Cloud - a friend or foe to CFOs?

Cloud is transforming how businesses work, interact and communicate internally and externally. Imagine not being able to get your Twitter feeds or your LinkedIn updates, or the latest news stories as they break around the world. All of this has been possible due to technological advancement and Cloud has been a significant part in that.

I recently met the Finance Director of one of my clients. The client is currently thinking of moving their financial application to a SaaS model hosted in the Cloud. Management are worried about moving their financial system to the Cloud and wanted to understand how other organisations are adopting Cloud and the role finance should play in this.

Although IT and, in some cases Sales and Marketing, functions have embraced Cloud and its benefits, many Finance departments have been slow to adopt Cloud solutions, but its transformative impact can no longer be ignored. Gartner reported last year that around 36% of all transactional systems will move to the Cloud by 2020.

That’s less than 2 years away!

Are the Finance functions really ready for this leap? Do they understand how Cloud could help? I think the time is now if Finance functions want to be a true business partner. What are the real benefits of Cloud to a CFO? Here are my top five:

• Managing cost – Cloud is a pay as you use service. This eliminates the need for significant capital expenditure (capex) at the outset and moves it into an operating expenses (opex) model. This allows organisations to pay only for the capacity, resources and licenses that they need and when they need it.
• Managing growth – Cloud allows you to align your spend to business growth. The ability to increase or decrease spend gives businesses the flexibility to manage total cost of ownership.
• Don’t worry about updating the system – Not having to worry about hosting and maintaining applications can be quite empowering. Cloud providers do most of the heavy lifting in terms of hosting, making changes and ensuring applications are available when they are needed.
• Provide data insight – Automating processes through technology reduces time spent on manual workarounds and allows Finance functions to draw insight from the data as opposed to creating the data.
• Plenty to choose from - The Cloud enterprise resource planning market is increasing and there are plenty of providers to choose from irrespective of the size of your organisation.

So if there are so many benefits, why are Finance functions slow at embracing Cloud? What is stopping them?

Being an accountant myself, I appreciate risk and reward go together – Finance functions who have embraced Cloud have understood the balance between risk and reward. Cloud introduces a new set of risks to organisations. In my blog on “Mind the gap - Cloud security”, I talked about the common security pitfalls and how to address them. This is one risk which is different to traditional security.

Can CFOs do it alone?

While the benefits are significant, Cloud, as I mentioned earlier, brings different risks to enterprise. Organisations are, in some cases, handing their crown jewels over to a third party. This requires careful planning and security considerations. Further with the introduction of the General Data Protection Regulation (GDPR) from May 2018, one has to consider the data portability and interoperability with the Cloud. If not considered carefully, Cloud technology can become very quickly become expensive and risky.

In my blog - “Compliance in the cloud - the new normal”, I talked about asking the right questions generally when embracing Cloud technology. Here are a few questions that CFOs should consider or ask of their IT function:

• How do the IT organisation’s short and long-term Cloud computing strategies reduce IT and business costs while helping drive new opportunities?
• How does the cost structure of our IT compare with that of Cloud users? Have we analysed the two approaches?
• How are we monitoring acquisition of new technology – are you creating shadow IT?
• Will we need entirely new processes or can we migrate those as well?
• Looking beyond costs savings, where can Cloud give us a strategic advantage?
• If we have started implementing Cloud technology, do we have independent assurance e.g. Is internal audit involved?

The advantages of emerging technology should give today’s CFOs lots to think about. With the correct planning and support, the benefits can outweigh the costs, and the associated risk can be managed. The days of finance functions being solely responsible for number crunching are long gone, finance needs to evolve and embrace technology to be a true business partner. With organisations of all sizes adopting Cloud technologies at a rapid pace, it’s also worth evaluating what the competition is doing – after all, no one wants to be left behind, do they?

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