saugatuck technology 201 cfo/cio survey - cloud financials

Copyright 2014 ǀ Saugatuck Technology, Inc. ǀ All Rights Reserved www.saugatucktechnology.com

Saugatuck Technology’s 2014 CFO / CIO Survey:

Cloud Financials – The Third Wave Emerges

B. McNee, B. Guptill, M. West, A. Bakker, C. Burns

December 18, 2014

1492SSR

Special Research Reprint

Courtesy of Tagetik:


Table of Contents

• About this Report

• Key Trends and Implications

• Saugatuck Insights – Summary

• Survey Findings

– Changing CFO Priorities: Importance

– Changing CFO Priorities: Effectiveness

– Status of Financial Management Systems

– Will Cloud Replace On-Premises Financials?

– Evolution of Financials Footprint 2014-2018

– Moving Financials to the Cloud: Key Concerns

– Moving Financials to the Cloud: Timing

– Statements on Financial Management Systems

– Statements on FP&A

• Appendix A – About the Survey / Demographics

• Appendix B – Research Reprint License

• About Saugatuck Technology

Page: 2


About this Report

• This document presents the comprehensive data and relevant analysis from Saugatuck's

2014 North American survey of enterprise finance and IT leaders regarding the evolution of

the Finance function, issues / challenges that may exist with current Financial Management

Systems, and preferences for deploying new business software – specifically related to

Cloud computing and advanced analytics.

• The survey was designed specifically to help understand how companies will acquire and

use Cloud-based business software solutions to help better manage their companies over

the next two-to-four years.

• In total, 317 finance and IT executives participated in the research, with 85 percent senior

decision makers with Director and above titles. The full survey methodology, population

and demographics are presented at the end of this document.

• Bill McNee is the lead author of this report, with contributions from Bruce Guptill, Mike

West, Alex Bakker, and Charlie Burns. All data, analysis, and other content herein was

developed by, and is the sole property of, Saugatuck Technology Inc. All content is

copyrighted by Saugatuck Technology Inc.

• This document is intended for distribution to, and use by, ongoing subscription research

clients of Saugatuck Technology Inc. Limited distribution and use by business and IT

media will be as expressly authorized by Saugatuck, or by clients who have purchased

reprint and distribution rights (see Appendix B).

Page: 3


Key Trends and Implications

• The third wave of Cloud Business Solution adoption – focused on Financial Management –

is gaining significant momentum. – While discrete functional categories are leading the charge, including Planning / Forecasting,

Analytics / Performance Management, Payroll and Expense Mgmt. – pent up demand will shift

Cloud-based Core Accounting from “early adopter” to “early mainstream” status during 2015-2017.

– The rise of powerful Cloud-based analytics and mobility support have significantly advanced the

value proposition for finance buyers.

• But the shift from on-premises to Cloud Financials will follow its own path – as a more

complex set of deployment scenarios will play out vs. the experience of Wave I (CRM) and

Wave II (HCM, Marketing) Cloud solutions. These include “Sidecar” models, “Process-

specific” migrations, as well as several flavors of Public / Private Cloud redeployments.

• Driving demand is not only the power of the new Master Architecture to deliver better, cheaper and faster outcomes – and addressing the highly fragmented nature of today’s

finance system deployments – but enabling the finance function to provide greater agility,

flexibility and value to the business. – This is particularly relevant given the dual mandates of an evolved (and more strategic) mission for

finance, and the fundamental challenges of supporting the transition to Digital Business.

• At the same time, security headwinds will continue to dampen deployment scenarios for

Cloud Financials – even though the highly public recent breeches at Target, JP Morgan

Chase and Home Depot had nothing to do with the Cloud. Paradoxically, most Cloud

providers offer superior security to all but a handful of on-premise environments.

Page: 4


Saugatuck Insights – Summary (1 of 3)

• Changing CFO Priorities – Importance and Effectiveness:

– The good news is that both Finance and IT leaders see the same priorities in the same basic

order, only their emphasis differs – led by 1) effective planning, budgeting and forecasting, 2)

monitoring / measuring performance, and 3) providing input for strategic decision making.

– The survey response data bode ill for most current Finance systems – and for those selling or

manufacturing them. Hefty gaps between the relative importance, and relative system

effectiveness, among the top Finance priorities, instantly show us where the greatest

opportunities for improvement lie: FP&A, BI/CPM, and strategic business input.

– Outside of transaction processing, fewer than 50% of Finance and IT execs see current systems

as being effective. Even transaction processing is only seen as effective by 53% of the execs.

– While perceived ineffectiveness alone may not be enough to trigger replacement, it is a sign that

users (and their leaders) see massive room for improvement – if and where Finance groups and

leaders can be convinced of such improvement through the acquisition of better systems.

• Status of Financial Management Systems:

– Greater than 50% of current Financial Management systems are viable targets for replacement,

with users actively evaluating options to replace (21%), or having plans to replace in 6-12

months (15%) or 12-24 months (17%). IT executives are much more bullish than Finance

executives on the expected pace of migration.

– Respondents from mid-sized companies (1K to 3K employees) indicate the least satisfaction

AND the greatest propensity for evaluating replacement systems. This potentially results from

challenges of using tools implemented when the companies were smaller and suggests a

significant concentration of opportunity.

Page: 5



• Will Cloud Replace On-Premises Financials?

– Most Finance and IT execs believe that Cloud will replace on-premises financial systems. Small and midsize companies and Aggressive adopters are already working on migrating systems today, while larger firms are more likely to be targeting deployments 12-24 months from now. Overall, IT is more positive that systems will move, while finance users have more of a wait-and-

see attitude.

– Saugatuck believes that the primary drivers are a combination of uncertainty and caution on

behalf of companies, which serves to retard immediate efforts to upgrade systems. This is

especially apparent in the larger companies, where process and existing technology both

represent significant investments and also significant challenges to upgrade/change.

– Despite this the footprint of existing financial software is aging. Many systems were designed for

an era when businesses didn’t have to meet increasingly complicated regulatory requirements

and also were not under such competitive pressure to be agile.

• The Evolution of Financials Footprint: 2014-2018

– The shift from on-premises to Cloud-based financials will be more complex than experienced in

early waves of adoption (e.g., CRM, HCM, Marketing). These include “Sidecar” deployments,

“Process-specific” migrations, and several flavors of Public & Private Cloud redeployments.

– By 2018, the on-premises footprint preference declines by more than half (58% 27%), while all

other categories grow, although the Sidecar footprint grows the least (15% 18%). Sidecar

implementations can probably be thought of as a complementary adjunct to core financials, as

they gradually deploy process-by-process (21%), function-only (16%) or all in (14%). SPP: CFOs preferring the on-premises footprint will remain the largest of the five categories until 2020.

Page: 6



• Moving Financials to the Cloud: Key Concerns – Despite mounting evidence of Cloud security, data privacy and security will likely always remain

the dominant concern, especially related to an organization’s financial aspects. Go-to-Market

strategy and messaging should primarily focus on it as well as data & process integration.

• Moving Financials to the Cloud: Timing – Long-term use of primarily Cloud-based Financials tops out at between 55% and 65% of firms over

the planning horizon. The “Money” functions – Treasury, core accounting, and revenue

management – are the least likely to go to Cloud, while “Managerial” functions (e.g., Planning /

Forecasting, Analytics / Perf. Mgmt, Payroll and Expense Mgmt.) are the most likely to move. IT

leaders see an average of ¼ to 1/3 more Cloud-based Finance systems presence and growth from

2014 through 2016 than do Finance leaders.

• Statements on Financial Management Systems – Although a majority of Finance and IT execs believe their systems are easy-to-use and timely (63%),

there are three powerful motivators for system replacement, upgrade or enhancement: 1) adding

Big Data analytics; 2) current systems are highly fragmented; 3) too expensive to run or upgrade.

At the same time, consolidations and complex regulations add to the burden of staying up-to-date.

• Statements on FP&A – The data suggest a strong trend toward adoption and use of FP&A tools, which are seen as useful

and (increasingly) required, and are being applied to reduce errors and inconsistencies – i.e., to

address baseline Finance activity and costs.

