SAP announced this week it is rolling out SAP Financials OnDemand, the cloud-based counterweight to its on-premises...
financials portfolio, competing with other cloud vendors such as Workday.
The application, which is based on the financial module in SAP's on-demand ERP application Business ByDesign, is a logical next step for SAP as it continues to add to its line of Software as a Service (SaaS) applications, according to Rainer Zinow, senior vice president for on-demand strategy at SAP.
"What we are seeing is the cloud market is developing fast. We have seen the CRM [customer relationship management] wave, the HCM [human capital management] wave; and it doesn't take a lot of science to predict that one of the next waves will be financial," he said.
The new software ideally fits companies that may be running SAP Financials on-premises but have subsidiaries that may be operating off legacy financial software. Having the subsidiaries deploy SAP Financials OnDemand means all sides can operate on the same financial platform.
"[We have] quite a few customers who say, 'Look, we have the on-premises financials implemented and we're quite happy with it, but I have continuous mergers and acquisition activity,'" Zinow said.
Analytics and mobility
SAP Financials OnDemand, which runs on a cloud-based HANA in-memory database, includes embedded analytics ranging from more traditional profit-and-loss and balance-sheet dashboards, to cash forecasting and other types of predictive analytics, according to SAP.
Zinow said SAP Financials OnDemand was also designed with a focus on mobile access, as part of the company's new strategy of beginning all application development with a focus on mobility.
Are companies growing more comfortable with financial data in the cloud?
Zinow said that companies continue to raise concerns about having their financial data in the cloud, but it's an issue SAP is able to put to rest with precautions that rival if not exceed the security systems of any on-premises deployment.
For more on SAP and the cloud
Read about HANA deployments in the Amazon cloud
Learn more about SAP EPM OnDemand
Watch analyst Jon Reed on SAP’s HANA Cloud strategy
"It is a concern, and it needs to be addressed. And then you put all the cards on the table and say, 'Look, these are all the things that we do, these are all of the certificates we have; do you believe this is sufficient, yes or no?'" Zinow said regarding the security measures, which include two power sources to prevent outages. "So far I haven't heard a 'no.'"
Bill McNee, president and CEO of Saugatuck Technology, a consulting firm based in Westport, Conn., said the number of cloud-based applications has lagged, in part because chief financial officers are so conservative by nature and there are so few "credible options" on the market. That's slowly beginning to change, he said. "As these credible options come to market, SAP will clearly be one of the leaders in the category," joining competitors like NetSuite Inc., Oracle Corp. and Workday.
SaaS-based financial applications will grow significantly in the next three to five years, even though they'll continue to lag behind other areas like CRM, he said.
How on-premises software and SAP Financials OnDemand differ
Although SAP's on-premises and on-demand financial software offerings are very similar in function, there are differences, Zinow said.
"The on-premises version currently supports more countries. In on-premises, you have some of the advanced GRC [governance, risk and compliance] capabilities that we don't yet have on the cloud platform. I would not claim that SAP Financials OnDemand is now absolutely on par with the 20-year-old Business Suite financials. There's more work to be done," he said.
SAP Financials OnDemand is available in eight countries: the U.S., Canada, Germany, Switzerland, United Kingdom, Netherlands, India and Australia.
And while SAP Financials OnDemand integrates into SAP's portfolio as a whole, including the SAP SuccessFactors HCM software via SuccessFactors Employee Central portal, the company is working on additional integrations, including one with the cloud-based Ariba network of buyers and sellers. SAP acquired Ariba Inc., in May.
Despite the similarities between the on-premises and on-demand versions, McNee said he expects that SAP Financials OnDemand would differ in a number of other ways -- if it's done right.
"SAP shouldn't try to replicate what they have on-premises. That would be the wrong thing to do. The key is to rethink business processes in a modern way, with a new user interface, and a new set of workflows. And to take advantage of modern architecture," McNee said.