Insight and analysis on the data center space from industry thought leaders.

CFOs and the Many Flavors of Cloud

CFOs need to understand the quickly changing world of IT infrastructure and outsourcing, writes Rob Levine of CentriLogic. The more they know about cloud computing and hosting options, the more they can influence IT decisions.

Industry Perspectives

March 23, 2015

5 Min Read
CFOs and the Many Flavors of Cloud

Rob Levine is responsible for developing CentriLogic’s global financial policies, including overseeing the organization's international facilities acquisitions, procurement, logistics and company acquisitions.

Three momentous trends have dominated IT planning in the past few years – cloud computing, mobile devices and the consumerization of IT. Employees everywhere have taken charge by using personal devices and apps at work and provisioning cloud services without input from the IT department.

The emergence of Infrastructure-as-a-Service (IaaS) public cloud providers and hundreds of other SaaS applications have indeed brought innovation and time to market benefits, yet without oversight, adoption of these technologies can backfire quickly. Pretty soon, a company is overspending, using multiple services for the same purpose and exposing a company to data loss, security breaches and integration issues.

Fundamental Issues to Consider

This is where the CFO comes into the game. Beyond business applications, CFOs need to understand the quickly changing world of IT infrastructure and outsourcing. The more CFOs know about cloud computing and hosting options, the more they can influence IT decisions and help the CIO avoid a scenario of integration chaos and waste. Here’s a rundown on the fundamental issues for CFOs to consider when involved with making decisions on cloud and IT hosting:

1. Defining the business problem or need. IT professionals get excited about experimentation, but any decision always rides upon where the business needs to go and what are the immediate and future requirements. This often comes down to an application-level decision.

For example, when IT wants to use a hyper-scale public cloud provider for testing or development, they can save money and time versus building out servers internally or signing an annual data center contract for a short-term project. But when the business is determining how to manage a core application that will store sensitive customer data or other proprietary information, a more secure, controlled environment with a private cloud or managed hosting provider may be the better business option—even it means spending more.

2. Vendor options and cloud models. Most major IT infrastructure vendors say they do cloud, but make sure you understand their definition of that. Here’s what the CFO needs to know:

  • Public cloud providers offer an on-demand, fully outsourced model which is pay-as-you-go. Typically, there are no contracts involved and you can spin up or spin down resources whenever needed. Support is limited and security options may not be adequate for highly sensitive data or rigid compliance needs. Such services are quick to set up and popular with various business units, but using them comes with risks. For instance, many public cloud providers cannot guarantee geographic data residency and do not make failover/redundancy easy to accomplish.

  • Private cloud refers to an outsourced or on-premise option which entails servers that are dedicated to your business – unlike with shared public cloud resources – and offer a higher degree of control for data protection and management. Private cloud offerings are typically more expensive than public cloud.

  • A third option is a hybrid cloud setup in which a company uses both public cloud and private cloud providers and technologies, a common option for large companies with applications that have vastly differing requirements. The downside is companies need specific methods and tools for managing and coordinating multiple environments.

  • Finally, a more traditional route is to colocate existing infrastructure and contract managed hosting services from IT vendors. In these arrangements, the company owns all the equipment, but benefits from not having to manage it in their own data center. As well, the company attains 24 x 7 support, a fully redundant environment, custom development and the comfort of a dedicated account manager. Note, however, that managed services can come with a Cadillac price.

3. Cost structures. When cloud computing went mass-market in 2011 and 2012, the discussions were slanted heavily toward saving money and launching time-sensitive projects without procurement delays. Yet there’s been a shift from a pure cost evaluation when it comes to hosting decisions. CFOs must balance security and compliance needs (such as the requirement to store certain data sets within the country of origin) and IT organization realities (do we have the right staff to set up and manage a public cloud infrastructure) with cost and time-to-market.

By choosing one provider to handle multiple application needs – some providers can do it all – companies may benefit from economies of scale, third-party expertise and simpler vendor relationships. Yet there may be prevailing reasons to use multiple providers: an IT staff with expertise in a public cloud domain can create a solid case for using that provider for running marketing and big data projects, while maintaining operational systems internally or outsourced with a private cloud provider.

Understand what compromises your company might be making by choosing the cheapest solution. Let’s say the CIO of a large financial institution is managing a $10 million IT budget. Perhaps only 2 perhaps of that budget relates to compliance, yet if that piece is handled incorrectly, the financial risk to the business could be in the hundreds of millions of dollars from lost customer confidence, customer defections and the legal and technical price of cleaning up a data breach mess.

4. Working with the CIO. The relationship between the CFO and the CIO is more important than ever. The friction is natural: CIOs look at a hosting decision from a technological standpoint, whereas the CFO wears the money and risk management hat. Marrying these two perspectives is nirvana, but not impossible. It starts with the CFO’s level of interest and motivation to learn about the nuances in technologies and hosting options and to gain a deep understanding of the CIO’s perspective. By doing so, the entire business can benefit from a decision that balances cost, risk, business benefits and IT innovation. Infrastructure is everything to the modern business – and the CFO is smack in the middle of making these critical decisions.

Industry Perspectives is a content channel at Data Center Knowledge highlighting thought leadership in the data center arena. See our guidelines and submission process for information on participating. View previously published Industry Perspectives in our Knowledge Library.

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