– IT leaders indicate a significantly greater favor toward FP&A tools than even Finance leaders do.

Page: 7


Changing CFO Priorities: Importance – Insight Summary

• Survey Question: Please indicate the level of importance that each of the following priorities and

responsibilities have in your organization today.

• Insight Summary:

– The good news is that both Finance and IT leaders see the same priorities in the same basic

order; only their emphasis differs – and those differences are explainable by each party’s

traditional roles and resulting perspective. The question remains: what, if anything, can or should

be done to enable a shift toward more strategic priorities and improvements for Finance? Can

improvements in systems themselves enable this?

– As the overall patterns of importance remain very similar, it can be safely assumed that these

needs and challenges of Finance leaders and organizations remain constant regardless of

company size. Provider go-to-market emphasis can be tailored to address size-based

differences while satisfying core needs with a standardized, core functionality.

– The role-based predictability of relative Finance priorities simplifies solution and provider

selection (and provider positioning and messaging) by providing a “message map” that

resonates with each group having input into Finance solution/system development and selection.

The bottom line is that Finance solutions still need to address a range of operationally-centric,

mostly non-strategic functionality.

– Despite statements regarding Finance leaders’ desire to play a more strategic business role, the

primary priorities of Finance remain tactical and managerial. A critical question for both Finance

leaders and for Finance systems providers is: How can/should Finance leaders, and organizations, be enabled to shift focus to more strategic needs and abilities?

Page: 8


Notes on the Data

Source: Saugatuck Technology Inc. “Finance in the Cloud” (CFO/CIO) survey, N=317, North America (Dec. 2014)

Changing CFO Priorities: Importance – Summary

Saugatuck Insight: Despite statements regarding Finance leaders’ desire to play a more strategic business role, the primary

priorities of Finance remain tactical and managerial. How can/should Finance leaders, and orgs, be enabled to shift focus to

more strategic needs and abilities?

• Non-revenue, non-

strategic activities

top the list.

• Risk management,

revenue generation,

and cost avoidance

share middling

sentiment/

importance.

• Finance priorities are

mostly tactical and

managerial in nature.

Page: 9

35%

30%

41%

43%

38%

41%

42%

48%

39%

15%

25%

24%

25%

29%

30%

32%

30%

45%

0% 20% 40% 60% 80% 100%

Managing shareholder information / relations

Processing transactions

Drive continuous enterprise cost reduction

Improve revenue growth opportunity identification /…

Managing / mitigate business risk

Managing compliance / internal controls

Providing input for strategic decision making

Monitoring / measuring performance

Effective planning, budgeting and forecasting

Please indicate the level of importance that each of the following priorities and responsibilities have in your organization today. (Only “Very Important” +

“Extremely Important” responses shown)

Very Extremely


Notes on the Data


Changing CFO Priorities: Importance – Finance vs. IT

Saugatuck Insight: The good news is that both Finance and IT leaders see the same priorities in the same basic order; only

their emphasis differs – and those differences are explainable by each party’s traditional roles and resulting perspective. The

question remains: what, if anything, can or should be done to enable a shift toward more strategic priorities and

improvements for Finance? Can improvements in systems themselves enable this?

• Rankings are similar

but with slightly

different emphases.

• Finance sees the top

priorities as more

important.

• IT leaders tend to

show some bias

toward traditional IT

management

priorities (i.e.,

transaction

processing, cost

reduction).

Page: 10

51%

52%

62%

68%

70%

70%

78%

81%

91%

51%

58%

68%

68%

66%

72%

72%

76%

79%

0% 20% 40% 60% 80% 100%




Improve revenue growth opportunity identification /…






Please indicate the level of importance that each of the following priorities and responsibilities have in your organization today. (Only “Very Important” +

“Extremely Important” responses shown)

IT Finance


Notes on the Data


Changing CFO Priorities: Importance – Size

Saugatuck Insight: As the overall patterns of importance remain very similar, it can be safely assumed that these needs and

challenges of Finance leaders and organizations remain constant regardless of company size. Provider go-to-market

emphasis can be tailored to address size-based differences while satisfying core needs with a standardized, core

functionality.

• Top priorities remain

similar across

company sizes.

• At and above 3K

employees, the

middle priorities shift

significantly, with

substantial drop-off

from the top priorities

in 3K to 10K

employee size firms.

• The largest firms are

the most concerned

with risk and cost

management.

Page: 11

100 - 999

Employees

1,000 - 2,999

Employees

3,000 - 10,000

Employees

> 10,000

Employees

Effective planning, budgeting and

forecasting 86% 88% 84% 83%

Monitoring / measuring performance 86% 73% 78% 87%

Providing input for strategic decision

making 79% 80% 69% 78%

Managing compliance / internal

controls 74% 75% 69% 63%

Managing / mitigate business risk 74% 67% 66% 74%

Improve revenue growth opportunity

identification / tracking 65% 66% 70% 70%

Drive continuous enterprise cost

reduction 51% 63% 67% 74%

Processing transactions 53% 56% 57% 48%

Managing shareholder information /

relations 44% 51% 56% 43%

Please indicate the level of importance that each of the following priorities and responsibilities have in your organization today. (Only “Very Important” + “Extremely

Important” responses shown)


Notes on the Data


Changing CFO Priorities: Importance – Title

Saugatuck Insight: The role-based predictability of relative Finance priorities simplifies solution and provider selection (and

provider positioning and messaging) by providing a “message map” that resonates with each group having input into

Finance solution/system development and selection. The bottom line is that Finance solutions still need to address a range

of operationally-centric, mostly non-strategic functionality.

• We see clear, role-

relevant rankings,

including:

– Analysts are

concerned most

about data – and

not about risk.

– Managers care

most about

managing &

planning.

– CEOs care most

about next year+.

Page: 12

C-level

EVP, GVP,

SVP

GM, VP,

Controller Director

Manager,

Supervisor Analyst

Effective planning, budgeting

and forecasting 92% 73% 85% 85% 75% 88%

Providing input for strategic

decision making 78% 82% 73% 78% 58% 75%

Monitoring / measuring

performance 83% 82% 86% 80% 50% 63%

Improve revenue growth

opportunity identif. / tracking 72% 73% 66% 68% 71% 50%

Managing compliance / internal

controls 73% 68% 71% 73% 79% 13%

Managing / mitigate business

risk 73% 73% 69% 69% 75% 0%


reduction 62% 64% 64% 72% 67% 25%

Processing transactions 57% 41% 49% 61% 71% 25%

Managing shareholder

information / relations 62% 55% 47% 47% 54% 13%

Please indicate the level of importance that each of the following priorities and responsibilities have in your organization today. (Only “Very Important” + “Extremely

Important” responses shown)


Changing CFO Priorities: Effectiveness – Insight Summary

• Survey Question: Please indicate how effective your current Financial Management System(s) are at

helping your organization address each of the following priorities and responsibilities.


– The survey response data bode ill for most current Finance systems – and for those selling or

manufacturing them. Hefty gaps between the relative importance, and relative system

effectiveness, among the top Finance priorities instantly show us where the greatest

opportunities for improvement lie: FP&A, BI/CPM, and strategic business input.

– Even the smallest firms (typically having the least-complex organizations and models) show

substantial need for Finance system improvement. The overall view from both Finance and IT is

that there is substantial room for improvement in the ability of systems to enable an support what

Finance needs to accomplish.

– Outside of transaction processing, fewer than 50% of participants see their current systems as

being effective. Even transaction processing is only seen as effective by 53% of survey takers.

– While perceived ineffectiveness alone may not be enough to trigger replacement, it is a sign that

users (and their leaders) see massive room for improvement – if and where Finance groups and

leaders can be convinced of such improvement through the acquisition of better systems.

– The go-to-market challenge for solution developers and providers: Qualifying or quantifying the

likely scope of Finance improvement without over-emphasizing Finance’s existing less-than-

adequate performance.

