Total spend on IT infrastructure products deployed in cloud environments is slated to hit $44.2 billion in 2017, according to the latest analysis from IDC (see more on that and other impressive figures here). Cloud infrastructure-as-a-service is going mainstream and it’s impact is being felt by everyone in your company, from your loyal IT staff to your graphic designer. But right in the firing line is the Chief Financial Officer (CFO) who bears the brunt of the Cloud shift, principally because they are the one paying the bill, and it’s a bill that’s not always easy to decipher.
Your CFO needs not only to be aware of Cloud technology— how it’s different from traditional in-house IT—but also understand its long-term benefits and advantages, and be able to drive how that budget is spent.While cloud technology adoption is growing across all business sizes and sectors, making the move might not appear a no-brainer to your CFO. The reason? A lack of budget control and lack of forecastability. And potentially, a lack of technical know-how that has now become mandatory.
The CFO’s position is all about the money. Therefore the benefits of Cloud infrastructure need to be approached from a financial angle. How can the oft-cited benefits of Cloud-infrastructure: scalability and agility be taken into account in the quarterly-budget? Calculating their fiscal advantage over a specific time period is no simple task.
This is the awkward position of your CFO: ironically the very person who would be best suited to be the change leader of the Cloud era, precisely because of the shift in paradigm that cloud adoption represents. A new set of values, that of flexibility and dematerialization, need to be embraced from the top down, to permeate through to other levels of the organization. So do your CFO reports take into account this shift in values?
Being able to scale up or scale back IT infrastructure according to demand is an undeniable advantage, especially in today’s marketplace (across all industries) that requires companies to be fast and adaptable, and hey, getting rid of that hardware that is depreciating in value every year is pretty great too. But if a CFO’s KPIs are based on creating and sticking to a budget, having to account for Cloud IT expenses, the spending of which is out of their hands -puts them at a disadvantage.
Outsourcing technology infrastructure shifts the cost from a capital, forecastable outlay to operational spending, and also means changes to procurement process, forecasting and payment.
Cloud technology is not just the change that is shaking up IT departments. It represents a new set of values and is the tool and that needs to be embraced across industries if companies want to remain competitive in today’s digitally disrupted business landscape.
In line with this shift in paradigm, the role of the CFO needs to evolve from a cost center to a strategic player in shaping the direction of the business. The way in which spending can be controlled and accounted for has evolved. While new values that place an emphasis on flexibility need to be translated onto the balance sheet in a way everyone understands.
To help evolve the CFO’s role in line with this shift in environment, finance focused solutions for managing the Cloud need to be on hand. We are talking about solutions that help to drive and control costs. Solutions that allow the budget allocated to this resource in previsions to be enforced and stuck to. The market currently offers lots of reporting-only tools that help the IT team to show how much they’ve spent and on what -but this, after the spending has been done. For the CFO this may be good for reporting but of no use to enforce the executive decisions.
Check out our suggestion for making life a little easier for your CFO. Put your CFO back in the driving seat and give your entire company the tool to become aware of and accountable for Cloud infrastructure spending.
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