When will CFOs say "Yes" and "No" to cloud computing?
By Carol Ko 19-Oct-2010
So the debate on cloud continues: will cloud computing rescue your from the vortex of endless IT support and maintenance, which eats up 70% of your IT budgets? Or, will cloud computing lure you to downfall as your 'Faustian deal' turns out to be too ambitious to keep the company's IT assets on track?
As cloud computing increasingly attracts the CFOs' attention, so must you as a CIO or a senior IT executive be aware of how your financial controller perceives the cloud. This is particularly important when the overall cloud/ Web platforms are soon to enter the trough of disillusion, while private cloud computing needs another two to five years to mature, according to Gartner's freshest report on the hype cycle for emerging technologies.
|"[I]t is imperative that the onus be put on the provider to prove it has documented to prove it has documented and tested procedures that address the key risk areas previously outlined." |
-- Daryl Plummer, Gartner
The interview with Gartner's research chief Daryl Plummer (pictured) continues this week. In the following conversation, IT practitioners will get another glimpse of what non-cost and billing factors that CFOs generally take into account when presented with a cloud proposal. Check them out and get prepared for some tough questions from your financial chief.
Asia Cloud Forum: Other than cost and billing issues, what are the CFOs top three concerns when it comes to whether or not to adopt cloud computing at their enterprise? Are they justified?
Daryl C. Plummer: Cloud computing comes with its share of risks that must be considered as part of the development of a cloud computing strategy. The top CFO concerns are not billing issues, but rather:
- Data security and loss: Is my data safe outside the firewall? What happens if the data gets lost? How can it be retrieved? Is critical data safe from intrusion by competitors?
- Compliance: Can we meet regulatory reporting and transparency requirements? If data is stored in another country, are there cross-border data transfer issues?
- Reliability and performance: Will it meet our "uptime" availability requirements?
Finance leaders and IT, working with CIOs and cloud computing vendors, can develop a viable mitigation plan for each of these risks. For example, users should ensure that the vendor provides documented uptime guarantees (typically between 99.5% and 99.9%) for mission-critical applications.
They should also ensure that the vendor's security procedures for vulnerability management, intrusion prevention, incident response, and incident escalation and investigation are well-documented. Some cloud computing vendors actually have better procedures than many internal IT organizations, but it is imperative that the onus be put on the provider to prove it has documented and tested procedures that address the key risk areas previously outlined.
What kind of benefits do CFOs expect from a cloud computing implementation? Can they be easily realized?
Plummer: Cloud computing sets the stage for a new approach to IT that enables individuals and businesses to choose how IT services are acquired and delivered, with reduced emphasis on the constraints of traditional software and hardware licensing models. There are several characteristics of cloud computing that can benefit the business:
- Low barrier to entry. The lower initial cost of cloud computing makes cloud services accessible to enterprises or departments that lack the capital or bandwidth to support on-premises platforms. Cloud-based services can enable the business to expand its breadth of IT services, improve business processes or reduce the cost of existing services. CFOs should work with CIOs to determine opportunities to lower cost through cloud services.