Five Cloud Questions Every CFO Should Ask

Author:
Brent Meadows

Category: Cloud Computing

Data Center Cost Considerations

Cloud computing is an important part of many business infrastructures, whether it’s a few SaaS applications or a full-blown infrastructure. The company CIO may be pushing cloud initiatives hard, but before you reach the implementation phase, there are several cloud budget questions you need to address.

1. Would a Single Vendor Infrastructure Reduce Costs?
The cloud-computing industry has a wide range of vendors offering solutions for infrastructure development. In some cases, it makes sense to use a wide range of vendors to cover all the business’s requirements for the infrastructure. However, spreading solutions across multiple vendors eliminates the potential for benefiting from the economies of scale that come from a single vendor’s set of solutions. The amount of time invested in contacting multiple vendors and coordinating their services results in a greater support cost in the long term. A single vendor infrastructure may restrict flexibility, but has the potential to bring down support costs and eliminate potential finger pointing.

2. Are You Leveraging Existing Assets to Cut Equipment Costs?
Three primary types of cloud solutions exist: public, private and hybrid. Public cloud-computing solutions are multi-tenant based, meaning that many companies leverage the same backend platform. The private cloud environment provides a dedicated backend platform to one customer, and the hybrid could either be a mix of the public and private as well as a mix that incorporates other physical hardware. If your company is looking at adopting a private or hybrid cloud model, existing assets can be leveraged to cut equipment costs. The company can repurpose existing servers and other hardware and incorporate it into the private or hybrid cloud infrastructure. In addition to reducing on-site equipment cost, it also helps to provide physical access control to certain hardware. In these cases working with a local provider will make operations run more smoothly and will likely reduce overall costs.

3. What Plans are in Place to Avoid Losing Money as a result of Downtime?
Cloud computing offloads a significant amount of maintenance and support from your in-house departments, but that’s not necessarily a cost-saving measure if the service is unreliable. In the event of downtime, it’s essential to know what redundancies and disaster recovery plans are in place. Even an hour of downtime could create a significant revenue hit, coupled with negative customer impressions and perceptions.

4. Is There a Risk of Falling Out of Compliance?
PCI and HIPAA compliance are two regulations that many companies deal with. When creating a plan for cloud-based infrastructure, it’s essential to keep compliance in mind. Some aspects of compliance revolve around data security, so understanding exactly what security measures are in place is essential. Failing to conform to compliance regulations could result in fines and other adverse consequences for the company.

5. Are There Migration Costs Involved?
Many companies have custom applications in place, developed specific to the business’s needs. If these applications are getting transferred to the cloud to create more scalable and accessible infrastructure, you need to know what the migration costs are.

Working With the CIO on Cloud Budget Decisions
CIOs may know the best technical option to implement a cloud infrastructure, but they may not be making their decisions with the overall IT budget in mind. IT expenditures often represent a significant chunk of a business’s budget, so it’s important to work with the CIO to achieve a balance between technical functionality and budget feasibility. Discuss the requirements the CIO is attempting to meet with his or her solutions and what his or her priorities are so the cloud budget can be adjusted to accommodate the most pressing issues. The CIO comes up with the requirements and solution, but the CFO typically has the final word on where the money is allocated and when it’s released. Being on the same page with the company’s IT needs makes the cloud budget decisions much easier.

Sources:
http://www.datacenterknowledge.com/archives/2015/03/23/cfos-many-flavors-cloud/

http://www.oracle.com/us/corporate/profit/archives/opinion/070610-epstein-qa-161454.html

 

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