The CFO’s Cloud Brief: Why move to the cloud?

Published On
August 24, 2018

While CFO’s don’t have to be an expert in IT they should still be well informed. One of the dilemmas that many organizations and CFO’s face is whether they should move their IT infrastructure to the cloud or not.

This compelling question is due to IT budgets increasing as the demand for computing power and data is growing rapidly. Customer demand in the digital space has driven this growth of data usage, similar to the way that the rise of the mobile internet has morphed customer engagement.

It doesn’t end on the customer side either, companies have also been adopting a mobile workforce and multinational business operations. This has put an added cost to ERP applications and compliance. This is why cloud adoption has become popular for organizations looking to simplify their SAP landscape.

It rests on the CFO’s shoulders to work with their CIO to find out the best way to try to minimize costs that comes with these demands while supporting growth, agility and efficient business operations.

CFO’s that are pondering cloud adoption probably see that a majority of their IT budget is being allocated to business continuity and building more datacenters to keep up with the pace.

In fact, the costs may have even stopped mergers due to the amount of work and time it takes to integrate the systems.

This is where cloud computing becomes the most sensible option and puts a CFO at ease. The efficiencies and benefits of the cloud has pushed companies to focus on innovation from their IT budgets instead of surrendering to expensive unexpected IT costs.

Cap EX and Op Ex Savings

When Cap Ex and Op Ex are mentioned there’s a usually a Vs. in between them as if the cloud puts them against each other. It’s much better to think of them cohesively, it really depends on which type of cloud platform is being used. Each one has their own unique economical differentiations.

Public Cloud

The Public Cloud allows the CFO to have to reassurance of knowing that they get the complete benefits of the cloud while eliminating Capex for Hardware completely. Deployment also becomes much easier because it can be handled remotely and may only take a few minutes. This saves the IT department quite some time that would normally be dedicated to configuring the new systems, which also would drive up Opex’s.

From the CFO’s point of view there will be a decrease in almost every capital expense going forward. Merger’s also become much less costly as there is no need for new networking and datacenters.

Possibilities for innovation are seemingly unlimited because of scalability. Companies will only have to pay for what they are currently using for their IT infrastructure.

Gone will be the days of having to stock up on extra hardware temporarily, and possibly having them sit idle for down times. No CFO wants to pay for capital expenses that aren’t in full utilization.

To learn more about the Public Cloud download our whitepaper: Click Here.

Hybrid Cloud

The Hybrid cloud allows the CFO many options, as they use servers rented out from cloud vendors while still maintaining on-premise systems using cloud based software.

In Hybrid Cloud solutions CFO’s will see how Capex and Opex simultaneously reduce. During migration all businesses go through a stage where they are using a hybrid cloud. The CFO and CIO can have control over where they want to have certain applications and databases.

In this solution there are security advantages as well. The cloud vendor of choice (Azure, AWS, Google etc.) will provide the latest innovations and maintenance capabilities that they use with their own servers and pass it down to the to the customer, helping them save money on hardware and datacenter maintenance which drive up a lot of costs.

As a result, the CFO will notice that their servers will run more efficiently in the long run. In this solution there is flexibility while still having some control over some hardware.

Private Cloud

Private Cloud is a bit different, there is a misconception that there are no capital expenditure savings because businesses will still have all of the expenses that come with maintaining their own infrastructure. But this isn’t entirely true. Companies will get the most of their hardware because the cloud technologies change the way that hardware, networking, storage and virtualization is performed. Making it much more efficient and cost effective.

The maintenance efficiencies are the main saving tactic for a CFO using private cloud, it helps them get the most out of their hardware. And it saves time and a burden on the IT department as they will experience just how quickly deployment takes place.

Lower TCO

In a typical on-premise model, the IT costs can be split in up to three main categories Software, Hardware and Maintenance. In the case of cloud, the total Cost of ownership measures the expenses of the lifespan of subscription. For on-premise comparison it would be the lifespan of hardware.

Hardware budgets are primarily used for servers, components for networking, desktops and mobile computers. Software budgets are primarily spent on new licenses and ERP systems. The maintenance budget goes towards support staff to deploy, operate and support the software and hardware as well as developers to design and build custom systems.

Since cloud providers have a cost-effective IaaS, not only is it cheaper to maintain hardware but is also simplifies normal daily responsibilities that the IT department would normally have to deal like deployment and system customization. Using cloud IaaS eases the burden of developers because of how quickly the VM’s can be customized for various tasks.

Many of our customers at Wharfedale never imagined before they migrated just how simple these processes become until they made their move.

The move away from expenses on hardware and maintenance opens more of the budget for innovations and lets companies focus on serving their customers in the best way possible. It also simplifies a company’s ERP Landscape, another reason why it’s becoming a must for SAP users.

Any CFO ready to move to the cloud or considering a move can schedule a consultation with us here.