Finance in the Cloud: Outsourcing Critical Business Functions

Welcome to my second post of the Finance in the Cloud blog series. In my first post, I described why CFO's should love the concept of virtualization. With virtualization, IT infrastructure and fixed asset investments are maximized by utilizing as much of the computing power as possible.

But let's face it, the move to virtualization and the cloud is very complicated. What equipment needs to be purchased? Who has the knowledge to configure this hardware and maintain it? If you are consolidating mission critical infrastructure on less equipment how do you address the risk of the data center it is located in and ensuring uptime? And finally, the capital cost of this equipment is expensive.

When you move to the cloud, you are outsourcing a critical business function. There are many benefits to outsourcing, but I would like to highlight three:

  1. Focus on your core business - each business has a value proposition - some value added benefit that they provide customers. When you outsource, you free up internal resources to focus on tasks that drive more value in your business. When you move to the cloud, your IT team can focus on application development and customer features as opposed to running a data center.
  2. Control capital costs and convert them to predictable operating expenses - IT equipment is expensive. The move to the cloud allows your business to avoid large upfront investments. Instead, you can move to an on-demand model, paying for only the resources you are actually using. This conserves cash flow and allows you to invest in the areas that drive the most value to your business.
  3. Lower risk - When you outsource, you are placing your critical infrastructure in the hands of experts who are able to leverage their knowledge and resources at a large scale to provide better, more reliable service to your business as a reasonable price. For years, most small and medium sized businesses have had critical components of their IT infrastructure on premise and maintained by company employees.

The third point in the benefits of outsourcing to the cloud warrants more investigation. Next up in the series is a discussion of risk management as it pertains to the cloud and key factors a CFO should consider when shifting IT spend to the cloud. See you soon!