5 costly cloud challenges and how to avoid them

Account reconciliation in many organizations’ legacy environment is a slow, manual process, which causes the annual close process to be delayed. KPMG worked with a customer that required a global redesign of their account reconciliation process to allow for handling high-volume transactions and resolve their performance issues at month’s end.

However, they’d been using Band-Aid fixes for system and process flaws, which complicated business processes and created inconsistencies in their data. By instituting a global standard based on Oracle Cloud, they were able to successfully match up to 10 million transactions per month and integrate with more than 30 different financial applications. Ultimately, this move helped them save time and reduce expenses for manual reconciliation efforts.

Lesson learned: Many organizations are eager to jump into cloud, but it’s important to take an iterative approach using global business standards and processes.

Reports and dashboards can help management easily view data that needs more attention, but for that to work, they need a unified view of that data. As a result, many organizations are attempting to rein in disparate data sources across their global regions. For one customer, disparate data meant that executives were unable to leverage a single source of truth for decision-making and had no flexibility in report development.

The customer was having difficulty managing legacy systems and required the flexibility of cloud. KPMG helped them successfully migrate from an on-premise Oracle Hyperion Planning system to Oracle EPBCS (Enterprise Planning and Budgeting Cloud Service), which includes budgeting, forecasting, data management, and analysis capabilities in a software-as-a-service (SaaS) deployment model.

KPMG developed a 360-degree console that allows chief financial officers and other executives to source global data and meet reporting requirements. As a result, hundreds of enterprise management reports were reduced to a core set of 65, which harmonized disparate data across all regions, countries, market segments, and products.

Lesson learned: A single source of data helps users make timely decisions and build more confidence in source numbers.

An overreliance on manual processes and workarounds increases internal control and audit risk, creates inefficiencies, and opens an organization to a high risk of error. For one customer, a legacy chart of accounts implemented more than 15 years ago had become outdated, resulting in a limited, weak governance structure that did not meet reporting needs.

Through the implementation of KPMG’s Powered Enterprise, KPMG helped the customer implement leading business processes and organizational design, enabled by Oracle Cloud technology. As a result, they were able to design and build a modern, cloud-based application that would be adaptable to future add-ons and allow projects to expand or integrate with the system, such as planning and budgeting, human capital management, and payroll.

A single, unified system improves service delivery, promotes operational excellence, and provides greater transparency and rigorous compliance through streamlined and robust reporting and analytics. In addition, centralized procurement processing allows organizations to pull in requisitions across multiple business units. The Oracle Cloud platform provides a means to continuously improve the finance and procurement function by leveraging the power of SaaS, and standardization has resulted in service-centre cost reductions.

Lesson learned: Designing an enterprise structure at an early stage of implementation is important to ensure future scalability and flexibility.

Reporting fraud is a major concern for organizations, especially those with offshore locations and/or a complex hierarchy. One customer had identified significant reporting fraud that called into question the accuracy of its financial statements. In addition, the company had been facing pressure on margins and needed better reporting and controls—all while keeping costs under control.

Working with KPMG, the company was able to simplify its organizational structure in the cloud, including less hierarchy and fewer offshore locations, which freed about 50 per cent of the finance organization to focus on higher-value work. The program resulted in improved compliance and financial controls while increasing gross margin and profit in the initial launch countries. The company also saw a 30 per cent reduction in the number of its stock-keeping units (SKUs).

Lesson learned: Ensure controls are in place that minimize the risk of fraud, and help to lower costs and increase profits.

Many organizations are still using manual processes—including Excel spreadsheets—for such critical areas of the business as financial reporting. One customer was reliant on Excel for its month-end close and financial reporting, with approximately 1,000 journal entry allocations each month. This required manual intervention and a high dependency on technical resources to pull data from the solution—which didn’t leave any time to focus on strategic analysis and growth. As a result, the company’s chart of accounts was inconsistent with organizational and reporting needs.

KPMG helped the company roll out a modern cloud financial architecture, which reduced manual intervention and enabled the use of emerging technologies. This included: redesigning the chart of accounts to support reporting, organization, and future needs; leveraging cloud reporting capabilities to significantly reduce manual efforts around reporting; and establishing a governance structure for cloud updates and future process changes.

Lesson learned: A modern cloud infrastructure helps to streamline processes, provide accurate data more quickly, and enable self-service capabilities for users.