Cloud Computing: Six Questions CFOs Must Ask

by Jonathan Collins, 26 November 2010

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topics:
Technology

tags:
cloud computing ERP financial management general ledger planning software reconciliation software ROI shared services

Open any trade magazine and you are bound to see an article on cloud computing. Do not buy into the hype that cloud computing always equals the best ROI. The best approach is to engage the organization in a dialogue that is centered on the business problem to be solved: lower cost of IT for Finance; improve speed to market for shared service for accounting functions, etc. Here are six important questions that the CFO should pose – and make sure are answered.

What is the right strategy for our company?

Cloud computing is such a broad term; just because you hear the CIO say cloud computing does not mean that her definition matches yours. There are multiple types of cloud offerings: infrastructure as a service (e.g., disk drive storage in the cloud), platform as a service (allows the ability to build applications using someone else's infrastructure) and applications as a service (salesforce.com).

With cloud computing services just now reaching the first grade of school, it will be a while before the industry sorts out the winning business models. So utilize cloud computing only if there is a clear ROI or it enables your business strategy in a way that nothing else will. Ask the CIO to come up with a list of options and review the hard and soft benefits and costs associated with each. If cloud computing comes out on top, so be it.

Alternatively, if your accounting staff is touting cloud computing as a faster path to market, take caution. The last thing you want to do is to create a shadow IT function within your organization: Accounting and Finance owning IT functions outside of the span of IT control. Cloud computing is making this easier to do than ever before. As a leader of the business, you want to be seen as an enabler of the business, not someone who creates silos.

What solutions are available for Finance and Accounting functions?

Consider the applications that support the finance and accounting function, to name a few:

ERP
General Ledger
Planning software
Reconciliation software

Depending on the size of your organization, there may or may not be a cloud strategy suitable it. While there are cloud-based ERP solutions, do they have the history that the major ERP players have? If your ERP solution is in need of an upgrade, can you create a strategy that gets you from your current state to a future cloud state with minimal business disruption?

Consider the migration of your historical product data that would need to be migrated. The sweet spot for cloud computing for F&A might be companies that don't have an existing software solution and are meeting their processing needs with Excel and manpower.

Can the cloud solution scale to meet my business needs?

The key benefit of cloud computing is being able to purchase as much as you need, only when you need it. Depending on the solution you need, a formal RFP may or may not be in order. In either case, you do want to feel comfortable that the vendor can provide for your firm.

The essential question: Can the solution scale up or down to match your business needs? And what is the pricing structure? If you are in acquisition mode, can the vendor support two times the user base from your company overnight? If you are in divestiture mode, does the pricing and contract structure allow you to de-provision users quickly?

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