Cloud transformation from a CFO’s perspective: Key challenges and myths
While CFOs are under short-term pressures, 81% now feel responsible for cloud investment decisions. This, however, is a positive shift as cloud transformation requires extensive involvement of the finance organization.
At the same time, the concerns of the CFO surrounding the shift to the cloud differ strongly from that of the CIO’s. Here are some key apprehensions:
1. What is the payoff and how can it be successfully realized?
While IT infrastructure savings are significant (up to 37% reduction over on-prem), they represent only a menial fraction (8%) of cloud’s overall benefits. The largest areas of impact are improved business agility, better workforce productivity (up to 86% improvement), and higher resilience (from reduced outages). The key to realizing this value lies in building a credible business case with the CIO, CTO, and other stakeholders.
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2. How to measure effectively the RoI on cloud investments?
This is a genuine concern as many CFOs struggle with tracking the costs of cloud (which often exceed budgets by up to 40%) and measuring resulting benefits. One approach to overcome this is to adopt cloud FinOps (more on this below). But more importantly, devising a plan to make sense of granular cloud bills, and tracking the RoI across isolated projects is crucial.
3. How will the shift to cloud impact capital and operating expenses?
Moving to the cloud turns IT into a major contributor to operating expenses. This has tax implications – and more importantly, treatment of these expenses varies across jurisdictions and is different for various types of cloud expenses. That’s why the tax department and your auditors must be involved in the conversation from the get-go.
4. Is it possible to bring predictability to cloud spend?
In the early stages, cloud expenses will ramp up rapidly as you migrate more and more applications to the cloud. However, these will become more predictable as your IT teams figure out ways to optimize cloud bills for their applications. Forecasts will become more accurate over time, and modernization will open doors for significant cost savings.
5. Is the cloud secure? Will it reduce my control over business-critical data?
This is mostly a dated concern, as 48% leaders undertake cloud migration for improved cybersecurity, and 61% experts consider data and apps in the cloud more secure. Moreover, there are multiple strategies to gain better control of your data, which include the hybrid cloud and private cloud models.