– Addressing this needs to emphasize how Finance can improve its own value and performance –

without emphasizing that Finance may not be performing well or providing enough value.

Vendors need to focus on inadequate systems and technology without opening up their own

offerings, or previous customer IT practices, to criticism.

Page: 13


Notes on the Data


Changing CFO Priorities: Effectiveness – Summary

Saugatuck Insight: The survey response data bode ill for most current systems - and for those selling or manufacturing

them. While perceived ineffectiveness alone may not be enough to trigger replacement, it is a sign that users (and their

leaders) see massive room for improvement – if and where Finance groups and leaders can be convinced of such

improvement through the acquisition of better systems.

• Outside of

transaction

processing, < 50% of

participants see their

current systems as

being effective.

• Even transaction

processing is only

seen as Very or

Extremely effective

by 53% of Finance

system users and

leaders.

Page: 14

33%

33%

35%

36%

37%

41%

44%

46%

53%

0% 20% 40% 60%



Improve revenue growth opportunity identification /tracking







Please indicate how effective your current Financial Management System(s) are at helping your organization address each of the following priorities and

responsibilities. (Only “Very Effective” + “Extremely Effective” responses shown)


Notes on the Data


Changing CFO Priorities: Importance vs. Effectiveness

Saugatuck Insight: Hefty gaps between the relative importance, and relative system effectiveness, among the top Finance

priorities instantly show us where the greatest opportunities for improvement lie: FP&A, BI/CPM, and strategic business

input. The go-to-market challenge for solution developers and providers: Qualifying or quantifying the likely scope of

Finance improvement without over-emphasizing Finance’s existing less-than-adequate performance.

• The most important

priorities show the

greatest lack of

overall system

effectiveness.

• These can be

considered as

“target-rich

environments” for

Finance systems

providers.

Page: 15

36%

53%

33%

35%

37%

46%

33%

44%

41%

50%

55%

64%

68%

68%

70%

74%

78%

84%

0% 20% 40% 60% 80% 100%




Improve revenue growth opportunity…






Please indicate how important and effective your current Financial Management System(s) are at helping your organization address each of the

following priorities and responsibilities. (Only “Very Effective” + “Extremely Effective” responses shown)

Importance Effectiveness


Notes on the Data


Changing CFO Priorities: Effectiveness – Finance vs. IT

Saugatuck Insight: Both Finance and IT agree there is substantial room for improvement in the ability of systems to enable

and support Finance priorities. Addressing this needs to emphasize how Finance can improve its own value and performance –

without emphasizing that Finance may not be performing well, or providing enough value. Vendors need to focus on

inadequate systems and technology without opening up their own offerings, or previous customer IT practices, to criticism.

• IT leaders show

more faith in existing

systems – but also

mirror Finance’s

dissatisfaction with

those systems’

effectiveness.

• Systems pertaining

to strategic business

and Finance

improvement are the

least effective.

Page: 16

28%

29%

31%

31%

34%

38%

41%

46%

57%

39%

38%

40%

45%

38%

45%

48%

46%

49%

0% 20% 40% 60%



Improve revenue growth opportunity…







Please indicate how effective your current Financial Management System(s) are at helping your organization address each of the following priorities and

responsibilities. (Only “Very Effective” + “Extremely Effective” responses shown)

IT Finance


Notes on the Data


Changing CFO Priorities: Effectiveness – Size

Saugatuck Insight: While we see the same basic pattern of relative ineffectiveness regardless of size, the degrees of effect-

iveness change as companies grow. Compliance / internal controls seem to go through improvement-decline-improvement

cycles based on size; performance monitoring and management improves as companies get larger. The bottom line? Even

the smallest firms (typically having the least-complex orgs and models) show substantial need for Finance system improvement.

• The smallest firms

indicate the most

effectiveness in

immediate “getting

the money into the

system” – but the

least effectiveness of

Finance systems

overall.

• NOTE: Only “Very Effective” + “Extremely Effective” responses shown.

Page: 17

100 - 999

Employees

1,000 - 2,999

Employees

3,000 - 10,000

Employees

> 10,000

Employees

Processing transactions 67% 55% 48% 50%

Managing compliance / internal controls 40% 49% 44% 52%

Monitoring / measuring performance 42% 45% 43% 52%

Effective planning, budgeting and

forecasting 35% 44% 42% 39%

Managing / mitigate business risk 33% 36% 40% 37%

Managing shareholder information /

relations 35% 37% 37% 33%

Improve revenue growth opportunity

identification / tracking 26% 44% 32% 35%

Providing input for strategic decision

making 30% 35% 32% 37%


reduction 26% 35% 34% 35%

Please indicate how effective your current Financial Management System(s) are at helping your organization address each of the following priorities and responsibilities. (Only “Very

Effective” + “Extremely Effective” responses


Status of Financial Management Systems – Insight Summary

• Survey Question: Please select the answer that best describes the status of your current Financial

Management System(s):


– Greater than 50% of current Financial Management systems are viable targets for replacement,

with users actively evaluating options to replace (21%), or having plans to replace in 6-12

months (15%) or 12-24 months (17%).

– IT executives are much more bullish than Finance executives on the expected pace of migration.

Differences in perceptions between IT and Finance execs potentially indicate differences in

evaluation criteria. For example, IT execs are likely more concerned with operational costs,

support staffing, etc., whereas Financial execs are likely more concerned with richness of

functionality and system availability.

– Respondents from mid-sized companies (1K to 3K employees) indicate the least satisfaction

AND the greatest propensity for evaluating replacement systems. This potentially results from

challenges of using tools implemented when the companies were smaller and suggests a

significant concentration of opportunity.

– Two industry segments (Bus./Prof. Svcs, and CPG/Food & Bev.) represent a concentrated

opportunity.

Page: 18


Notes on the Data


Status of Financial Management Systems – Summary

Saugatuck Insight: Only 23% of respondents indicated satisfaction with current Financial Mgmt systems. Since this is 6

percentage points higher than those who had recently replaced their systems, we believe this may actually result from a lack

of recent focus and indicate additional opportunity for replacement systems. In total this would yield more than 50% of

current systems are potential targets for upgrade.

• 53% of respondents

(see red box) indicated

being unhappy with

current Financial Mgmt

systems AND have

budget to replace them.

• Only 5% of respondents

indicated dissatisfaction

but lack budget to

replace them.

Page: 19

5%

15%

17%

21%

17%

23%

We are unhappy with the system but have nobudget to replace

We are planning to replace the system (next 6-12 months)

We’re planning to replace the system (next 12-24 months)

We’re currently evaluating options to replace the system

We recently upgraded/replaced the system

We’re happy with the system; no changes planned

0% 5% 10% 15% 20% 25%

Please select the answer that best describes the status of your current Financial Management System(s):


Notes on the Data


Status of Financial Management Systems – Finance vs. IT

Saugatuck Insight: Except for the lowest ranked response (“unhappy but no budget”), Finance execs indicated they are

more satisfied than IT execs with their current systems. Differences in perceptions between IT and Finance potentially

indicate differences in evaluation criteria. For example, IT execs are likely more concerned with operational costs, support

staffing, etc., whereas Financial execs are likely more concerned with richness of functionality and system availability.

• Difference in IT vs

Finance response for

“planning to replace

in 6-12 months”

suggests lack of

coordination

between the two

camps.

Page: 20

6%

10%

14%

19%

20%

28%

4%

20%

20%

23%

15%

17%

0% 20% 40%

We are unhappy with the system but have no budget toreplace

We are planning to replace the system (next 6-12 months)

We’re planning to replace the system (next 12-24 months)

We’re currently evaluating options to replace the system

We recently upgraded/replaced the system

We’re happy with the system; no changes planned


IT Finance


Notes on the Data


Status of Financial Management Systems – Size

Saugatuck Insight: Respondents from mid-sized companies (1K to 3K employees) indicate the least satisfaction AND the

greatest propensity for evaluating replacement systems. This potentially results from challenges of using tools implemented

when the companies were smaller and suggests a significant concentration of opportunity.

