A recent paper from Deloitte titled CFO Insights: Heading for the Clouds raises some very good points from the perspective of the CFO. It's worth a quick read.
In essence, the case is made that Cloud computing presents a significant opportunity because it allow companies to reduce the capital costs of information technology. It allows companies to convert the cost of computing from capital expenditures to primarily an operating expense. The author emphasizes that since the IT budget is often one of the largest expenses a company incurs, CFOs should ask their CIOs how they plan to leverage cloud computing to reduce costs and increase service responsiveness. In my view this is clearly a critical issue for CFOs looking to improve their financial results in a down economy.
Here are a few questions CFOs should ask:
• Is there a strategy to use cloud computing as part of the IT services mix? Companies need to take a "business service management" approach - only in reverse. That is to say, they map out their "mission critical business processes" and leave them alone! Instead, they look to outsource non-critical IT tasks to cloud computing service providers who are better equipped to execute them, which frees up the internal IT organization to focus on business critical processes.
• What areas create the greatest opportunities for savings now? Today, cloud services for data storage and occasional high performance computing capabilities may be a good starting point. Clearly, data storage is one such area, especially storage of non-critical data - email, office aps, images, videos, etc.
• What applications will be migrated to the cloud? For small and medium-sized companies, enterprise applications such as customer relationship management (Salesforce) and accounting (Netsuite) are already moving to the cloud.
What about security, reliability, and lock-in? These are the three issues most of us worry about with cloud deployments. The article says that the level of computer security, data privacy practices and the expertise of major cloud service providers are likely to be greater than those provided by an in-house IT staff and systems.
And of course, you've got to check your service providers' SLAs, their backup and recovery policies. Here are SLAs from Amazon S3 and Softlayer, for example.
Bottom line? CFOs must embrace the Cloud if they are looking to improve performance.
In essence, the case is made that Cloud computing presents a significant opportunity because it allow companies to reduce the capital costs of information technology. It allows companies to convert the cost of computing from capital expenditures to primarily an operating expense. The author emphasizes that since the IT budget is often one of the largest expenses a company incurs, CFOs should ask their CIOs how they plan to leverage cloud computing to reduce costs and increase service responsiveness. In my view this is clearly a critical issue for CFOs looking to improve their financial results in a down economy.
Here are a few questions CFOs should ask:
• Is there a strategy to use cloud computing as part of the IT services mix? Companies need to take a "business service management" approach - only in reverse. That is to say, they map out their "mission critical business processes" and leave them alone! Instead, they look to outsource non-critical IT tasks to cloud computing service providers who are better equipped to execute them, which frees up the internal IT organization to focus on business critical processes.
• What areas create the greatest opportunities for savings now? Today, cloud services for data storage and occasional high performance computing capabilities may be a good starting point. Clearly, data storage is one such area, especially storage of non-critical data - email, office aps, images, videos, etc.
• What applications will be migrated to the cloud? For small and medium-sized companies, enterprise applications such as customer relationship management (Salesforce) and accounting (Netsuite) are already moving to the cloud.
What about security, reliability, and lock-in? These are the three issues most of us worry about with cloud deployments. The article says that the level of computer security, data privacy practices and the expertise of major cloud service providers are likely to be greater than those provided by an in-house IT staff and systems.
And of course, you've got to check your service providers' SLAs, their backup and recovery policies. Here are SLAs from Amazon S3 and Softlayer, for example.
Bottom line? CFOs must embrace the Cloud if they are looking to improve performance.
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