For many line managers outside of the corporate IT function, shifting to cloud-based hosting for a firm’s data and applications is synonymous with digitizing – a high priority for the majority of firms.
And in some ways they are right. The potential for collecting, storing, and analyzing terabytes of customer data, an always-on service, and the capacity to scale-up a service to meet more demand and support a mobile workforce, all hinge on cloud-based infrastructure and services.
But converting this digital vision to reality demands a significant shift in how and where IT invests its budget.
Two Questions to Answer
CFOs and CIOs are the executives most likely to oversee this shift in how and where IT invests its dollars, and they are also the most likely (or at least should be) to spot the best opportunities for using cloud technology.
However both executives also need to answer some significant questions on behalf of their company before contracts are signed, migration begins, and employees start using cloud services. And failing to answer them could easily derail a whole host of digitization initiatives.
The sticking point for many CFOs and CIOs is that they often think spending money on cloud services will see a large chunk of spending that was once designated as capital expenditure (on servers, and all the necessary kit to keep them running) becoming operating expenditure (on paying a vendor for a service).
But this issue is frequently a red-herring. In many markets, accounting rules that dictate how spending on cloud-based services should be classified are under considerable scrutiny and are in flux.
Rather than placing accounting treatments at the center of the CIO-CFO cloud conversation, executives should think through two questions.
How it helps the company: How migrating, deploying, and maintaining cloud solutions changes the story your CFO is able to tell investors. Digitization efforts, when prioritized correctly, will focus on delivering solid value that aligns with business strategy.
The business case that accounts for the total costs of cloud: There are a litany of one-time and recurring costs that will be incurred during a shift to cloud that encompass everything from shifting IT’s infrastructure to retraining and shifting the mindset of end users.