• Respondents from

mid-sized companies

(1K to 3K

employees) indicate

the least satisfaction

with their Financial

Mgmt systems

Page: 21

100 - 999

Employees

1,000 - 2,999

Employees

3,000 - 10,000

Employees

> 10,000

Employees

We are unhappy with the system but

have no budget to replace 12% 6% 4% 2%

We are planning to replace the system

(next 6-12 months) 9% 16% 16% 13%

We’re planning to replace the system

(next 12-24 months) 12% 19% 19% 15%

We’re currently evaluating options to

replace the system 19% 26% 19% 20%

We recently upgraded/replaced the

system 23% 18% 16% 17%

We’re happy with the system; no

changes planned 23% 16% 26% 28%



Notes on the Data


Status of Financial Management Systems – Industry

Saugatuck Insight: Respondents from two industries (Bus./Prof. Svcs, and CPG/Food & Bev.) indicated significantly lower

overall satisfaction with current Financial Mgmt systems and indicates high incidence (52% & 73% respectively) of

evaluating or planning a replacement system (see red rectangle). This suggests a concentrated opportunity in these industry

market segments.

• With exception of

two industry

segments (Bus./Prof.

Svcs, and CPG/Food

& Bev.) respondents

expressed fairly

consistent

satisfaction with

existing Financial

Mgmt systems

Page: 22

Bus./ Prof.

Svcs

CPG /

Food &

Bev

Energy /

Utlty /

Chem

Fin Svcs /

Ins. / Bank

Health /

Pharm. /

Life Sci

Tech. /

Telco/

Media /

Ent.

Manu /

Logistics /

Retail

Pub

Sector /

Govt

We are unhappy with

the system but have no

budget to replace 7% 7% 0% 5% 7% 2% 4% 7%

We are planning to

replace the system

(next 6-12 months) 11% 7% 9% 11% 13% 26% 25% 0%

We’re planning to

replace the system

(next 12-24 months) 19% 33% 22% 16% 18% 14% 12% 14%

We’re currently

evaluating options to

replace the system 22% 33% 26% 31% 22% 14% 21% 7%

We recently

upgraded/replaced the

system 26% 13% 22% 16% 9% 23% 13% 36%

We’re happy with the

system; no changes

planned 15% 7% 22% 20% 31% 21% 25% 36%



Will Cloud Replace On-Premises Financials? – Insight Summary

• Survey Question: Do you believe Cloud / SaaS Financial Management Systems will eventually

replace on-premise financials?


– Almost all Finance and IT executives feel that Cloud is going to replace on-premises financial systems. Overall,

IT responses are the most positive on the Cloud with only 6% indicating that they do not expect systems to move

the Cloud. Self-identified Conservative technology adopters are at the extreme end of the spectrum, where 18%

believe Financial software will always remain on-premises.

– The timing for deployment is spread out over the next 24 months. Smaller companies and Aggressive adopters are already working on migrating systems today, while larger companies are more likely to be targeting deployments 12-24 months from now. Overall, IT users are more positive that systems will move, while finance

users are more likely to adopt a wait-and-see attitude.

– Saugatuck believes that the primary drivers for these responses are a combination of uncertainty and caution on

behalf of companies, which serves to retard immediate efforts to upgrade systems. This is especially apparent in

the larger companies where process and existing technology both represent significant investments and also

significant challenges to upgrade/change.

– Despite this, the footprint of existing financial software is aging. Many systems were designed for an era when

businesses didn’t have to meet the increasingly complicated regulatory requirements and also were not under

such competitive pressure to be agile.

– This aging footprint ultimately must give way to new systems, designed from the ground up to take into account

the requirements of businesses to incorporate rapid restructurings, digital products and services, and increasing

scale of data.

Page: 23


Will Cloud Replace On-Premises Financials? – Summary

Saugatuck Insight: Despite hesitation on moving to the Cloud, very few respondents (9%) believe that Financial

Management will remain on-premises into the foreseeable future. The bulk of responses that indicate either 2 years away, or

“don’t know” are strong indicators that this category of applications is likely to remain very hybridized in the near future.

Where Financial management moves to the Cloud sooner, it is likely to be in a supplementary role to existing systems.

Page: 24

16%

18%

29%

24%

9%

0% 20% 40%

Yes, it’s happening today

Yes, it will happen within the next 6-12 months

Yes, but it will happen over the next 12-24 months

Don't really know, only time will tell...

No, I don’t believe Financial Management will ever move to to the Cloud

Do you believe Cloud / SaaS Financial Management Systems will eventually replace on-premise financials?



Notes on the Data


Will Cloud Replace On-Premises Financials? – Finance vs. IT

Saugatuck Insight: 71% of IT respondents believe that Financials will be in the cloud within the next 24 months, weighted

toward the end of that time-frame (See Slide 19). More work needs to demonstrate to Finance users of the need to

upgrade/migrate their financial solutions by focusing on business outcomes. IT buyers can more easily justify the operation

improvements garnered by leveraging the SaaS model, and will focus less on specific areas of business enablement.

• Overall, IT sees more

movement move toward

SaaS than Finance.

• IT is less unsure about

when this will happen.

• IT is also less likely to

believe that this

transition is already

happening today.

• Finance Users either

believe that more of this

is happening today, or

that it is much further

away.

Page: 25

19%

11%

26%

29%

13%

13%

26%

32%

20%

6%

0% 10% 20% 30% 40%

Yes, it’s happening today

Yes, it will happen within the next 6-12months

Yes, but it will happen over the next 12-24months

Don't really know, only time will tell...

No, I don’t believe Financial Management will ever move to the Cloud


IT Finance


Notes on the Data


Will Cloud Replace On-Premises Financials? – Size

Saugatuck Insight: Small companies are the most active in upgrading systems today, likely due to less existing software and fewer

users to train; Cloud applications also allow them to stretch resources. Large enterprises may be beginning the process, but have

complex integration and deployment challenges, especially as they rationalize hybrid Cloud strategies. The move to cloud is more a

question of timing than anything else.

• Larger companies with

more than 3,000

employees indicate that

the bulk of their efforts

are unlikely to happen

immediately, but will

begin to ramp up over

the next year, with the

bulk coming 12-24

months away.

• Smaller Companies are

much more able to take

advantage of the Cloud

now.

Page: 26

100 - 999

Employees

1,000 - 2,999

Employees

3,000 - 10,000

Employees

> 10,000

Employees

Yes, it’s happening today 35% 11% 15% 9%

Yes, it will happen within

the next 6-12 months 14% 22% 19% 13%

Yes, but it will happen

over the next 12-24

months

23% 33% 25% 39%

Don't really know, only

time will tell... 19% 27% 25% 26%

No, I don’t believe

Financial Management

will ever move to the

Cloud

7% 7% 13% 7%



Notes on the Data


Will Cloud Replace On-Premises Financials? – Adoption Profile

Saugatuck Insight: The story here is not that adoption is happening more slowly for conservative adopters, but that it is

happening. Relatively few users expect the systems to stay on-premises forever, so again, the timing is everything.

Conservative adopters want more mileage out of their existing systems and are adopting a wait-and-see attitude toward the

evolution of their applications. Aggressive adopters have already began replacing systems in search of business advantage.

• Conservative adopters

are less likely to deploy

Cloud in the near term.

• They do indicate that

these systems will

eventually move to the

Cloud, though.

• Conservative adopters

also indicate a much

higher rate of believing

that the Cloud may

never be right for

Financial systems.

Page: 27

Aggressive Mainstream Conservative

Yes, it’s happening today 24% 16% 12%

Yes, it will happen within the

next 6-12 months 28% 22% 6%

Yes, but it will happen over the

next 12-24 months 24% 28% 34%

Don't really know, only time will

tell... 12% 26% 31%

No, I don’t believe Financial

Management will ever move to

the Cloud

10% 6% 18%



Evolution of Financials Footprint 2014-2018 – Insight Summary

• Survey Question: How would you best describe your current Financial Management System(s)

footprint, as well as your vision for what it will look like in 2016 and 2018?


