Magazine article Financial Management (UK)

The Effects of Cloud Technology on Management Accounting and Business Decision-Making

Magazine article Financial Management (UK)

The Effects of Cloud Technology on Management Accounting and Business Decision-Making

Article excerpt

A lot has been written about cloud computing in general, but there has been little research so far into how the technology is affecting the work of management accountants and influencing decision-making in businesses. With the help of some seedcorn funding from CMA, we started a study this year to provide some first insights into issues such as the level of cloud adoption and the benefits and drawbacks of using the technology. It included interviews with cloud technology experts in Ireland and a survey of nearly 200 German firms in a range of industries.

One of our expert interviewees gave us an interesting insight into how he was using cloud computing to run his own business. He used it for all commercial processes with the exception of finance, which he said he would move to the cloud within the next 12 months. In his opinion, this approach was typical of most organisations. Our survey confirmed this view to some extent, finding that most respondents were using cloud technology for non-financial processes. This prompted us to ask two questions:

* Why have some businesses left their finance systems until last, or not adopted cloud technology at all?

* Of those companies that have adopted cloud technology, how has it affected their management decision-making?

To answer the first question, let's consider from our survey who had adopted cloud technology, how they were using it and for what purposes (we asked our sample to exclude cloud-based email and file-sharing services). We found that a quarter of firms were using cloud technology for various operational systems, with a small number planning to move some systems to the cloud in the near future. The chart below shows the breakdown of areas in which cloud technology was being used--obviously, some firms were applying it in more than one area.

Middle managers were the main users, followed by senior managers, nearly all of whom were using the cloud daily, 70 per cent of the time on a business laptop or similar PC and 30 per cent of the time on a tablet or other mobile device.

Of those respondents who weren't using the cloud, by far the main reason they cited for this was their concern about data security. This was a point that one of our technology experts also noted, but from a different perspective. In his view, even a public cloud (see glossary, next page) offered a level of security and technology that would normally be beyond the budget and expertise of many firms, especially SMEs. But, even among the adopters, 72 per cent used either a private cloud or a public-private hybrid.

When it came to our second question on how adopting the cloud had affected decision-making, our IT experts cited one key attribute of the technology: how it could help users to collaborate. For businesses in general and SMEs in particular, it may be useful for employees in separate locations to work together on a project at any time--and cloud technology can help here. Our survey asked cloud adopters to tell us how they were using data from their cloud systems and whether or not the move had improved their decision-making. Given that cloud technology enables users to access information from any place at any time, using pretty much any device, we were also curious to know whether decisions were being taken outside normal working hours and business locations.

We found that cloud-based finance and management information systems were still being used mainly within the walls of the organisation and during normal business hours. …

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