, in favour of cloud implementations, which are more profitable for the vendors, while reducing the effort of local IT support.”