The terminology associated with the dark art of business technology can sometimes make finance directors feel as if they are back at school. Bamboozled by a series of buzzwords developed by the technical clique, they could be forgiven for tuning out when the chief information officer (CIO) begins bending their ear.
But the baffling jargon associated with IT obfuscates a business necessity; technology is changing the way business operates and the finance function is not immune to such transformation. What is more, the changes associated with cloud computing – the latest hyped-up killer app in technology – are potentially the most far-reaching yet.
Moving all your databases, systems and software onto an internet-based platform rather than running it through expensive hardware platforms, cloud computing breaks the traditional and costly model of IT purchasing and implementation. Rather than being tied to rigid licensing models for under-used technology, it allows the business to make use of an internet-enabled form of technology provision.
Through such an approach, businesses can flexibly purchase IT resources across a range of areas, and on-demand.
Andy Beale, technology director for architecture and services at Guardian News and Media (GNM) has led the implementation of one such invention, Google Apps Premier Edition, across the group’s central offices.
He says it encourages a more collaborative way of working and allows employees to use Google’s range of licence-free desktop applications, such as word processing, spreadsheets and video. Software is hosted and managed by Google, removing the need to install software or hardware onsite.
When it comes to the company’s finance department, though, Beale says there is limited use of Google Docs for the sharing of financial information, but the cloud is still pushing business transformation.
“What has changed is the way departments collaborate on budget information before it goes to finance,” Beale tells Financial Director. “Finance employees use Google Mail and Google Talk for communications. For larger departments with multiple cost centres, the ability to have many managers working on the same spreadsheet has made the budget process more efficient.”
Beale’s experiences suggest more workers could use cloud-based services to undertake collaborative forms of working and to increase productivity. As many as 82 percent of UK finance professionals already use web-based applications at work, according to online accounting software provider Aqilla. More than a third, meanwhile, use Her Majesty’s Revenue & Customs’ online tax returns function.
Scepticism about the potential benefits of cloud computing remains. Research from CIO Connect, a members’ group for CIOs, says that as many as 58 percent of technology heads it asked do not believe cloud computing is changing how IT is delivered.
The biggest inhibitor to the uptake of cloud services is security. Many IT heads believe cloud computing does not offer a secure environment for the type of applications required by the business, according to the Cloud Industry Forum.
FDs and others are often concerned about the extent to which sensitive information should be held online, beyond the confines of the corporate firewall.
From his experiences at GNM, Beale thinks it crucial that project-sponsoring executives work to overcome uncertainty among users.
“Early engagement with legal and risk roles within the organisation about potential issues will help during and after the implementation,” he says.
Some of the scare stories associated with cloud computing could leave FDs questioning the sense of moving applications and data online. But caution is advised and Peter Cochrane, former chief technology officer (CTO) at BT, suggests some of the cloud’s built-in security features can be overlooked.
The flexible nature of cloud computing means the protection of applications and data can be invoked centrally at minimal expense. “It is a world that could ultimately provide the solution to the security problems of people carrying content on vulnerable laptops,” says Cochrane.
Preventing such wayward activities has traditionally been the role of the IT department. But the continued development of cloud computing – and the ability of users to buy technology on-demand and monitor activity from afar – could mean the technology team becomes an anachronism.
Cloud computing, then, is likely to have a big impact on the work of the FD, as well as the cost-effective provision of IT across the business. Capgemini CTO Karl Deacon says the cloud is likely to affect the entire IT investment strategy. From tactical planning to cashflow management, FDs will face many challenges as the business is expecting to roll out new services quickly.
“The speed of decisions, relative to IT-related business change, will become very rapid,” says Deacon.
FDs are already considering the impact of the cloud. Tom Berquist, CFO at software giant Corel, is a big proponent of online provision. He says cloud c omputing offers high availability and reduces the pressure on the internal IT helpdesk, removing the requirement to have deep infrastructure expertise in-house.
More specifically for FDs, Berquist says, most finance technology requirements can also be handled through the cloud. Key areas – such as accounts payable, purchasing, expense reports and performance management – are already available online through multiple vendors. The only question for FDs is, how much is too much? For Berquist, the potential is limitless.
“As more of these finance applications also support mobile infrastructure, we can provide our sales people, managers and executives with real-time applications that provide significant insight into what is happening with customers, vendors, inventory, cash management and many other key business metrics,” he says.
Berquist expects more business services to be provided online and on-demand. If it can make the FD’s life easier while making money, it really is the disruptive killer app it sells itself as.
As the global economy recovers from recession, FDs are likely to find that cloud computing quickly becomes a best friend after something of a cultural change and a leap of faith. Despite the vociferous hype around it, that would be a silver lining.
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