Cloud Computing – What CFOs Should Know

In a fast-paced economy, a CFO of any company has multiple roles to play and multiple issues to get engaged in. In most companies, CFOs are now managing the IT section as well, which is totally an out an out subject from their field. According to a research conducted by Gartner, 26 percent IT investments need CFO's authorization and in 46 percent companies; the IT section is answerable to the Chief Financial Officer (CFO). Another study conducted by Oracle revealed that CFOs have started taking interest in IT issues and look to cooperate with CIOs to enable smooth and effective operations. They have realized that working in collaboration with the CIO is a decisive factor in the company's growth. This notion has made many CFOs to learn about technologies like cloud computing, big data, mobility, social media etc. They have become conversant of most technologies above but cloud computing still mystifies many of them and all they know is that cloud computing promises a great future in all sections of a business.
Cloud computing being the hottest trend in the businesses, it is very important for CFOs to be aware of its technical aspects.

The Total Cost of Ownership (TCO) and Return of Investment (ROI) factor should be considered first up. In the first instance, it might allure that subscription to cloud computing and the usage-based fee is all-inclusive.

1. Legacy systems – Generally, an application may share data, storage, networks, and locations and systems. CFOs should know that moving the application to the cloud concept would not eliminate the cost of running the application internally. The cost incurred in the training of the users should also be considered along with funds to be used in updating the equipments and machinery as older machines would not comply with the advanced cloud computing technology.

2. Selecting between public, private or virtual private cloud – No doubt that public cloud incurs low operational cost but in lieu, it makes us compromise with the security of confidential data. In a private cloud, most of the applications and technologies are on a dedicated or restricted platform that can be accessed only by the persons authorized to access them.

3. Risk management – Adopting cloud could be beneficial for businesses but issues like its disruptive nature and capability to alter the fundamentals of business operation have the potential of influencing the areas of governance and compliance. Security has been the main agenda for CFOs and CIOs of many businesses and third party apps are the biggest issue. Outsourcing mainly requires sharing data with third party firms and in most cases; this data is stored in located in different regions of the world. As more and more companies are adopting cloud computing, CFOs working there will need to look for new policies to ensure that the service provider selected by them meets all the regulations set by the industry. CFOs and CIOs should jointly review services provided by the service provider and monitor his reliability and quality before determining what type of cloud would suit them. This problem is under serious consideration even of the cloud service providers and they are making every effort to provide better security solutions and protection from the server's unauthorized access.

In whole, I believe that it is equally important for the CFO of a company to show his interest and concern in IT matters. Especially, when the issue is as crucial as implementing cloud computing, he should work in complete coordination with the CIO to ensure that a company's market value does not deteriorate at any cost.