Few things are as critical to CFO’s and finance professionals as our systems. Core accounting and budgeting platforms to back office infrastructure and client relationship management systems are all moving online, into the "cloud", and an entirely new business model called “Software as a Service”. This represents the largest change in technology for the Finance profession since the internet began. (Sungard)
The responsibilities that come with this change are a paradigm shift as systems control moves more to the finance roles. Quite ready too are many of the new breed of finance executives who have emerged in the last decade. This has seen them develop from being passive Information Technology users, to being savvy technology thinkers and change agent leaders, who can relate Information management to the business process and understand how to exploit it to get business value.
As cloud benefits mature and become more and more obvious, the questions being asked now are not what is it but:
- How can finance people start understanding the dynamics and plan change?
- How can they take advantage of Software as a Service to change the business model and / or generate new revenue?
- Why are Finance Executives now in high demand to lead this change and why should they embrace it?
- Some of the answers to these questions lie in understanding the provider models and how they will shake out. A few weeks ago in this series I wrote about an internet cloud based shift in Information Technology with the focus on shrinking corporate IT management From the market perspective, an excellent “Greg Papadopoulos” post sent to me since, talks about controlling dynamics of the cloud which make this subject even more compelling when we consider who will be controlling our daily lives in the future.
It was written last year when he was at SUN, a platform and infrastructure services giant who were then being taken over by another giant database software services company, namely ORACLE. In his research he also provides good explanations of how the Internet Cloud is emerging with distinctions on various layers being infrastructure, platform and software.
In summary, the Intercloud as Papadopoulos calls it has the words “as a Service” as the key. With emphasis on the big “S” and not on the web infrastructure it is delivered across. Then, by adding prefixes such as “P” for platform, “S” for software “I” for infrastructure it starts to make sense. That is to say cloud services comprise more than one thing. Thus the abstraction layer cake of SaaS on PaaS on IaaS).
Make no mistake, he says, I have no doubt that cloud (nee network, grid) computing will become the organizing principle for public and private infrastructure. The production question is what the balance will be. Which cloud approach will ultimately win? Will it be big public utility-like things, or more purpose-built private enterprise ones?
The answer: yes. There will be no more of a consolidation to a single cloud than there is to a single network
And, yes, I know I’ve said that the there will be only about five gigantic public clouds I still think that is correct, but also as suggested by that post, it will look a lot like the energy business, with dozens, or hundreds, of national and regional companies.
Papadopoulos concluded on behalf of SUN last year, “We should expect and work towards nothing less in cloud computing.”
“Platforms” to run the “Infrastructure” to run “Software” applications, all as a service are now being built into a totally services based managed web environment. This in turn is now seeing multiple third party service providers solutions being seamlessly delivered strategically and at much lower overall costs. Understanding the mix of how these all work and where the cost and value can be exploited is where the CFO needs to be getting involved.
For the Finance and other Business Executives and key operational end users, it is more critical to understand what this move to market driven service models cover and how to exploit them. With zero latency now part of our business time to decision mindset, it is now much more than having more efficient end to end components that traditionally could only exist on a grid based system.
What some people don’t see as they struggle with the confusion of terms, is what is actually driving all this. The X Factor here is the race to control of the cloud by the large vendors with cost benefit leadership being the uppermost prize. The value of this to the eventual winners will be infinite. Like energy companies who have controlled oil supply for so long, the stakes on information management control are equally huge. To get there and get a consumption based model established early is vital for the big guys.Equally so mid range players and well placed early adopter firms are now moving in to get a foothold too. This is the classic model that has made so many in past rich as they cashed in on exit strategies as acquisitions and consolidations come on down the track.
Even just two years ago it was all seemed so visionary, but now cloud based solutions are a reality as they are fast replacing in-house managed network grids. The intense IT and business integration management that goes with this is destined to disappear too. And as costs tumble and the value of supply and demand take on new meanings, Information Technology as we know it is being redefined with developers also getting new life and opportunities.
Evidence of impetus that is building in the finance professionals community is also showing up in regularly surveys of CFO forums. One this week forums asked its members to consider how maturing cloud services can now provide options in strategic thinking and operational processes. In this there a list of vendors already offering these services including. Adaptive Planning, Amazon, Citrix, Google, Host Analytics, HP, Intacct, IBM, Microsoft, NetSuite.
The survey also asked questions about the lower-cost alternatives to “on-premise” systems such as:
- accounting / ERP
- applications to Consolidate accounting
- planning/CRM across borders, currencies, and offer improved collaboration,
- Reduce company’s IT CAPEX and operating expenses
- Provide scalability without infrastructure build-up
- Reduce company’s operating risk
- Reduce company’s downtime
- facilitate compliance with company’s internal policies or external regulation
Microsoft, Google and Amazon are perhaps the most well know household names with Salesforce.com perhaps one of the most well know long time providers with its CRM services extensively used for nearly a decade.
This week INFOR another giant of the mid ranged accounting systems (ERP) and performance management (PM) software systems. announced plans to run its product as a service on Microsoft’s Azure cloud stack. This adds further momentum to the shift away from licensing on-premises ERP vendor software to a service based model.
So the bottom line for the finance and business strategists is to understand where the investment by vendors is heading and what changes are going on in the development world as the legacy systems become less important to them to support.
Unfortunately when we talk about Information Technology the language disintegrates quickly into acronym based tech talk .The issue then is we have trouble understanding it all. But for the technically savvy take a look at some rated posts here.
Infor embrace Microsoft’s azure-cloud – Author IT World Exchange
The Intercloud – Author Greg Papadopoulos
Proformative Member Survey on Cloud Computing & SaaS – Author Proformative