The Cloud phenomenon has stirred up interest throughout the world and the future belongs to those who understand the technology, can manage adaption risks and have the ability to innovate. The Cloud provides all businesses with an opportunity to minimize typical IT constraints, such as limited resources, incompatible systems and spiraling maintenance costs, and free the business to pursue growth and innovation.
However, many businesses are looking at the Cloud as just another technology and are leaving decisions on how to adopt, own, and manage their Cloud presence to their CIO. This may be appropriate at some levels, but creating or acquiring a Cloud platform is not solely an IT decision; it’s also a strategic and tactical decision which requires input from senior management.
At a strategic level, the Cloud promises to cut IT costs while increasing the scalability and availability of IT resources. This is exciting for CEOs as the Cloud can be used to support new business models due to its flexibility and short time to market. Using the Cloud, CEOs can consider scenarios where IT can be used innovatively to enhance existing services and change existing business models.
At a tactical level, the CFO and CIO play complementary roles. CIOs evaluate Cloud offerings and recommend a technical roadmap for adoption of the Cloud. This role includes assisting with the development of appropriate measurement tools, such as ROI, to track the impact of Cloud adoption on the organization. The CFO plays a key role in the financial evaluation of the businesses Cloud presence. This includes an assessment of the financial business case and relevant issues, such as tax considerations. Further, the CFO could serve as a key intermediary between the CIO and the CEO.
The Cloud is a game-changer which impacts the way we use IT and promises significant commercial and technical benefits. Further, the Cloud promises to deliver affordable, reliable, and flexible computing solutions to SMEs, enabling them to compete more effectively with larger organizations.
However, the challenges also need to be considered and many entities will need to modify their strategy to realize the benefits of the Cloud. One clear example is the need to redefine business models to better reflect changing trends in the use of IT.
The Cloud provides business with a fresh perspective on the planning process, for example a legacy business must understand how a more nimble competitor would use the Cloud to challenge and/or change the current industry dynamic. Given this, the approach to strategic planning must also change to reflect the realities and opportunities of the Cloud.
By Graham Pearce - Associate Director, KPMG
Graham Pearce is an Associate Director at KPMG New Zealand where he specializes in buy and sell-side M&A lead advisory. Graham was formerly part of KPMG's European Technology Team where he provided strategic advice to U.K. owner entrepreneurs, corporates and private equity houses. He maintains several retained private equity clients for whom he provides regular advice to in assessing technology acquisitions.