– Over a four year period, the on-premises footprint preference declines by more than half (58%

27%), while all other categories grow, although the Sidecar footprint grows the least (15%

18%). Sidecar implementations can probably be thought of as a complementary adjunct to core

financials, as they gradually deploy process by process (21%), function-only (16%) or all in

(14%). SPP: CFOs preferring the on-premises footprint will remain the largest of the five categories until 2020.

– IT takes a more aggressive view of Cloud migration than Finance, both in the general arc

through 2018 and in several specific instances. Examples include Process-specific (28% v 14%)

in 2016 and Functionally Cloud-based (20% v 12%) in 2018. IT’s view very likely concerns the

technology challenges of migration in strongly preferring Process-specific in 2016 and the

architectural and security advantages of a Functionally Cloud-based footprint in 2018.

– While there is a clear correlation between size and on-premises preference in 2014, by 2018 that

levels out for the most part, except for the 1000-2,999 which even in 2018 has a 33% preference

for On-premises. Another way to look at it is to view the Very Small (100-999) as distinct in

showing a steeper decline in On-premises preference and a sharper rise in Fully Redeployed

(12%-16%-26%) than other segments. By 2018, all sizes and footprints show double digits (11-

33%).

Page: 28


Evolution of Financials Footprint 2014-2018 – Question Detail

• How would you best describe your current Financial Management System(s) footprint, as

well as your vision for what it will look like in 2016 and 2018?

• Please select from one of the following five descriptive profiles (for each year):

– On-premises Completely: All of our core Financial Management System(s) are on-premises. This

includes our core accounting systems, financial planning / forecasting / budgeting systems, as well

as our performance management and advanced analytics / BI capabilities.

– Sidecar Approach: We plan to keep our core Financial Management System(s) on-premises but

are standing up new capabilities in the Cloud that help with our consolidations, financial planning /

forecasting / budgeting, and advanced analytic requirements.

– Process-Specific Migration to Cloud: We are in the middle of a process-by-process migration of our

Financial Management System(s) to the Cloud, assessing each financial process as to whether it

makes sense to leave it on-premises, deploy in a hybrid model, or move it to the Cloud.

– Functionally Cloud-based: On a step-by-step basis, we will be moving all of our financial processes

to the Cloud, but we are going to leave our financial data on-premises or in a private Cloud.

– Fully Deployed to Cloud: We have or will be moving all of our Financial System(s) and data to the

Cloud. This includes our core accounting systems, financial planning / forecasting / budgeting

systems, as well as our performance management and advanced analytics / BI capabilities.

Page: 29


Notes on the Data


Evolution of Financials Footprint 2014-2018 – Summary

Saugatuck Insight: By 2018, the on-premises footprint preference declines by more than half (58% 27%), while all other

categories grow, although the Sidecar footprint grows the least (15% 18%). Sidecar implementations can probably be

thought of as a complementary adjunct to core financials, as they gradually deploy process by process (21%), function-only

(16%) or all in (14%). SPP: CFOs preferring the on-premises footprint will remain the largest of the five categories until 2020.

• On premises drops

from 58% to 36% to

27% through 2018.

• Both Sidecar (15-

18%) and Process-

Specific (13-21%)

increase in 2016 and

remain at that level

through 2018.

• Both Functionally

Cloud-based and

Fully Redeployed

begin at 5% in 2014

and triple by 2018

(16% and 14%,

respectively).

Page: 30

5% 8% 14% 5%

13%

16%

13%

21%

21%

15%

18%

18%

58%

36% 27%

0%

20%

40%

60%

80%

100%

2014 2016 2018

How would you best describe your current Financial Management System(s) footprint, as well as your vision for what it will look like in 2016 and 2018?

On-premises Completely

Sidecar Approach

Process-Specific Migration toCloud

Functionally Cloud-based

Fully Redeployed to Cloud


Notes on the Data


Evolution of Financials Footprint 2014-2018 – Finance vs. IT

Saugatuck Insight: IT takes a more aggressive view of Cloud migration than Finance, both in the general arc through 2018

and in several specific instances. Examples include Process-specific (28% v 14%) in 2016 and Functionally Cloud-based

(20% v 12%) in 2018. IT’s view very likely concerns the technology challenges of migration in strongly preferring Process-

specific in 2016 and the architectural and security advantages of a Functionally Cloud-based footprint in 2018.

• Both Finance and IT

show a similar

declining preference

for the On-premises

footprint, but IT declines a bit more steeply thru 2018.

• The largest gap

between Finance

and IT occurs in the

2016 in re Process-

specific (28% v 14%)

• By 2018 Finance

and It are aligned but

for the Functionally

Cloud-based (20% v

12%) preferred by IT.

Page: 31

4% 5% 8% 8% 13% 15% 3%

8% 11%

16% 12%

20%

13%

12%

14%

28% 22%

20%

14% 15%

20%

17% 18%

18% 60%

57%

43%

30% 29% 25%

0%

20%

40%

60%

80%

100%

Finance IT Finance IT Finance IT

2014 2016 2018


On-premises Completely

Sidecar Approach

Process-Specific Migration toCloud

Functionally Cloud-based

Fully Redeployed to Cloud


Notes on the Data


Evolution of Financials Footprint 2014-2018 – Size

Saugatuck Insight: While there is a clear correlation between size and on-premises preference in 2014 (see Notes), by 2018

that levels out for the most part, except for 1,000-2,999 which even in 2018 has a 33% preference for on-premises. Another

way to look at it is to view Small (100-999) as distinct in showing a steeper decline in on-premises preference and a sharper

rise in Fully Redeployed (12%-16%-26%) than other segments. By 2018 all sizes and footprints show double digits (11-33%).

• in 2014 Smaller

(100-2,999)

organizations (60%

and 69%) strongly

prefer On-premises

versus Midsize

(3,000-10,000)

organizations (58%)

and Large (>10,000)

organizations (41%).

• By 2018, all sizes

prefer On-premises

between 21-33%

and the Very Small

(100-999) show the

greatest preference

for all-in to the Cloud

Page: 32

2014 2016 2018

On-p

rem

ises

Com

ple

tely

Sid

ecar

Appro

ach

Pro

cess-S

pecific

Mig

ratio

n t

o C

loud

Fu

nctio

nally

Clo

ud

-

based

Fu

lly R

edeplo

yed t

o

Clo

ud

On-p

rem

ises

Com

ple

tely

Sid

ecar

Appro

ach

Pro

cess-S

pecific

Mig

ratio

n t

o C

loud

Fu

nctio

nally

Clo

ud

-

based

Fu

lly R

edeplo

yed t

o

Clo

ud

On-p

rem

ises

Com

ple

tely

Sid

ecar

Appro

ach

Pro

cess-S

pecific

Mig

ratio

n t

o C

loud

Fu

nctio

nally

Clo

ud

-

based

Fu

lly R

edeplo

yed t

o

Clo

ud

100 - 999

Employees 60% 9% 14% 2% 12% 40% 16% 19% 5% 16% 21% 16% 21% 12% 26%

1,000 - 2,999

Employees 69% 12% 13% 1% 1% 40% 17% 20% 19% 1% 33% 16% 19% 15% 15%

3,000 - 10,000

Employees 58% 16% 8% 9% 6% 34% 20% 23% 11% 8% 27% 20% 23% 16% 11%

> 10,000

Employees 41% 22% 20% 7% 2% 30% 20% 22% 13% 11% 24% 20% 17% 22% 11%



Moving Financials to the Cloud: Key Concerns – Insight Summary

• Survey Question: Of the following, please rank the top three (3) most important concerns that you

have with moving Financial Management Systems to the Cloud.


– Despite mounting evidence of Cloud security, data privacy and security will likely always remain

the dominant concern, especially related to an organization’s financial aspects. Go-to-Market

strategy and messaging should primarily focus on it as well as data & process integration, as it

continues to be a key concern.

– IT respondents indicated higher rankings for concerns in areas typically associated with IT with

“compliance” being highlighted for targeted marketing.

