What to Expect from SaaS and Cloud-Based EPM Software

SaaS software

Finance software, and business software in general, has evolved significantly over time.

Not too long ago, the only option for the enterprise needing EPM software or a similar application to manage their business finances had little choice apart from an expensive on-premises solution. Over the past five years, that has changed. Now more businesses are leveraging the more affordable and agile SaaS and Cloud-Based EPM products.

Recently, Forrester VP, and Principal Analyst for Application Development and Delivery Professionals, Paul Hamerman, spoke at a webinar for finance professionals to discuss SaaS EPM software and its impact on the industry. According to Hamerman, Forrester's research indicates that, while overall software spending is down, SaaS software investments are driving almost all of the growth in the software industry. This trend is largely fueled by SaaS EPM software and other financial products.


Enterprise Pain Points in Selecting EPM Software

According to Hamerman, Forrester's research pinpoints several pain points when it comes to enterprises selecting EPM software. First, enterprises need more accuracy when it comes to planning and predicting the future. Second, enterprises are often stuck making decisions based on outdated business intelligence due to a considerable lag between a finance system collecting the data - then the finance team analyzing the information, and reporting on it. Enterprises also tend to lack the ability to collaborate on the intelligence, which adds to that lag in analysis, and response times.

Another pain point for the enterprise when it comes to their finance software is a lack of strategic focus. Generally, businesses just don't have the visibility needed to conduct accurate financial forecasting. Finally, enterprises just don't have the insight they need into their company's revenue and operations. So, accelerating the time it takes to collect, analyze, and report on solid financial information is a critical factor in the enterprise selecting EPM software.


What the Enterprise Needs in EPM Software

Forrester has identified a few key essentials that EPM software needs to address in the enterprise. As we'll see in a few moments, SaaS software can provide these essentials much more effectively than on-premises software can. Enterprises need strong reporting capabilities, including both internal and external reporting. It must be able to deliver strong performance analysis in order to give the enterprise a valuable perspective on the situation at any given time.

EPM software also needs to deliver strong functionality in the realms of planning, budgeting, and forecasting, in order to enable the enterprise for the future. On-premises EPM software tends to be most efficient at telling the business what's happened in the past (actual spend, for instance), but SaaS software excels at delivering intelligence for real-time decision making and for future planning.


How EPM Software Enables the Finance Department to Empower Stakeholders

Cloud-EPM SoftwareIn the webinar, Hamerman went on to discuss that the age-old priorities of the finance department have made it hard to drive growth within the enterprise. Too often, there is a lack of ability to address the particular needs and concerns of both the internal stakeholders and the external stakeholders. The enterprise CEO and CFO struggle to align the goals of internal stakeholders (investors, the company board, and management) with those of the external stakeholders (the customers' demand for a positive experience).

Internal stakeholders are generally focused on issues such as regulatory compliance, driving revenue, and the company's ability to grow and gain market share. External stakeholders, a.k.a., the customers, are more focused on a positive experience, the ability to get innovative products and a pricing structure that is easy to understand.

EPM software needs to empower the company's leaders to assess and address the needs of both internal and external stakeholders so that the company can continue to grow and open new markets, and navigate the complex waters of mergers and acquisitions, while simultaneously improving the customer experience.


Spending on Software is Down Except in the Sector of SaaS

Software spending, on the whole, is down. Finance software is the second largest group of business software, worth $23 billion globally, according to Forrester. This includes EPM software, as well as other products like core accounting packages. EPM software by itself is worth about $3 billion per year.

cloud-based EPMWhile on-premises business and finance software is seeing no growth or even negative growth, SaaS software is growing by more than 20 percent per year. According to Hamerman, almost all of the growth seen within the business software industry is directly attributed to SaaS products. Here, market growth is strong. Financial management systems are up by 22 percent; governance, risk, and compliance products are up by 23 percent; and some SaaS software products (like CRM) have seen gains as high as 56 percent.

So, it isn't that companies aren't investing in software. It's that businesses have decided that investing in SaaS software is the better option. Hamerman stated that 19 percent of companies have already replaced their expensive and cumbersome on-premises finance systems with SaaS products, and another 27 percent of businesses have plans to do so within the next couple of years. In just four years, the planned adoption rates of SaaS products for finance and accounting have risen from just 11 percent to a healthy 46 percent.


What's Driving SaaS Adoption?

Hamerman referred to a study Forrester conducted among businesses with at least 1,000 employees. They found that the strongest drivers for SaaS adoption are:

  • The need for business agility
  • The speed of implementing software
  • The ability to focus valuable resources on other critical projects
  • The ability to reduce costs
  • The ability to deliver new functionality fast (often, the features available in SaaS are not offered in on-prem software)
  • The ability to regulate and automate how enterprise software is upgraded
  • The ability to support innovations with advanced capabilities
  • The ability to do away with large, upfront capital expenses and shift those to lower monthly operational expenses

What's Driving SaaS EPM Software Adoption?

When it comes to the adoption of EPM solutions, specifically, the strongest reasons for adoption are:

  • Flexibility (less dependence on the IT department)
  • Regular software updates
  • Easy, transparent TCO
  • The ability to align the needs and goals of internal and external stakeholders
  • The ability to get business insight instantly and within context

To listen to the entire webinar with Paul Hamerman of Forrester, along with some comments from a satisfied SaaS EPM software customer, go to CFO and Forrester: Navigating the SaaS EPM Landscape.

Watch the Webinar Replay

Posted by on December 1, 2016
Topics: EPM
John O'Rourke

John O’Rourke is Vice President of Strategic Marketing at Host Analytics. With a background in accounting and finance, John has over 30 years of experience in the software industry and 20 years of experience in EPM product marketing at Hyperion Solutions, Oracle and Host Analytics. He has worked with many customers and partners on financial reporting and planning initiatives and has spoken and written on many topics in EPM. John has also held positions in strategic marketing and product marketing at Dun & Bradstreet Software, Kenan Systems, and Decisyon. John has a BS degree in accounting from Bentley University and an MBA from Boston College.

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