Latest Technology News from SemTech
These 4 Issues are Paralyzing CFOs from Moving to the Cloud
CFOs have long been challenged by the value proposition of capital technology investments, often requiring in-depth analysis and reviews before making the plunge. While the lower monthly costs of cloud-based computing may overcome this inertia in some instances, CFOs are understandably nervous about committing to “rentals” of software or services that don’t have an extended life beyond the end of the subscription. While the CFO may not be reviewing each purchase for IT fit, they are likely intensely interested in whether they are getting the expected value from any technology purchases that are made. The CFOs leaning may help influence purchases for quite some time, making it vital to ensure that your CFO fully understands the benefits of moving to the cloud so you can break through their paralysis of analysis. Here are 4 of the sticking points that are pushing CFOs away from adoption of a more agile, extensible model for technology.
1. Communicate Key Risk Factors for Adoption
Like any technology, cloud platforms are only truly valuable if you gain widespread adoption throughout your user base. CFOs may have been burned in the past with projects that had an extensive upfront cost, yet didn’t deliver the expected business value after an extended implementation period. CIOs and other IT leaders can help mitigate this risk by addressing the root causes behind the poor adoption rates. Cloud solutions can be particularly challenging to sell, simply because they are predicated on the concept of continual change — something that is a struggle for many organizations.
2. Reassure CFOs That Technology Will Be Analyzed and “Rightsized” for Cloud
Financial business leaders are rarely happy with having assets on the books that aren’t being utilized, but legacy technology has a way of hanging around long after its useful life has been expended. When you reassure CFOs that you won’t simply be transferring efficiency problems to a new type of infrastructure — that you’re first resolving and appropriately sizing the solutions for your future business needs — they are more likely to be open to the conversation about a move. Gaining efficiencies and improving operations are always topics near and dear to the heart of CFOs. This could manifest in a variety of ways such as analyzing server and peak memory usage, looking for system vulnerabilities that can be addressed and reducing overall software licensing requirements.
3. Yes, There Are Ongoing Variable Costs — But They Are Balanced by Added Value
Traditional software models include an upfront purchase cost and an associated ongoing maintenance fee to obtain upgrades. Over the life of a contract, maintenance fees can increase and there may be charges over time for significant upgrades that aren’t covered in your service model. Newer options are introduced to the market on a regular basis, but a high sunk cost in a particular platform serves to discourage new investments in other platforms. With cloud-based platforms you may still have a multi-year contract, but once that time is over it may be significantly easier to shift to a new platform. Granted, there are likely integration costs and training and general disruption to your business to consider, but you may be able to recognize compelling benefits by changing to a new cloud-based service. Plus, most cloud software has the benefit of regular releases that will provide enhanced usability, resolve bugs and create a more secure computing environment. The financial equation becomes slightly more difficult to sell to your CFO if your usage is expected to vary considerably from month-to-month, as it can make cash flow more difficult to project.
4. Cloud Performance Has Improved Dramatically in This Decade
Sure, there are still some platforms that are not fully optimized and don’t run as quickly as they would on a local server — but we are no longer in a world where “cloud” equates to poor performance, latency and a lack of security. Ultra-fast connections throughout the country and the world and high-performance data centers offer a new level of service deliverability. While it’s still important to carefully review contracts to ensure that SLAs and reliability levels are up to your expectations, these should no longer be used to deliver a no-go decision on moving to the cloud.
Having an honest internal conversation with top leadership helps determine which — or all — of these concerns are holding back your CFO from approving cloud-based projects. While financial considerations are often top of mind, there are other risk factors that need to be openly addressed in a way that communicates the overall value to the organization.