A few months ago, the Dubai-based Emaar Hospitality Group, part of the mighty property group that owns the world’s tallest tower, the Burj Khalifa, said it had chosen to adopt Microsoft Dynamics 365 Finance and Operations in the cloud as its new back-office ERP system.
“We are transforming our business model through digitisation that would take us to the next level in providing world-class service to our guests,” said Olivier Harnisch, chief executive officer of Emaar Hospitality Group.
“In this, we are setting our fundamentals right and we needed core business applications that will drive new operational efficiencies and support future innovation. With Dynamics 365 for Finance and Operations, we have the balance between back-end control and customer-facing agility.”
The Emaar Hospitality Group operates a portfolio of premium brands around the world, including several luxury hotels, resorts and golf clubs. It is a wholly-owned subsidiary of Emaar Properties, one of the world’s most valuable real estate businesses.
“Microsoft Dynamics 365 for Finance and Operations enables the end-to-end digital transformation of a business,” said Sayed Hashish, regional general manager, Microsoft Gulf.
“Emaar Hospitality Group will now have the ability to completely redefine its business processes, and deliver a consistent, customer journey while dramatically improving both service levels and employee productivity, and greatly reducing operational costs.”
Service-centric organisations first off the starting blocks
The move by the Emaar Hospitality Group is significant. It marks growing evidence that finance, traditionally the most risk-averse function in a business, is finally starting to embrace the cloud and the potential cost benefits, elasticity and opportunity for continual improvement of finance processes it can offer, particularly as offerings from cloud providers reach a level of maturity and usefulness that many company executives could never imagine before.
Also proving attractive is the pay-as-you-go approach with no upfront capital costs as well as the fast delivery of functionality when responding to changes in regulation.
But the biggest game-changer for deploying financial management applications, particularly budgets, forecasts and planning processes, in the cloud is the transformational shift in how the finance function can support business transformation and innovation.
In a recent report, Gartner, the independent technology research firm, predicts that by 2025, demand for financial management application deployments delivered as cloud services will be worth more than 65 per cent of total market spend, up from 30 per cent in 2015.
The report authors offer some thought on why the market shift is happening now. This includes:
- Growing ERP focus on their cloud offerings and extending capabilities and value-add services delivered through their platforms. Microsoft revealed a major upgrade to Dynamics 365 at Ignite, its annual customer conference with a focus on cloud excellence, integration between services and artificial intelligence. The new release is scheduled for October with the new bi-annual cadence.
- Many organizations have had their current core financial management (FM) applications in place for 10 or 15 years and need to upgrade or replace them. Many IT leaders and CFOs are asking if now is the right time to move their core FM applications to the cloud rather than continuing to invest in on-premises technology.
- CFOs and other finance leaders are less concerned about the potential security risks of the cloud as the lack of any serious data breaches means that the majority of CFOs will now consider cloud as a deployment option provided their security concerns are met
- A growing number of organisations are adopting a cloud-first strategy across all application areas.
Service-centric organisations, Gartner points out, are leading the way in cloud adoption, because typically they already have some, or all of their human capital management and procurement capability in the cloud and so “flipping” their core FM applications seems a “logical step”.
This is not so much the case for product-centric and asset-intensive organisations. Gartner predicts that for the next three years, these firms will most likely keep their financial and operational ERP on-premise (or hosted) because of the need to integrate with other on-premise operational and logistics systems, but they will get there eventually.
In Deloitte’s second Digital Disruption Index: From Experimentation to Transformation – a report into the state-of-play digital innovation in the workplace – the global consultancy refers to the following scenario to highlight the impact digital can have on back-office processes and supply chains.
“IoT sensors on the factory floor generate data that supply chain managers can use to optimise shipping and inventory processes. When supply chain operations become more efficient and predictable, finance and perform more accurate forecasting and planning. This in turn allows dynamic pricing or adjustments to cash positions based on real-time visibility of operations.”
But, while the shift to cloud services adoption is now firmly on the agenda for many CFOs and finance leaders, the variation in the viability of the cloud as a deployment model for finance technologies means that finance leaders are faced with some difficult choices.
Gartner says: “Many are hoping that vendors will provide the ‘answer’ to cloud adoption by providing all the required functionality in a single suite.
“Unfortunately, it’s too simplistic to assume that all finance systems can be transitioned to the cloud by choosing a single vendor and hoping that it can provide all the required functionality in the cloud.
“Instead, IT and finance leaders need to define an overall strategy for if, when and how finance capabilities will transition to the cloud as part of a broader postmodern ERP strategy.”
The report warns IT and finance leaders against being swayed by vendor sales incentives in less mature areas of cloud financial management applications and risk missing functionality.
It also urges finance teams not to take a “hands-off” approach to integration but to work closely with IT leaders, identifying super-users who will perform integration activities.
Microsoft Dynamics 365 for Finance and Operations was named a leader in the 2018 ERP Value Matrix, an assessment of the top ERP systems in the market, compiled annually by independent technology firm Nucleus Research.
Nucleus was particularly impressed with Microsoft’s latest intelligent additions to improve efficiency and productivity, powered by investments in machine learning and AI.
If your company is considering moving its financial and operations applications into the cloud, give us a ring on +44 (0)1483 233 000. Our experts would be delighted to talk to you.