To get ahead in digital transformation, companies must embrace cloud technology—and the CFO has a key role to play. Donal Óg McCarthy explains why
Successful companies have long had a common trait—resilience. Surviving and thriving in these current, very uncertain, times makes this resilience more necessary than ever.
Companies are being forced to reimagine their businesses, often through changes to their technology estate. Why? Some want to automate processes, scale capacity, and create new growth opportunities. Others are simply seeking the cost savings and greater efficiency needed to bring their enterprise spend under control.
While some enterprises have risen to the occasion, others have struggled, and as leaders emerge, there is a common thread that unites them—they are embracing the power of the cloud as the foundation of the digital core, which is key to business reinvention.
The hard truth, however, is that many in the boardroom are feeling underwhelmed by their company’s cloud experiences to date, leaving leaders wondering why new ways of delivering and consuming IT services have fallen short of expectations.
From the chief executive’s perspective, the accelerated innovation might not have happened at the desired pace. More control and better governance may have proved elusive for the chief operating officer. The chief technology officer could still be waiting for the technology to deliver on transformation.
The chief financial officer (CFO), meanwhile, may be wondering why there is no sign of a boost to the bottom line. While the significant benefits to be gained from cloud technology remain, leaders’ experiences have, in many cases, been tarnished by the challenges they have experienced along the way.
What has become clear is that success in adopting cloud calls for a new type of boardroom mindset—and a conversation that goes far beyond the technology itself.
And while finance leaders may recognise the potential of the cloud, they are not always equipped with what’s needed to realise the full benefits.
A study carried out by Accenture in 2021, The Cloud First CFO, found that 32 percent of CFOs regarded a lack of cloud skills within the finance function as a major barrier to doing their jobs. In that same year, 35 percent of the global executives polled by Accenture in its 2021 research, How to Unleash Competitiveness on the Cloud Continuum, highlighted a misalignment between IT and business as one of the top pain points in cloud adoption.
Unleashing the potential of the cloud
Although the cloud landscape continues to undergo a fast-paced evolution, many organisations still struggle to generate maximum value.
No matter what industry or area of the business you work in, adopting cloud services as a core part of your overall business strategy is the first step toward gaining a competitive advantage.
The value case for the cloud must be examined in a more holistic way, moving beyond the financial lens and looking at areas such as sustainability, better customer and employee experience, talent re-skilling and innovation—all of which will deliver ‘360-degree value’.
CFOs can quickly build on their own function’s experience of digital transformation to unlock more strategic priorities using better data-driven insights and forecasting to support the business.
CFOs are also uniquely positioned to significantly influence the technology choice and direction that will enable business strategy.
Accenture’s Global CFO Research, Catalyst of the Future Corporate Value, indicates that 73 percent of CFOs are retooling finance with the latest technology for the specific purpose of extending influence across the enterprise.
At the same time, finance teams might be disappointed to discover that the potential of the cloud to make expenditure more predictable is by no means guaranteed. The reality for many organisations is that complex consumption plans from big vendors, and prices that keep changing, often result in runaway costs and ‘bill shock’.
Optimising value and performance, and successfully transitioning from capital expenditure to operational expenditure models, requires a different mindset and a cultural shift across the entire organisation.
Adopt a Cloud FinOps approach
The new financial management discipline Cloud FinOps—shorthand for ‘cloud financial operations’—involves bringing greater financial accountability to managing the variable spend model of the cloud. It is a methodology that advocates for a collaborative working relationship between technology, finance, and business teams, resulting in the iterative, data-driven management of cloud spending.
When closer collaboration has been established under the Cloud FinOps umbrella, unit economics and value-based metrics demonstrate business impact. Teams begin taking accountability for cloud usage/cost and become empowered to manage their own usage in line with their budget.
Enterprises of all shapes and sizes are being asked to evolve their cloud organisations to adapt to this new financially focused mindset. This will drive business value through their cloud estate, especially as they increasingly seek to go ‘cloud native’ and utilise multiple cloud service providers.
With the right processes, capability and tooling in place, an organisation’s spend on the cloud can be significantly reduced and wider qualitative benefits unlocked. These benefits can improve the organisation’s competitive position in the market through increased speed to market, on-demand scalability and employee engagement.
Build your cloud fluency
For CFOs, this is evolution rather than revolution. It’s not about finance people mastering technology, or tech teams starting to become finance people. It is about a meeting of minds and closer collaboration, understanding each other’s motivations and complementing our respective skills.
All of this is achievable with a FinOps capability set up at the centre of the organisation. With real-time visibility of cloud expenditure, IT and finance can work together and become more proactive, identifying potential overruns before they become an issue.
This structure can also bring better governance to the wider organisation, helping develop a culture that empowers other business teams to take ownership of their decisions and understand the cost implications.
Top of the agenda for the CFO is to make sure they have a key role in driving the cloud journey. They must be directly involved with cloud adoption—not just making sure the numbers add up, but also learning about and understanding the cloud. No one expects high levels of technical expertise, but the CFO will need enough knowledge to make informed decisions about their organisation’s future technology partnerships.
Wherever possible, an organisation needs to nurture its existing talent, upskilling people to contribute to the cloud journey. This will help to ensure that everyone in the enterprise feels part of the project from the outset—always the best recipe for success.
The complexity of the cloud, however, means that internal skillsets will need to be supplemented with external expertise. Be prepared to forge partnerships with third parties who understand your business and can provide a good cultural, as well as technical, fit.
Cloud journeys might appear long and complex at the outset, but with a new boardroom mindset and cross-department collaboration, cloud value can become eminently attainable and a critical enabler of business transformation.
Make the leap, take the lead
Leaders in enterprise technology have extended their advantage in the last few years by doubling down on their investments with a more aggressive cloud-enabled technology strategy.
There is a new group emerging, however, that is outpacing its peers by re-platforming to the cloud, adopting an innovation-led mindset and expanding access to technology across functions. These organisations are leapfrogging their competitors and breaking through previous performance barriers to get ahead.
This group does so by moving to the cloud at scale, with computational flexibility and strategic agility enabled by the world-class technology capabilities of cloud service providers. Virtually overnight, you can accelerate software development cycles, change business processes, and build new capabilities into your organisation.
Crucially, there will also be more opportunities to innovate and experiment—something that was difficult in the past when resources were focused on firefighting and supporting ‘business as usual’.
Look at the process holistically: the multiple steps now involve getting to the cloud, utilising the power of the cloud, and operating across the cloud continuum, offering a range of capabilities from public to private to edge computing. This reframing allows you to flip IT budget spend and put more into innovation-related activity than operations.
By expanding access to technology across different business functions, organisations can focus on widening business priorities, touching on issues like employee reskilling, well-being, and sustainability.
Ultimately, taking the lead in cloud adoption will catalyse change adoption, advance digital transformation, and promote growth through innovation.
The three As for cloud success
The differentiating factor among cloud leaders is their focus on three things when it comes to their teams—alignment, adoption and ability.
Alignment
With a shared strategic vision across the c-suite, and alignment in execution between IT and the business, companies will be able to move faster in the race to the cloud and derive the most value.
Ability
By building up leadership competencies, upskilling and
recruiting talent, and by ensuring digital fluency skills
trickle out across the whole enterprise, a culture can
be created to drive continuous learning and keep the
business at the leading edge.
Adoption
Having re-platformed in the cloud, reframed the business
through the optics of FinOps, and extended its reach with
new scale and agility, the door is open for adopting new
ways of working and innovation practices that will make
the business more resilient.
LOADING...