The demand for mobile wallets, online banking services, and the increasing adoption of digital technologies has led to the expansion of the financial applications market in Asia/Pacific. The rise in digital transformation (DX) initiatives and the adoption of mobile technologies have also contributed to the demand for cloud-based financial applications in Asia/Pacific.
Companies are increasingly seeking secure and compliant solutions to manage their financial data. As a result, the market for cloud-based financial applications in the region will witness significant growth in the coming years.
According to IDC's 2023 Future SMB and Midmarket Survey, 50% of surveyed respondents (driven by SMBs) in Asia/Pacific state that they will automate their financial and accounting processes through cloud applications in the next 18 months.
"As businesses increasingly seek tailored financial solutions for their unique needs and requirements, financial solution providers must focus on continuous innovation by embedding emerging technologies, such as low-code, no-code, and generative AI technologies, into their platforms," says Supriya Deka, senior market analyst, IDC Asia/Pacific SMB and Midmarket Program.
She adds that specialised and cutting-edge financial solutions for SMBs and midmarket businesses will enable them to thrive and succeed in a rapidly changing business environment. FutureCFO spoke to Deka to dig deeper into the topic:
Which features/capabilities in financial applications are most in demand by mid-size enterprises?
Supriya Deka: The general features of financial applications include accounting, reporting & analytics, bank reconciliation, billing & invoicing, asset management, budgeting & forecasting, financial risk management, expense tracking, and payroll management.
However, the demand for features/capabilities of financial applications can differ based on their company size, maturity, and business needs and goals.
- According to IDC's 2023 Future SMB and midmarket survey, reducing business risk, sustainability, and employee productivity are the top three business priorities of the midmarket segment (mid-size enterprises) in Asia Pacific.
This highlights the demand for financial risk management and expense tracking capabilities in financial applications to identify current risks, prioritise profitability, eliminate the paper trail, and reduce administrative effort.
- More than 50% of mid-size enterprises plan to automate analytics/BI through cloud applications in the next 12 – 18 months, highlighting the demand for financial reporting and analytics capabilities. This trend is driven by the need for real-time data analysis and insights to make informed business decisions.
In conclusion, financial applications that include risk management, expense tracking and reporting & analytics features/capabilities can benefit mid-size enterprises in Asia Pacific to identify risks, improve profitability, streamline processes, and make data-driven decisions.
This can help them stay competitive in today's fast-paced business environment and stay ahead of their competitors in the global market.
Specific to the automation of finance and accounting processes, can you identify the top three areas mid-size enterprises are prioritizing to automate?
Supriya Deka: IDC research shows that 48% of surveyed mid-size enterprises in Asia Pacific state that they will automate their financial and accounting processes through cloud applications in the next 18 months.
Financial and accounting processes include managing the general ledger, accounts receivable & payable, billing and invoicing, reporting & analytics, bank reconciliation, budgeting & forecasting, etc. The top three areas mid-size enterprises are prioritising to automate include:
- Accounts payables & accounts receivables (billing and invoicing): Mid-size enterprises often have a significant volume of invoices and payments. This can be time-consuming and lead to errors when handled manually.
Automating these processes can accelerate approval processes, manage vendor relations, keep track of funds, and avoid payment duplication. 49% of mid-size enterprises plan to automate billing and invoicing processes via cloud applications in the next 18 months.
- Reporting and analytics: Companies in this segment realise the benefits of accurate and real-time financial reporting to make informed business decisions.
Automating the reporting process can help identify errors and potential frauds, improve forecasting and budgeting, understand sales trends, and so on.
In Asia Pacific, 52% of mid-size enterprise plan to automate their analytics/BI processes through cloud-based applications in the next 18 months.
- Payroll accounting: Automating payroll processes can help save time and resources, maintain compliance with legal regulations, reduce manual errors and track business expenses. Streamlining payroll management, such as tax filing, salary payments, and benefits, is critical for mid-sized enterprises.
Automating and effectively tracking payroll expenses can help companies analyse the cost of each employee and the value they provide your business.
Close to 60% of mid-size enterprises plan to automate their payroll process through cloud applications in the next 18 months.
How do you see mid-size enterprises balancing the desire for customised features/functions versus just living with what is out there (particularly for cloud-based solutions)?
Supriya Deka: Customising cloud-based applications can be expensive for mid-size enterprises with limited budgets and technical capabilities. However, the need to customise features depends upon the company's growth plan, unique processes, and business needs.
Therefore, while purchasing IT products or solutions, mid-size enterprises prefer to engage with third-party partners who can customise solutions according to their requirements.
Moreover, the rise of generative AI applications and low-code/no-code tools are making it easier for mid-size enterprises to customise their IT solutions (even with limited technical capabilities) without relying heavily on third-party partners.
The accessibility to such tools empowers companies in this segment to invest in advanced technologies to efficiently address their unique needs and stay competitive.