CFOs Embrace the Cloud for Scalability, Reliability, and Independence
CFOs are more commonly migrating services to the Cloud in order to unlock benefits that can help them free up resources and achieve a new level of scalability. They and their management teams are capturing greater reliability, cost-effectiveness, and security through the right Cloud services.
The Cloud used to fall mainly under the jurisdiction of IT departments. However, as CFOs participate more and more in the technology shift across the enterprise, they are embracing the almost irresistible tide – at this point, eWeek has even referred to these executives as “Cloud Financial Officers.”
In fact, according to RightScale’s 2015 State of the Cloud report, 82 percent of enterprises have adopted a hybrid Cloud strategy. And a Reuters survey of 1500 financial decision makers indicates that almost half of them have either already deployed financial applications in the Cloud, or plan to do so within the next year.
The shift is clearly in progress, although it has been slow to materialize in some cases. While IT departments tend to be forward-looking, sometimes Finance can be resistant to change, to adopting technology, and to relinquishing a measure of control. Finance also tends to have a natural hesitancy to divulge financial information, which is a prerequisite to working through the IT department to identify the best technology fit.
The advances at a CFO’s fingertips, however, now outweigh many of the reservations. This is especially apparent as legacy hardware begins to age and becomes more difficult to keep updated. Not only does Finance need to tap IT resources to maintain these systems, they also spend tremendous time and energy getting them to work efficiently. Aggregating data, integrating across the organization, and reporting are cumbersome activities that force their infrastructure and software to work overtime.
A Cloud Service Provider (CSP) eases these burdens significantly. The right partner will typically have clean interfaces that are kept up-to-date and enable integration or migration of existing systems or data to Cloud-hosted solutions. The responsibility for upgrades also shifts from IT to the CSP, allowing internal resources to focus on issues that are more mission-critical to the company.
As a company grows, many of the tasks regularly performed by CFOs also become much more reliable with the Cloud. For example, the extra stress that quarterly and monthly reports put on hardware can bring delays to a process that should be seamless for a mature organization. Moving to the Cloud means tapping into a much larger virtual infrastructure that can scale as demand requires.
Knowing that scalability is within easy reach makes for greater purchasing power, as well. When Finance is reliant on hardware, they need to purchase for the highest end of the scale that they may need. That can lead to overbuying, or if they underestimate those needs, they may be forced to resize servers or even the entire infrastructure. These are expensive operations that rely on already-taxed IT resources.
The Cloud delivers a level of flexibility that helps control costs in other ways as well, although the real formula for ROI is different for every company. Cloud and locally-hosted services have varying up-front, support, and maintenance costs that can alter the cost assessment. According to a recent Forbes article, when using the Cloud, the real savings come through greater efficiencies across the organization: “The cloud isn’t primarily driven by the relatively smaller benefits of saving on software licensing costs and shifting IT budgets from capital expense to operating expense. It’s driven by the larger savings of not having to hire people and buy a lot of equipment to run the software.”
Equally as important, or perhaps even more so, costs associated with Cloud services are more predictable. One of the main advantages of Software as a Service (SaaS) over a licensed software model, for instance, is knowing exactly what the cost is and how it will be served.
From a security standpoint, the Cloud introduces an increased level of confidence when it comes to back-ups, disaster recovery, and overall access. What used to be a major concern for IT is now the realm of CSPs, for which high levels of security are entry fees to the marketplace. That said, not all CSPs are created equal, and the organization is still accountable when it comes to data protection: careless use of highly secure software can be just as dangerous as careful use of insecure software.
CFOs should therefore thoroughly vet CSPs to ensure they are choosing the right partner. They can commission a Service Organization Controls report (SOC II report) to measure the reliability of processes and security of a third party vendor like a CSP. At a minimum, they should look for modern security features such as two-factor authentication to ensure that access is managed to a standard that is equal to or better than any on-premise deployment.
Reliability, cost-effectiveness, and security are a powerful combination for CFOs. The Cloud gives them a pathway to greater independence, the ability to be prepared for growth, and flexible tools to manage the Finance function on a day to day basis.
If you have any questions about leveraging the Cloud or business IT improvements, please contact your AAFCPAs partner; James Jumes, Partner at 774.512.4062, firstname.lastname@example.org