I am pitched often (and I mean OFTEN) about how cloud software applications and services are transforming sales, marketing, manufacturing, pretty much any business process you can name. Up until this point, corporate finance teams—notorious Luddites when it comes to new information technology—have been far slower to jump on the bandwagon, while signing plenty of checks for their counterparts. But lately, CFOs have begun signing up for cloud financial software at a much faster pace.
To be real, overall adoption is still modest. But the forecast is telling: Almost 20% of companies surveyed in late 2015 by Forrester Research have replaced all or most of their accounting systems and financial tracking applications with alternatives that “live” in a cloud service rather than in some server tucked away in the company’s own data center. Another 24% plan to do so within two years. Separate research by KPMG corroborates the trend: 70% of the CEOs the consulting firm surveyed last year believe their CFOs need to invest in more cloud-based financial systems.
There’s plenty of revenue at stake: More than $23.1 billion will be spent on financial management software this year, second only to apps for managing customer relationships, according to Forrester’s projections.
Indeed, these are not insignificant projects. Two of the biggest commitments yet come from insurance giant Aon and commercial real estate powerhouse Cushman & Wakefield, both of which are replacing existing systems with cloud financial software from Workday. As you might expect, similar tales are shared by many of the other companies scrambling to win over finance teams. Adaptive Insights, which has about 3,000 customers, reports that a far higher number of them want to spend more time on planning and analytics than on closing the books. Intacct, which also fields ongoing CFO surveys, reports similar findings.
The cloud converts preach the same mantra: They can spend far less time closing the books and far more time helping CEOs and counterparts in sales and marketing deliver on business growth objectives. “All of the finance folks, especially the younger ones coming out of university, want to help decision making,” says Laurel Meissner, senior vice president and global controller for financial services giant Aon. “The types of tools we have had are not providing information fast enough, or deep enough.”
How successful are these investments? In the case of the largest companies, it’s really too early to tell how transformative the cloud will prove to be, since many are still in the process of installing this software. But considering the nature of these buyers, there will be plenty of pressure to demonstrate the return quickly.
Heather Clancy is a contributing editor at Fortune. Reach her via email.
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BITS AND BYTES
Dell may have $2 billion deal for software assets. It appears that Francisco Partners and the private equity unit of activist hedge fund Elliott Management are actively negotiating to buy most of the tech giant's software operations, reports Reuters. Dell has been shopping Quest Software, its management software division, and SonicWall, its cybersecurity organization, ahead of its EMC takeover. EMC shareholders will vote on the merger July 19. (Reuters)
Apple's latest Chinese challenge: a smartphone patent flap. A relatively unknown local manufacturer has successfully argued that the tech giant's iPhone design infringes on its patents. Technically, that could prevent Apple from selling older smartphones in Beijing, but it has appealed the ruling. (New York Times)
Verizon unions bless new contracts. It's official: The nearly 40,000 employees who walked off the job for seven weeks this spring are now covered by a new employment contract that runs through Aug. 3, 2019. The terms will create more than 1,400 jobs and ensure pay raises of 10% over the next three years. (Reuters, Wall Street Journal)
Watch for it next year—a milestone in mobile Internet ad spending. Businesses are projected to spend $99.3 billion on Internet advertising optimized for mobile devices in 2017, which is 2% more than anticipated budgets for ads displayed on desktop computers. (Fortune)
New York giveth, and taketh away. State lawmakers voted to legalize sites that run fantasy-sports leagues, such as FanDuel and DraftKings. The state attorney general has challenged their activity as illegal gambling. Meanwhile, they also voted to prohibit advertising for short-term rentals in New York City, a blow against home-sharing service Airbnb, which has run afoul of regulators there. Both bills await New York Gov. Andrew Cuomo's signature. (Wall Street Journal, Fortune)
Official drone rules in the offing? The Federal Aviation Administration's guidelines for how businesses can put drones to work for commercial uses, such as package deliveries or (as is more likely over the short term) for inspections and data gathering could be issued this week. The FAA previously granted about 5,000 "exemptions" so that companies could begin experimenting months ago. (Wall Street Journal)
Now hiring, north of the Canadian border. Microsoft will recruit almost 750 new developers and engineers at a new research and development laboratory to be located in Vancouver, British Columbia. Two of the bigger projects that will have a significant presence there are the Skype communications service and HoloLens augmented reality headset. (Fortune)
THE DOWNLOAD
Why IBM stock could be worth a long-shot bet. With the tech giant well below 10% in cloud market share by most estimates, few investors think that business will help the company turn its fortunes around.
Bulls are placing their bets instead on IBM’s machine learning and artificial intelligence (AI) efforts—represented in the public eye by Watson, the glib-toned box showcased on Jeopardy! and innumerable commercials.
IBM doesn’t break out figures for its AI work—a sore point among investors who are looking for clearer data. But analysts say that IBM’s “strategic imperatives” business, which includes AI efforts as well as cloud, security, and other initiatives, will surpass 50% of revenues by mid-2017. (Fortune)
IN CASE YOU MISSED IT
HBO's 'Silicon Valley' proves that life can be stranger than fiction
by Kia Kokalitcheva
Facebook has become a place where death is broadcast live
by Mathew Ingram
Jeff Bezos' Blue Origin safely completes fourth landing by Michal Addady
Lawsuit claims Twitter, Facebook, and Google liable for terrorism
by David Z. Morris
Smart cycle startup Peleton expects $150 million in sales this year
by Leena Rao
What Apple's deal with Intel says about the end of Moore's Law
by Howard Yu
World's largest press release gets acquired by Dan Primack
Here's how the 'ladies' of Google are drawing attention to corporate sexism by Madeline Farber
A round smartphone, but not quite by David Z. Morris
ONE MORE THING
Does there need to be a law against robot abuse? Many designers try to make humanoid technology more "approachable" to undo fears instilled by Hollywood. But robots assigned to certain duties, such as surveillance or security, could stand to be more intimidating. (Wall Street Journal)
This edition of Data Sheet was curated by Heather Clancy.
