by Erik Peterson
A friend and I were prepping to advise the financial execs of a large, international company on cloud adoption. He turned to me and said “Erik, I think I’ll tell them cloud adoption is a CFO decision”. I replied with something like, “Absolutely. Of course such important investments like ‘the cloud’ are a CFO decision”.
Well, the statement makes a good point although a bit idealistic. A more complete statement would be something like “a best practice is that cloud adoption strategy and execution should include CFO involvement, approval, controls, and transparency…” Not as pithy, but let’s talk about the relationship between cloud adoption and the office of the CFO and my deliberate usage of the word “should”.
Back to idealism for a minute…
Consider a perfect world where a company has clear business strategy and objectives. The organization has mature operational governance and financial systems that reasonably align technology investment and outcomes with the business. The current state of the information technology footprint is reasonably up to date and uses best practices. It’s not bleeding edge but the “house is in order”. The company is doing well and now along comes a massive information technology shift from a cottage industry approach to a utility approach. No worries, this company is positioned to take advantage.
But companies aren’t perfect and decision makers have to navigate new waters knowing the rudder is a bit cocked, the crew has some issues, there are a few leaks being fixed in the hull, and “if we just had more wind in the sails”. So how does an imperfect executive team comprehend when, where, and how it should move to the cloud?
A utility metaphor…
Think about a century or two ago when a home owner had to implement their own method of obtaining water, disposing of sewage, and providing lighting. Today, unless you’re building a remote cabin in the woods, you’re hooking up to utilities.
What business wants to be a remote cabin in the woods? An IT trend has been taking place where businesses not hooked to the utilities (the cloud) look more and more isolated like that remote cabin. They just can’t get connected fast enough. They can’t connect to their own systems let alone partners, providers, customers, etc. Ugh! Executive ideas, ambitions, and objectives are held hostage by IT.
But not so fast…
Sometimes the wise move is to not be the early cloud-this-or-that-adopter. Imagine hooking up to in immature cloud provider that get’s hacked or that provides only a very expensive exit option when it isn’t providing the expected value. (Note that you should consider calculating exit costs as part of the total EV...who never leaves a tech platform?)
So what’s the relationship of CFO’s to cloud adoption? Get educated. Get involved. Don’t strangle it’s adoption. Don’t let it run wild either.
Note that SaaS cloud adoption is your biggest shadow IT nightmare…right now…and you don’t have it adequately managed. Prove me wrong! As CFO, you need to be involved managing it. It’s too easy for a well-intentioned but naive staff with a credit card and favorite credentials to start getting work done with cloud SaaS subscription. But before long you have hundreds of duplicate providers, massive security exposure, have lost alignment, and a real mess for you (or the next CFO) to clean up.
How does cloud shift your CAPEX/OPEX for existing and new offerings? How does “on-demand” impact your sales? Your production and delivery? Good CFO questions and I have plenty more you may want to consider.
What it comes down to is that a CFO “should” provide leadership from their view by knowing the tools, opportunities, the risks, mitigation, governance, trends, etc. that help the company make sound cloud investments and manage them well. It’s a great opportunity to contribute to your executive team.