The CFO Guide to Cloud

The CFO Guide to Cloud

Agility and innovation? You need to talk about cloud as a business value proposition.

By David Linthicum*

Everything you’ve ever wanted to know about cloud has probably already been written, but no CFO has time to wade through it all. That’s why we created this executive briefing, with the CFO perspective in mind. Our goal? To help CFOs and their organizations make more effective cloud decisions.

This briefing is organized around questions frequently asked by our CFO clients. Some apply to cloud investments anywhere in the enterprise, others deal specifically with Finance as a potential cloud user. All are relevant for any CFO in business today.

NOW OR LATER

Our CEO wants to move to the cloud over the next three years. Should we do it now or wait until things settle down?

We see few companies today that don’t have some kind of cloud initiative underway, so there’s a good chance your business has already begun moving. Cloud represents a fundamental shift in how technology solutions are developed and delivered. It’s increasingly becoming the new standard. Many companies today are working on cloud pilots, some are pressing ahead with full migration, and countless others are somewhere in between. Which means the question of whether you should begin to move may be moot.

Instead, the questions you should be asking are as follows: What benefits should you expect from your investments?

How can you manage your cloud footprint more effectively? How will your organization be able to pivot to the cloud most efficiently? Is cloud mostly about cost savings or are there other advantages? And how can we realize sustainable savings?

Multiple surveys with Finance leaders and broader business audiences all point to significant momentum building around cloud experimentation and adoption.

The vast majority of business executives who participated in Deloitte’s 2018 global outsourcing survey—93%—said their organizations are adopting or considering the cloud.

In a poll of nearly 3,000 Finance and business leaders conducted during a Deloitte webcast, 41% said they have cloud technologies in place or are in the process of implementing them. Another 16% said they are currently assessing cloud options.

Nearly half of Finance executives polled in the webcast said cloud technology would be critical to the performance of their finance organization two years from now. CFOs are often skeptics when it comes to spending based on the promise of savings. So when your company is building the business case for any type of cloud implementation, make sure you’re looking at the bigger picture. Finance needs a seat at the table. No one else is likely to bring up the tough questions that need to be asked, such as: How much is this going to cost and where is the money coming from? What are the known cost savings? When will you see them? Exactly what new strategic capabilities will this cloud investment deliver? What marketplace advantages will new capabilities create? And how will cloud affect your current and future operating model?

CFOs should be wary of business cases that depend on technology cost reduction alone. Cloud is often less costly to operate than on-premises technology, but there are pitfalls along the way. The business case might be easy to build, but without accompanying changes in people and processes, it can be challenging to realize. Be sure to look at savings that may be associated with the value of agility.

Bottom line? Some companies are achieving returns of more than 10X on their cloud investments when they account for all the costs and benefits. These companies push hard to build a compelling business case—and even harder to deliver exceptional value. That’s a high bar, but we’ve seen it cleared by many businesses and in many functions.

* David Linthicum is Deloitte’s Chief Cloud Strategy Officer and the author of more than a dozen books about cloud services. 
2019-07-10T15:23:50+00:00

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