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Do you see IT organizations avoiding cloud technology solutions for their own self preservation? How should I handle as a CFO? (Webinar Attendee Question)

This question was asked during the Proformative webinar "The Evolving Role of Finance Leaders: Technology Strategists."  A video of the webinar can be viewed here: https://www.proformative.com/resources/webinar-video-evolving-role-finance-leaders-technology-strategists

 

 

 

 

 

Answers

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

My experience is that the opposite is true. The IT people I've worked with are very service-level focused and very capital and headcount restrained. They like what they do, and being able to provide more with less is great for them. Where that is possible with a cloud or saas or similar solution, IT has been a leader in my experience.

I have run into a few IT people who *seem* to be avoiding cloud solutions, but their avoidance has been rational (to a degree).
-They've got a solution that currently works, and disrupting that has risk involved along with direct costs (retraining, deployment, etc).
-An up and running system is often a sunk cost so maintenance can be relatively low; a hosted solution typically has higher overall costs if that up-front sunk cost is ignored.
-IT often serves many constituencies; while a particular cloud solution might be a better fit for your needs, it might not fit others and therefore end up being an incremental cost as the prior system may still be needed.

Recasting this question, I would say...."I think there is opportunity here; How, as a CFO, do I lead strategic change in how IT is delivered at our company."
-Remove threats. Change is scary. Acknowledge this and work to minimize fear (excess workloads, loss of budget, punishment for failure, etc.)
-Support decision making. Provide analysis on current costs (and potential future costs of the current system), and help do the homework on costs of potential alternatives.
-Support deployment. Provide people / budget for design, implementation, training, etc.

Topic Expert
Donald Koscheka
Title: Principal
Company: Bluecloud Communications
(Principal, Bluecloud Communications) |

While Keith makes some good points, I have seen dozens of IT organizations 'stonewall' on the issue of cloud computing. The issue isn't always job security - sometimes the IT organization just wants to avoid making big changes (IT managers tend to be risk averse - a consequence of working in a position where taking risks can lead failed systems).

You can tell if IT is stonewalling by their language - they use language like "Cloud computing is more expensive" or "The cloud isn't secure enough". You can test these assertions very easily: ask your CIO to prepare a cost/benefit analysis of cloud vs. on-premises. Chances are good that they will focus on only a few items like hardware software costs. The ROI analysis needs to cover hardware, software, people, facilities and utilities to be complete. Many IT organizations don't factor in labor costs because they can't imagine putting them or their colleagues out of work - you might need to engage a third party to do this analysis for you.

As for security, a lot of IT organizations wouldn't pass the minimum security standards outlined in SSAE-16 - in my experience working with hundreds of IT organizations, most technologists overestimate their security controls.

Tom Kelly
Title: Managing Director
Company: T > Edward, Inc.
(Managing Director, T > Edward, Inc.) |

I couldn't agree more with Donald's comments. In fact, ask your IT colleague for his/her uptime stats for each on-premise application they are hosting for the last 12 months. If they have them how many are meeting a 99.5% uptime requirement which is the minimum that a solid Cloud provider offers.

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