– Respondents from mid-sized companies (1K to 3K employees) indicated a requirement for a

more targeted Go-to-Market messaging.

Page: 33


Notes on the Data


Moving Financials to the Cloud: Key Concerns – Summary

Saugatuck Insight: Despite mounting evidence of Cloud security, data privacy and security will likely always remain the

dominant concern, especially related to an organization’s financial aspects. Go-to-Market strategy and messaging should

primarily focus on both of the top two groups of concerns, as data and process integration continues to be a key concern.

• Responses appear

to reasonably split

into three logical

groupings of

concerns (see red

lines delineating the

groups).

Page: 34

21%

22%

22%

27%

30%

35%

56%

74%

0% 20% 40% 60% 80% 100%

May not keep pace with changes in ourindustry

Will not have ability to feed our company’s financial dashboards

Will require extensive training for financialusers

Won’t be fully compliant with key regulations

Won’t meet our performance requirements

Our company requires customization notoffered by the Cloud

May be difficult to integrate with applicationsystems

Data privacy / data security

Of the following, please rank the top three (3) most important concerns that you have with moving Financial Management Systems to the Cloud.


Notes on the Data


Moving Financials to the Cloud: Key Concerns – Finance vs. IT

Saugatuck Insight: IT respondents indicated higher rankings for concerns in areas typically associated with IT (i.e.,

customization, performance, feeding dashboards, and compliance). The significantly higher concern about “compliance”

suggests a targeted marketing approach focusing on this area.

• Except for the lowest

ranked concern

(“compliance with

key regulations”)

there is reasonable

alignment between

the perspectives of

IT and Finance

respondents.

Page: 35

19%

21%

23%

26%

29%

33%

59%

76%

35%

23%

19%

19%

32%

38%

55%

73%

0% 20% 40% 60% 80% 100%

Won’t be fully compliant with key regulations

Will not have ability to feed our company’s financial dashboards

May not keep pace with changes in our industry

Will require extensive training for financial users

Won’t meet our performance requirements

Our company requires customization not offeredby the Cloud

May be difficult to integrate with applicationsystems

Data privacy / data security

Of the following, please rank the top three (3) most important concerns that you have with moving Financial Management Systems to the Cloud.

IT Finance


Notes on the Data


Moving Financials to the Cloud: Key Concerns – Size

Saugatuck Insight: Respondents from all sized companies indicated similar rankings for concerns. Respondents from mid-

sized companies (1K to 3K employees) indicated the broadest range of rankings for concerns, suggesting that this market

segment requires a more targeted Go-to-Market messaging.

• Respondents from

mid-sized companies

(1K to 3K

employees) ranked

concern about data

privacy/security

significantly higher

than respondents

from other sized

companies.

Page: 36

100 - 999

Employees

1,000 - 2,999

Employees

3,000 - 10,000

Employees

> 10,000

Employees

Data privacy / data security 67% 81% 72% 76%

May be difficult to integrate with

application systems 63% 54% 59% 52%

Our company requires

customization not offered by the

Cloud

37% 37% 33% 41%

Won’t meet our performance

requirements 30% 34% 29% 24%

Won’t be fully compliant with key

regulations 30% 21% 28% 30%

Will require extensive training for

financial users 23% 22% 24% 17%

Will not have ability to feed our

company’s financial dashboards 19% 20% 25% 20%

May not keep pace with changes in

our industry 14% 19% 22% 26%

Of the following, please rank the top three (3) most important concerns that you have with moving Financial Management Systems to the Cloud


Moving Financials to the Cloud: Timing – Insight Summary

• Survey Question: Please indicate when each of the following applications or systems are expected to

be (primarily) Cloud-based in your enterprise.


– Long-term use of primarily Cloud-based Financials tops out at between 55% and 65% of firms

over the planning horizon.

– “Money” functions – Treasury, core accounting, and revenue management – are the least likely to

go to Cloud, while Managerial functions are the most likely to go to Cloud (e.g., Planning /

Forecasting, Analytics / Performance Management, Payroll and Expense Mgmt.)

– IT leaders see an average of ¼ to 1/3 more Cloud-based Finance systems presence and growth

from 2014 through 2016 than do Finance leaders.

– As has been the case throughout Saugatuck's Cloud business software research history: The

closer we get to the money functions, the less likely we are to involve Cloud. That doesn’t mean

No Cloud at all; it just means the systems upon which the enterprise relies to make and manage

money are the least likely to be found in Cloud. Rightly or wrongly, this is mainly due to

traditional culture and practices regarding control over money and related core data.

– A continuing trend among participants in Saugatuck’s research on Cloud-based business

management solutions, regardless of enterprise business group or area of responsibility, is that

adoption patterns and actions are strongest or more expected one to two years in the future. A

lack of enterprise- or even department-wide Cloud strategy and planning means that the growing

adoption - happening right now throughout the enterprise - is rarely noticed until after the fact.

Page: 37


Notes on the Data


Moving Financials to the Cloud: Timing – Summary

Saugatuck Insight: As has been the case throughout Saugatuck's Cloud business software research history, the closer we

get to the money functions, the less likely we are to involve Cloud. That doesn’t mean No Cloud at all; it just means the

systems upon which the enterprise relies to make and manage money are the least likely to be found in Cloud. Rightly or

wrongly, this is mainly due to traditional culture and practices regarding control over money and related core data.

• Long-term use of

primarily Cloud-

based Financials

tops out at between

55% and 65% of

firms.

• “Money” functions –

Treasury, core

accounting, and

revenue

management – are

the least likely to go

to Cloud.

• Managerial functions

are the most likely to

go to Cloud.

Page: 38

6% 7% 12%

19%

8% 6% 6% 7% 8% 4%

6%

10%

7%

4% 3% 5% 5% 7%

15% 16%

17% 17%

20%

15% 14% 10%

19%

17%

21%

15% 10%

21%

20% 20% 17%

19%

15%

12% 12% 12% 13%

12% 15%

14%

11%

0%

10%

20%

30%

40%

50%

60%

70%

CoreAccounting

Procurement ExpenseMgmt.

Payroll Analytics /Perform.

Mgmt

RevenueMgmt.

Asset Mgmt. TreasuryMgmt.

Planning /Forecasting

Please indicate when each of the following applications or systems are expected to be (primarily) Cloud-based in your enterprise

Already Primarily in Cloud By YE 2014 By YE 2015 By YE 2016 By YE 2017+


Moving Financials to the Cloud: Timing – IT vs. Finance

Saugatuck Insight: IT leaders see an average of ¼ to 1/3 more Cloud-based Finance systems presence and growth from

2014 through 2016 than do Finance leaders. We see two factors at work in this: (1) IT leaders external to the Finance

organization likely have a more complete view of all Finance-related systems, and (2) IT leaders tend to be more positive

regarding Cloud adoption and use within the enterprise, frequently acting as Cloud evangelists to business units like Finance.

Page: 39




Notes on the Data


Moving Financials to the Cloud: Timing – Company Size

Number of Employees

Financial Mgmt Application/System Timeframes 100 - 999

1,000 -

2,999

3,000 -

10,000 > 10,000

Core Accounting (e.g., GL, AR/AP) Thru 2015 16% 8% 11% 7%

2016-2017 28% 33% 35% 26%

Beyond 2017 21% 16% 13% 20%

Procurement Thru 2015 19% 9% 13% 20%

2016-2017 37% 39% 37% 33%

Beyond 2017 2% 17% 14% 9%

Expense Management Thru 2015 26% 18% 19% 28%

2016-2017 37% 34% 32% 24%

Beyond 2017 5% 15% 13% 11%

Payroll Thru 2015 47% 18% 22% 28%

2016-2017 16% 35% 29% 17%

Beyond 2017 12% 12% 12% 15%

Data Analytics / Performance Management Thru 2015 21% 8% 13% 9%

2016-2017 40% 45% 39% 39%

Beyond 2017 5% 12% 16% 15%

Revenue Management Thru 2015 12% 6% 11% 7%

2016-2017 40% 40% 29% 33%

Beyond 2017 7% 11% 14% 15%

Asset Management Thru 2015 16% 10% 11% 9%

2016-2017 35% 37% 33% 24%

Beyond 2017 7% 16% 15% 22%

Treasury Management Thru 2015 12% 13% 12% 11%

2016-2017 33% 31% 25% 20%

Beyond 2017 12% 8% 18% 17%

Saugatuck Insight: A continuing trend in Saugatuck’s research on Cloud-based business management solutions, regardless

of enterprise business group or area of responsibility, is that adoption patterns and actions are strongest or more expected

one-to-two years in the future. A lack of enterprise-wide or even department-wide Cloud strategy and planning means that

the growing adoption - happening right now throughout the enterprise - is rarely noticed until after the fact.

