The case for cloud technology has developed from cost reduction to wider business transformation. Rick Wright, global cloud enablement programme leader at KPMG in the US, tells CFO Agenda what this means and what CFOs can do to help.
As the market for cloud services continues to expand, the way enterprises consumer technology is changing. On-premise legacy systems – once so popular – have become less relevant and less effective, with the need for agility and speed to market so important.
“Today, we see most new business software products being developed and delivered ‘as a service’,” says Rick Wright, global cloud enablement programme leader at KPMG in the US. “Whether it’s finance or data analytic systems in support of the CFO, the whole world is moving this way.”
Even in the brief time that cloud technology has been prevalent, the perceptions and expectations people have of it have changed. It began as a relatively straightforward IT concern; CIOs needing greater infrastructural agility would look to outside companies such as Amazon, HP or IBM to deliver it. But fast-forward a few years and almost any aspect of business – HR, tax, finance, etc – can be run through the software-as-a-service delivery model.
That technological progress has presented CFOs with a whole new way of looking at the cloud. Rather than a simple cost-saving measure, the software-as-a-service model is now viewed as a genuine opportunity to transform business.
“Originally the cloud was seen as a way to avoid spending tens of millions of dollars on a large ERP finance implementation,” Wright says. “But what we’re finding, as we talk to more and more CFOs, is that, while cost is a factor, it’s not the only driver. In most of the successful, large-scale cloud adoptions, the key question is how it helps the enterprise transform their business.”
There are various examples of this. If a company enters a new market like China and needs to set up a fresh set of business processes, the agility of software as a service solution can be useful. And the same is true of acquisitive enterprises, many of which need a structure in place to bring new companies on board as quickly as possible.
Complications do exist despite the market’s relative popularity. Many organisations that have on-premise software and large data depositaries are only just beginning to migrate areas of their business to the cloud. However, some are finding integrating existing on-premise systems and cloud to be a challenge.
“People are struggling in this regard,” says Wright. “But successful integration is paramount to CFOs who want to view the performance of their business across the enterprise. If a company enters a new market and establishes a completely new system, they need to be able to integrate it into the wider business. The magnitude and complexity of the effort is often undervalued and undersized. We’re now seeing an ecosystem of cloud solutions evolve that is dedicated to the integration of cloud services. It’s an area that both parties – cloud providers and enterprises – will need to work hard on in the coming years.”
Another common misconception around cloud technology is the role played by IT departments. Many business leaders view cloud technology as a way of circumventing IT, but that couldn’t be further from the truth, according to Wright.
“IT is best equipped to drive cloud programme performance,” he says. “Therefore CFOs need to ensure they have the right IT leaders in place. There may be a big reduction in the amount of technology that needs to be deployed, but the level of organisational change in such a short period of time is massive. Day-to-day management of the risks of these implementations should be driven out of the IT department with strong oversight from the CFO.”
For Wright, achieving genuine business transformation requires method and strategy. An ad hoc tactical approach to cloud adoption might change your business, but in the long run it could create an environment that is complex and, ultimately, unsustainable.
© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.