Forward-looking organisations understand that their survival depends not merely on digital transformation, but on a dramatic cultural shift as well. By initiating their migration to the cloud with Finance and HR, companies can leverage their two most powerful assets - people and money.
Forward-looking organisations understand that their survival depends not merely on digital transformation, but on a dramatic cultural shift as well. By initiating their migration to the cloud with Finance and HR, companies can leverage their two most powerful assets - people and money - to reap immediate savings and efficiencies as well as gain long-term strategic advantage, tipping the balance between success and failure for their cloud initiatives.
Finance and HR have traditionally been walled off from one another thanks to the outdated assumption that HR is merely a support function that relies on “soft” metrics while Finance drives strategy based on hard numbers.
However, it is increasingly apparent that the functional and data silos of the past simply cannot support a modern business. Today, every business process needs to be connected and the power of data unlocked, to flow seamlessly through end-to-end transactions.
What makes this Finance-HR integration so seamless is a common set of metadata for the two sets of supporting cloud applications, so that information is rendered consistently. The data doesn’t have to be massaged or translated.
Aligning with business priorities
A business’s HR department priorities include recruiting, employee engagement, operational effectiveness, and workforce analytics and insights; while the CFO priorities include driving financial performance with data and analytics, business growth strategy, process optimisation and automation, and cash flow and risk.
These once disparate functions are now finding that they have much in common, such as improving organisational performance, ensuring better skills usage and availability, enacting data-driven decisions, enforcing robust security, and to be able to adapt to changing market conditions.
This opens up several areas of collaboration, including forecasting budgets, workforce management, identifying employee performance drivers, risk management and compliance, and even planning for business model changes.
Additional benefits of integration include greater security and more consistent data governance, shared workflow and business processes, integrated reporting to provide deeper analytics, and common self-service access and shared data-entry points.
In all, Oracle has identified 34 common “touch points” between Finance and HR applications, processes, and policies. These are distinct areas, from budget approval to supplier invoicing to project management, for which tight finance-HR integration accelerates decision-making and eliminates cumbersome manual work.
Companies, however, still have some misgivings about integrating these functions: according to an MIT Technology Review study, titled “Finance and HCM: The Cloud’s New Power Partnership”, 41 percent of finance and HR line-of-business respondents cited cloud integration challenges as the top barrier. Among IT respondents, the number was even higher: 51 percent said the difficulty of integrating separate clouds, from different vendors, is the main barrier to cloud adoption.
The switch to cloud
To address this challenge, companies should take the time to choose a best-in-class single-vendor solution to maximise data sharing and analytics capabilities as well as ease transition and implementation. In addition, this approach eliminates one of the most significant hurdles: easily integrating multiple applications.
A potential hurdle is that IT teams can be reluctant to support and assist with the transition if they see cloud migration as a threat to their traditional standing. Certainly, relocating data assets to the cloud will reduce the need for maintenance, assistance, and upkeep, but it will also free up IT to take on a more strategic and innovative role, transforming it from a cost centre into a driver of growth and revenue.
That being said, organisational change cannot succeed unless stakeholders themselves are willing to change ingrained habits and assumptions. It’s important to note that front-line employees in Finance, IT, and especially HR accrue numerous benefits that are not immediately obvious.
In addition to helping stakeholders understand what’s in it for them (a lot!), change leaders must challenge and reject the common misconceptions that digital transformation is a difficult, slow, or expensive process. According to the same MIT study, 51 percent of IT respondents and 50 percent of Finance and HR respondents said the migration timeframe was better than they expected, while 90 percent of respondents stated that cloud migration costs were either lower than, or in line with expectations.
For South African companies looking to make the switch, proactively communicating these numerous benefits and success stories to all relevant stakeholders - before and during a company's cloud migration - is critical to lowering internal resistance to change, and will help assure a successful digital transformation in the long run.
By Derek Bose, Oracle Applications South Africa Country Leader & SADC Region Cluster Leader