Deloitte’s new report shows technology decision-makers are more fretful about transitioning to cloud computing…
The new issue of ‘CFO Insights’ examines the use of cloud computing and addresses the benefits and concerns related to the decision of transitioning to this form of technology.
The Deloitte report recommends that technology decision-makers, notably CFOs and CIOs, to carefully decide what to move to cloud, when to move it, and how to transition from an on-premises computing technology environment to a cloud computing technology environment. It further examines how to test out cloud computing in an organisation and assesses its ‘cloud comfort level’.
The concept of cloud computing can help a business outsource day-to-day management of a resource and only buy what it needs, the quantity it needs, and when it needs that resource (similar to utilities such as power and water). Also, and in contrast to on-premises technology, the cloud computing resource is delivered over the Internet.
The Deloitte report stresses that the decision on cloud computing requires a productive working relationship between the CIO and the CFO. The CFO’s role in the transition is to embrace the cloud, to catalyse behaviours across the organisation and to execute strategic and financial objectives, while creating a risk intelligent culture. In his turn, the CIO, with the backing of the technology department, can increase their visibility as valued service providers to the broader organisation.
“Aligning the various stakeholders is an important task for the CFO in partnering with the CIO to adopt a cloud computing environment in an organisation” said James Babb, Partner, CFO Programme Leader, Deloitte Middle East.
“In addition, a cloud computing environment will often allow a CFO to know better the true cost of the IT function where the running costs of applications are often hard to determine with precision.”
Right type of cloud
The Deloitte report finds that as with any initiative that involves uncertainty, most organisations will pilot the use of cloud computing with either low-risk projects, or projects in which the on-premises computing resources would not normally be available. To determine which cloud type is right for an organisation, Deloitte experts suggest that relative costs and benefits should be examined.
Benefits of cloud computing seem evident to both CFOs and CIOs. The Deloitte report cites those that appear most often in interviews with CIOs and CFOs to include:
- agility that the cloud provides, whereby businesses are not burdened with technology infrastructure and can react more quickly to change technology;
- cost savings in that cloud computing is considered an operating expense, paid for as it is consumed, and as such, does not require a significant capital investment in computing resources;
- potential for the reduction in IT support staff needed as the vendors of the cloud maintain the hardware and software environments; and,
- ability to quickly respond to opportunities or competitive threats through the use of cloud computing.
“Cloud computing has real benefits to the finance function in particular where efficiency and productivity gains are available,” explains Babb.
Conversely, in terms of concerns, the Deloitte report finds that interviewed CFOs and CIOs raise numerous security concerns including whether data will be safe, and whether the data will be audited and backed up. Similarly vendor dependency and potential ‘end game’ scenarios seem high on the concerns list.
Technology with less risk
The issue of how easy it would be to move from one cloud technology provider to another is put forth, in addition to concerns related to how cloud computing would fit into the entire computing portfolio of the organisation.
Deloitte experts’ basic message for companies is to become comfortable with cloud computing.
CIOs and CFOs alignment through the cloud decision can help them decide where cloud is appropriate for their organisation. This will involve assessing technology in the context of business purpose and risks.
One recommendation the report offers is to start small and sample technologies with less risk and related influences on the business. After obtaining greater comfort in the cloud, the Deloitte report recommends to continue to shift the computing environment to cloud by using an appropriate assessment-based road map.
With CFOs and CIOs evaluation of governance and how the availability of cloud technology can impact their organisation, they can help ensure a smooth transition to cloud computing.