• The greatest growth

in the use of Cloud-

based Finance apps

is expected in the

2016-’17 timeframe

(as shown in red %).

• A majority of survey

participants do not

expect any Finance

app category to be

mostly Cloud until

beyond 2017.

Page: 40



Statements on Financial Management Systems – Insight Summary

• Survey Question: Please rate each of the following statements about your Finance Management

System(s) – Agree and Strongly Agree Shown.


– Although a significant majority of Finance and IT execs believe their systems are easy-to-use

and timely (63%), there are 3 powerful motivators for system replacement, upgrade or

enhancement: 1) adding Big Data analytics; 2) current systems are highly fragmented; 3) they

are too expensive to run or upgrade. At the same time, consolidations and complex regulations

add to the burden of staying functionally up-to-date. Yet, despite these challenges, urgency has

not yet been perceived or established.

– From an operational point of view, the greatest challenge to IT is consolidating subsidiaries,

although Finance must not be aware of the challenges IT has to deal with because it is one of

their least concerns. It may be a point of tension consequently. On the competitive side of

Finance, enhancing financial systems with Big Data analytics is something both IT and Finance

agree strongly about, although IT is significantly more positive. Analytics is clearly a motivator.

– If we assume the very small enterprise (100-999) is a special case and focus on the other three

size segments, it is easy to see that Big Data analytics is a hot button across the board,

consolidation is a shared challenge and new regulations have universally complicated financial

reporting. Yet as organizations grow in size there is a decline in agreement that systems are

easy-to-use and timely. The very small enterprise is the least satisfied with its financial systems

and a clear opportunity.

Page: 41


Notes on the Data


Statements on Financial Management Systems – Summary

Saugatuck Insight: Although a significant majority believe their systems are easy-to-use and timely (63%), there are 3

powerful motivators for system replacement, upgrade or enhancement: 1) adding Big Data analytics 2) current systems are

highly fragmented, 3) too expensive to run or upgrade. At the same time, consolidations and complex regulations add to the

burden of staying functionally up-to-date. Yet, despite these challenges, urgency has not yet been perceived or established.

• A significant majority

of respondents

believe their systems

are easy-to-use and

timely (63%).

• Nevertheless, an

ever greater number

(71%) value the

enhancement of Big

Data analytics.

• Two negatives were

expressed:

– Highly-fragmented

systems (54%) and

– Too expensive to

run or upgrade

systems (48%).

Page: 42

48%

54%

58%

59%

63%

64%

71%

0% 20% 40% 60% 80% 100%

Our core Financial system is too expensive torun and/or to upgrade.

Our Financial systems are highly fragmentedwith too many disparate interfaces btw them.

Our Financial systems easily support rapid,flexible and timely changes in the business.

Consolidating subsidiaries is a major challengetoday

Our Financial systems provide an easy-to-useand timely "single version of the truth".

New regulatory requirements have significantlycomplicated our financial reporting.

We believe our financial systems would beenhanced by Big Data analytics.

Please rate each of the following statements about your Finance Management System(s) – Agree and Strongly Agree Shown


Notes on the Data


Statements on Financial Management Systems – Finance vs. IT

Saugatuck Insight: From an operational point of view, the greatest challenge to IT is consolidating subsidiaries, although

Finance must not be aware of the challenges IT has to deal with because it is one of their least concerns. It may be a point

of tension consequently. On the competitive side of Finance, enhancing financial systems with Big Data analytics is some-

thing both IT and Finance agree strongly about, although IT is significantly more positive. Analytics is clearly a motivator.

• IT is even more

positive about Big

Data analytics than

Finance (81-63%).

• In every statement

but one, IT is

significantly more

positive than

Finance.

Alignment is close

on finance systems

being easy-to-use

and timely (65-62%).

• The greatest gap

between IT and

Finance (72-48%) is

Consolidation.

Page: 43

39%

46%

48%

53%

59%

62%

63%

58%

63%

72%

65%

71%

65%

81%

0% 20% 40% 60% 80% 100%

Our core Financial system is too expensive torun and/or to upgrade.

Our Financial systems are highly fragmentedwith too many disparate interfaces btw them.

Consolidating subsidiaries is a major challengetoday

Our Financial systems easily support rapid,flexible and timely changes in the business.

New regulatory requirements have significantlycomplicated our financial reporting.

Our Financial systems provide an easy-to-useand timely "single version of the truth".

We believe our financial systems would beenhanced by Big Data analytics.


IT Finance


Notes on the Data


Statements on Financial Management Systems – Size

Saugatuck Insight: If we assume the very small enterprise (100-999) is a special case and focus on the other three size

segments, it is easy to see that Big Data analytics is a hot button across the board, consolidation is a shared challenge, and

new regulations have universally complicated financial reporting. Yet as organizations grow in size there is a decline in

agreement that systems are easy-to-use and timely. The very small enterprise is the least satisfied with its financial systems.

• Consolidation is a

major challenge in

Large enterprises

(72% v 44-63-57%).

• Big Data is a strong

positive in Large

enterprise (70%).

• Large enterprises do

not feel their finance

systems support

rapid, flexible, and

timely changes.

• Big Data analytics

and new regulatory

requirements are hot

buttons in the SMB

space (1000-2,999).

Page: 44

100 - 999

Employees

1,000 - 2,999

Employees

3,000 - 10,000

Employees

> 10,000

Employees

We believe our financial systems would be

enhanced by Big Data analytics. 63% 75% 72% 70%

New regulatory requirements have signi-

ficantly complicated our financial reporting. 49% 75% 65% 61%

Our Financial systems provide an easy-to-

use and timely "single version of the truth". 53% 69% 64% 59%

Consolidating subsidiaries is a major

challenge today 44% 63% 57% 72%

Our Financial systems easily support

rapid, flexible and timely changes in the

business.

53% 60% 63% 48%

Our Financial systems are highly

fragmented with too many disparate

interfaces btw them.

37% 53% 60% 54%

Our core Financial system is too

expensive to run and/or to upgrade. 37% 51% 47% 57%



Statements on FP&A – Insight Summary

• Survey Question: Please rate each of the following statements about your Finance Planning &

Analysis (FP&A) capabilities and tools (only “Agree” + “Strongly Agree” responses are shown).


– The data suggest a strong trend toward adoption and use of FP&A tools, which are seen as

useful and (increasingly) required, and are being applied to reduce errors and inconsistencies –

i.e., to address baseline Finance activity and costs. It appears that FP&A tools / solutions have

not – yet – been implemented or leveraged into strategically-advantageous Finance capabilities,

likely because Finance must first “clean house.”

– IT leaders indicate a significantly greater favor toward FP&A tools than even Finance leaders do.

The most likely explanation of the stronger IT response is that the IT group tends to see more of

the systems in use overall but also tends to be more focused on system/tool performance than

on system/tool use and value in the Finance management and operational context. We have

seen similar perception/vision of IT vs Finance and other business units in previous research.

It’s very likely that communications gaps exist between Finance and IT leadership.

– There’s a tipping point at about 1,000 employees where FP&A needs and value seem to shift,

and firms begin outgrowing current tools/systems. Provider value propositions should likely shift

at this point as well, from emphasizing the basic functional improvement and utility of FP&A to

emphasizing systems growth, adaptability, and error/cost reduction.

