A decade ago, cloud computing was one of the biggest business buzzwords, but today the technology is approaching maturity. However, there's still plenty going on in the cloud CFOs might need to know about.
Computer giant IBM defines cloud computing as, “the delivery of on-demand computing resources - everything from applications to data centres - over the internet, on a pay-for-use basis.”
As IBM explains, cloud offers businesses a number of benefits. It allows them to rapidly “scale up or down” their IT services. Additionally, firms only pay for the services they use.
Often, moving systems 'to the cloud' means businesses outsource much of the hardware and software they need to run their IT systems to external providers; outsourced servers are a common example.
This can help businesses manage their risks and could allow them to create a more reliable IT network because they are not reliant only on the technology they have and the capacity to manage themselves; rather, they are working with a range of IT businesses to help them meet their technology needs.
Lee Thompson is cloud computing expert Oracle NetSuite's Group Vice President for Japan and the Asia Pacific region. He says increasingly, businesses recognise that cloud technologies help them to drive revenue.
“They are realising cloud technology can help them grow their organisation from being a $20 million business to a $200 million business,” says Thompson.
“Cloud-based technology enables organisations to grow fast. Ten years ago, firms had to buy IT infrastructure such as servers and employ a range of consultants.”
Cloud reduces the capital investment required – and accompanying depreciation costs, he adds. “Massive technology projects generally took 12 months or more to complete. By the time the project was finished the market had moved on. Cloud avoids all that.”
Thompson says cloud also enables businesses to be more innovative.
“I recently spoke to a client that had discovered a million dollars in inventory the business didn't know about because they were using old technology. By moving to the cloud, they could instantly scan and know every piece of inventory in their organisation. That allowed them to move to a just-in-time supply chain model, rather than having products sitting on a shelf,” he says. “Cloud technology also gives them complete visibility of their inventory.”
Thomson's advice to CFOs when thinking about how to best employ cloud technologies in their organisations is to review processes and identify opportunities to streamline them.
He says in particular, cloud-based software applications for enterprise resource planning (ERP), performance management and supply chain management are easier to use than older technologies.
“The seamless integration of these functions is important to help CFOs free up their time to run the business,” he adds.
Cloud the key to IoT
According to Thomson, in the future cloud-based applications that underpin the Internet of Things (IoT) are likely to give CFOs direct access to improved data to help them make decisions faster.
The Internet of Things is an online network of millions of devices from fridges, to air conditioners to cars and everything in between, which can send data back to a source, such as the finance function.
For example, the CFO might see from an IoT feed from a device that monitors weather, that a typhoon will impact their Asia Pacific operations. This quick delivery of data enables them to act on this information immediately.
“Previously, it may have taken several days for supply chain management to note the approaching weather event and inform the CFO. Now thanks to cloud capabilities, the CFO can access wider insights more quickly,” he says.
As a result, the CFO role is likely to change from performing data analytics and compiling reports to using technology to uncover insights from data.
Finance chiefs who want to stay ahead of the game will be starting to think about future resource planning around this now.
Cloud no silver bullet
While cloud computing solutions have certainly made life easier for CFOs, they are not a panacea for all their IT challenges.
Most businesses will continue to run a 'hybrid IT' model, where some functions will be hosted in the cloud and some will continue to be managed on the organisation's premises.
“CFOs are getting better at addressing the technical and budgetary aspects of managing new cloud technology, security concerns and legacy technology that will remain on-site, rather than be shifted to the cloud,” says software firm SolarWinds' head geek, Patrick Hubbard.
“Cloud has become just another technology to manage for most organisations. Businesses should focus on reducing costs, administration of the cloud and managing resources,” he explains.
Hubbard says the future of cloud computing involves integrating new technologies such as machine learning, telemetry and the Internet of Things.
He says different cloud computing software vendors have different specialisations – meaning that many firms may decide to need to appoint a range of different cloud partners.
As a result, CFOs may be required to manage multiple cloud environments.
While producing financial statements and internal auditing are likely to remain in the CFO's remit, Hubbard says a rich and growing variety of cloud-based analytic and reporting tools that are now available can enhance this function.
“These tools reassure businesses cloud is an appropriate technology, and also may offer new capabilities not available in traditional on-premises applications,” he says.
Examples of some of the emerging tools for CFOs include real-time processing, forecasting, compliance assurance and alerting, he says.
Additionally, he says machine learning – or the ability for software to learn from patterns in data – will become widely adopted in business software. As a result, there will be less need for expert data scientists to provide analysis from the insights that are created by machine learning.
Rather, the finance team will have the capability to do this in house.
The maturing of cloud technology brings good news for CFOs, who can benefit from having more sophisticated and timely business analysis at their fingertips, that can be employed to help them better manage the finance function.
- Cloud computing can allow businesses to scale their IT up or down in line with business needs.
- As cloud computing and the Internet of Things converge, CFOs could have better data with which to make decisions.
- Not all IT applications will migrate to the cloud; more likely, some data and applications may move to the cloud while others remain on the organisation's premises.