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Should anyone put their financial applications in the cloud?”

This is another cloud-based question I get with some frequency.

Lots of financial applications exist in the on-premise world and the numbers of solutions for the SaaS, multi-tenant, cloud world are growing quickly. Four vendors I’ve spent a lot of time with include: FinancialForce, Workday, NetSuite and Intacct. Each of these has customers running their financial applications in the cloud. Another vendor, Corefino, uses applications like these to provide cloud-based accounting/finance and bookkeeping services in the cloud for their clients. So, are companies using the cloud for financial applications? Absolutely. Will more do so? Absolutely.

First, few technologies ever really go away completely and few, if any, ever achieve 100% market share. On-premise applications are not going away. Cloud solutions won’t completely replace on-premise solutions. Zealots for either position aren’t happy with a mixed bag but that’s the reality of the software world. So, the argument is not will either delivery method crush the other. No, the questions should be focused on the eventual uptake/market share for cloud/SaaS financial software and the time needed to achieve this. Cloud/SaaS financial applications will continue to gain market share (99+% probability) and on-premise solutions will lose market share, if only due to superior economics of the former. Timing is the key issue.

For the sales people trying to get customers to move their on-premise financial applications to the cloud, these sales are often tough to complete. The reasons for this are varied and sometimes subtle.

Finance software buyers (that is, Controllers and CFOs) are usually a risk-adverse, ROI focused lot. Any new (on-premise or cloud-based) financial accounting software sale must overcome a number of concerns. These include:

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