– Generational factors don’t seem to be factor in FP&A use and satisfaction, but they do seem to

factor into the perceived value of FP&A tools and systems. Gen-Y leaders are significantly more

likely to be moving beyond spreadsheet-centric Finance cultures and operations toward modern

FP&A tools.

Page: 45


Notes on the Data


Statements on FP&A – Summary

Saugatuck Insight: The data suggest a strong trend toward adoption and use of FP&A tools, which are seen as useful and

(increasingly) required, and are being applied to reduce errors and inconsistencies – i.e., to address baseline Finance activity

and costs. FP&A tools/solutions have not – yet – been implemented or leveraged into strategically-advantageous Finance

capabilities, likely because Finance must first “clean house.”

• FP&A systems/tools

are widely regarded

as useful and

integral to Finance –

but there’s room for

debate as to whether

or not they are as

useful as

spreadsheets.

• Only a slim majority

of firms have been

able to integrate

FP&A throughout

Finance, let alone

the enterprise.

Page: 46

49%

55%

59%

60%

62%

66%

67%

0% 20% 40% 60% 80% 100%

We have not been able to get our organization tobuy into FP&A tools

We have not found FP&A tools to be as intuitiveor as versatile as spreadsheets

Inconsistent data has been a problem that we aretrying to solve with FP&A tools

We are happy and successful with our currentFP&A system.

Our planning culture has readily adopted FP&Atools with some training required

The use of spreadsheets, while helpful for spotanalysis, has lead to time-consuming errors

We have outgrown the limitations ofspreadsheets for FP&A

Please rate each of the following statements about your Finance Planning & Analysis (FP&A) capabilities and tools (only “Agree” + “Strongly Agree”

responses are shown)


Notes on the Data


Statements on FP&A – Finance vs. IT

Saugatuck Insight: The most likely explanation of the stronger IT response above is that the IT group tends to see more of

the systems in use overall but also tends to be more focused on system/tool performance than on system/tool use and value

in the Finance management and operational context. We have seen similar perception/vision of IT vs Finance and other

business units in previous research.

• IT leaders indicate a

significantly greater

favor toward FP&A

tools than even

Finance leaders do.

• The size of the IT-vs-

Finance gap may

indicate a lack of

communication/

understanding

between the two

groups.

Page: 47

45%

52%

53%

57%

57%

61%

63%

53%

59%

66%

63%

69%

73%

73%

0% 20% 40% 60% 80% 100%

We have not been able to get our organization tobuy into FP&A tools

We have not found FP&A tools to be as intuitiveor as versatile as spreadsheets

Inconsistent data has been a problem that weare trying to solve with FP&A tools

We are happy and successful with our currentFP&A system.

Our planning culture has readily adopted FP&Atools with some training required

The use of spreadsheets, while helpful for spotanalysis, has lead to time-consuming errors

We have outgrown the limitations ofspreadsheets for FP&A

Please rate each of the following statements about your Finance Planning & Analysis (FP&A) capabilities and tools (only “Agree” + “Strongly Agree”

responses are shown)

IT Finance


Notes on the Data


Statements on FP&A – Size

Saugatuck Insight: Smaller firms are more likely to have less-complex finances and therefore experience fewer data errors,

inconsistencies, etc. There’s a tipping point at about 1,000 employees where FP&A needs and value seem to shift, and firms

begin outgrowing current tools / systems. Provider value propositions should likely shift at this point as well, from emphasizing

the basic functional improvement and utility of FP&A to emphasizing systems growth, adaptability, and error / cost reduction.

• The smaller the firm,

the more likely they

are to be happy with

their FP&A (and less

likely to have a

planning culture).

• The larger the firm,

the more likely they

are to reach FP&A

system limits – and to

see data errors

(typically as a result

of inconsistent

spreadsheet use).

Page: 48

100 - 999

Employees

1,000 - 2,999

Employees

3,000 - 10,000

Employees

> 10,000

Employees

The use of spreadsheets, while

helpful for spot analysis, has lead to

time-consuming errors

60% 70% 65% 72%

We have outgrown the limitations of

spreadsheets for FP&A 53% 76% 66% 70%

We are happy and successful with

our current FP&A system. 65% 60% 60% 57%

Our planning culture has readily

adopted FP&A tools with some

training required

49% 65% 66% 61%

Inconsistent data has been a

problem that we are trying to solve

with FP&A tools

44% 60% 61% 63%

We have not found FP&A tools to be

as intuitive or as versatile as

spreadsheets

42% 63% 57% 46%

We have not been able to get our

organization to buy into FP&A tools 30% 58% 50% 46%

Please rate each of the following statements about your Finance Planning & Analysis (FP&A) capabilities and tools (only “Agree” + “Strongly Agree” responses are shown)


Notes on the Data


Statements on FP&A – Generation

Saugatuck Insight: Generational differences don’t seem to be factor in FP&A use and satisfaction, but they do seem to

factor into the perceived value of FP&A tools and systems. Gen-Y leaders are significantly more likely to be moving beyond

spreadsheet-centric Finance cultures and operations toward modern FP&A tools.

• Gen-Ys are much

more likely to be fed

up with

spreadsheets and

associated data

quality challenges.

• Otherwise, FP&A

sentiment and

experience is very

similar across age

groups.

• It’s not clear if

Boomers are much

less likely to require

training or to have a

planning culture.

Page: 49

Gen-Y / Millennials Gen-X Baby-Boomers

We have outgrown the limitations of

spreadsheets for FP&A 79% 68% 73%

The use of spreadsheets, while

helpful for spot analysis, has lead to

time-consuming errors

79% 67% 68%

Inconsistent data has been a

problem that we are trying to solve

with FP&A tools

76% 59% 59%

Our planning culture has readily

adopted FP&A tools with some

training required

79% 66% 48%

We are happy and successful with

our current FP&A system. 62% 63% 55%

We have not found FP&A tools to be

as intuitive or as versatile as

spreadsheets

56% 57% 59%

We have not been able to get our

organization to buy into FP&A tools 59% 49% 52%

Please rate each of the following statements about your Finance Planning & Analysis (FP&A) capabilities and tools (only “Agree” + “Strongly Agree” responses are shown)


Appendix A – About the Survey / Demographics

• The data in this report come from a Web survey conducted by Saugatuck in November 2014.

• The research focused on North American Finance and IT leaders at companies with greater than 100

employees, with the focus on upper-mid and large enterprises. In total, 317 executives participated in

the research – with the responses equally split between the two functional groups.

• Approximately 85 percent of the responses came from senior decision makers with Director and higher

functional title levels, as follows: 37 percent were C-level, EVPs, SVPs or GVPs; 19 percent VP, GM or

Controller level, and 29 percent Director level.

Page: 50

By Employee

Size

100 – 999 14%

1,000 – 2,999 28%

3,000 – 10,000 42%

>10,000 15%

Total 100%

By Title

C - Level 30%

EVP / SVP / GVP 7%

VP / GM /

Controller 19%

Director 29%

Manager 8%

Analyst 3%

Other 5%

Total 100%

By Industry

Business / Professional Services 9%

Consumer Packaged Goods / Food & Bev 5%

Energy / Utilities / Chemicals 8%

Financial Services / Insurance / Banking 17%

Health Care / Pharmaceutical / Life Science 14%

High Technology / Telecom/ Media / Enter. 14%

Manu / Supply Chain / Distrib. / Retail 16%

Public Sector / Government 4%

Other, please specify 13%

Total 100%

By Function

Finance 51%

IT 49%

Total 100%


Appendix B – Research Reprint License

About This Research

• This independently developed research was published as a deliverable of Saugatuck's

Continuous Research Services (CRS) subscription research program. Tagetik Software

has been granted the right to reprint and electronically distribute this Saugatuck Strategic

Research Report (1492SSR) through its website, through September 13, 2015.

• Entire contents © 1999-2015, Saugatuck Technology Inc. All rights reserved. Opinions

reflect judgment at the time and are subject to change.

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• To request a briefing with our analysts, contact Chris MacGregor at

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