October 31st, 2008
Cloud computing: Will the financial geeks give it a boost?
The advantages of cloud computing are commonly known: You don’t need upfront infrastructure investment; scaling up is relatively easy; and the service provider is likely to be more efficient than your company.
But your friendly neighborhood chief financial officer may not get those arguments. Luckily a recent Forrester Research report provides a translation tool to get cloud computing projects done.
Forrester analyst Ted Schadler notes that companies still have to get stuff done in a downturn. And that stuff may increasingly be collaboration applications, email overhauls and Web conferencing (companies are squeezing travel budgets hard).
Also see: Microsoft’s Azure cloud platform: A guide for the perplexed
The cloud–whether it’s Amazon.com’s, Cisco’s, Google’s, IBM’s, HP’s or someone else’s–could be used for many of these projects. The hard part is pitching your CFO. Here are a few tips to get that cloud computing project approved via Forrester:
It’s all about the cash flow. The cloud–and software as a service for that matter (Forrester is using a wide definition)–has pay-as-you-go economics. Your CFO loves those economics. Why? He doesn’t have to put infrastructure on the balance sheet.
Schadler notes:
The ability to pay as you go from a service provider rather than spending upfront feels natural to a CFO — there’s nothing new about buying services. What’s new is that cloud computing offers a delivery and financing alternative to one of the bastions of corporate capital expenditures: IT.
In a crappy economy it’s a safe bet the CFO will get over the relative novelty of cloud services. Forrester adds that if a CFO can see better cash flow, lower risk and visibility she’ll become a cloud computing convert in no time.
Speed kills. Schadler adds that one financial services company moved its employee portal to a cloud service provider in 60 days. Another firm is still taking 18 months to do the same thing.
You’ll be more focused. The CFO is likely to want to farm out some projects on the cloud so the technology department can focus on things like customer service.
Now cloud computing isn’t a bed of cash flow for everyone. Service level agreements, increasing monthly costs and data ownership are all potential trouble spots that will need to be resolved.
But overall, these technology benefits:
Can translate to these financial benefits:
The big question is whether a weak economy will push CFOs over the edge to jump into cloud computing. The switch won’t happen overnight, but the longer the economy drags the better it looks for cloud computing.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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