The business case for the Cloud
Start with the benefits
Whenever we start to think about the deployment of new IT capabilities, like Cloud, we should begin by understanding the business benefits that they will bring to the organisation. Exciting new features and functions are not business benefits. For example, being able to access your office emails on your own favourite device, anywhere, might mean that you are not tied to working in the office but if your organisation has spent money so you can do this, what does it get back in return?
In some cases new technology might replace earlier more expensive ways of doing things, so savings can be made in the IT budget. Sometimes the users will be completely unaffected by such changes so this is entirely for the IT function to assess and take action.
In most cases, however, the people who are going to use the new capabilities are outside the IT function. Supposing you are considering a collaboration app over the Internet so dispersed groups of people can share documents, calendars, task lists, contacts etc to work together on, say, projects or in their normal jobs. In these cases, it is the actual users who need to create the business benefits for the organisation by working differently in future. These benefits might be savings in office space, travel, hotel costs and time. They might be able to use the time saved to sell more. As these benefits arise outside the IT function, it is necessary to get commitments from the affected business functions that they will make these business benefits happen for the organisation.
No commitments – no deal
If these managers in these business functions do not commit to these business benefits and make sure they happen, then, however useful the app might appear to be, it would be a complete waste of money.
Let’s suppose the business function managers are just as enthusiastic as you and think of lots of ways the organisation would benefit from the deployment of the collaboration app. Is that enough to win management approval to roll it out?
What about the costs?
The good news is that a Cloud application is hosted on the vendor’s systems so we only need to pay a small annual subscription per user, whilst we do not need to buy expensive servers and software and costs only increase as the number of users delivering benefits increases.
This all sounds very attractive but we need to do some more thinking about this. For a start how many subscriptions will be needed? The collaboration app example we used has similar characteristics to email and telephones in that unless everyone has it there will be lots of issues about who can collaborate with whom. So, perhaps our on-going costs are going to be much higher than we first thought and we are going to have to get lots of business managers to make business benefits commitments, if the organisation is going to be able to afford this. Also some people are going to be more competent to use it than others and there are going to be problems from time to time, so we are going to need some support people and that will be an extra IT cost.
Not only that but we will have to spend time and money negotiating the contract with the vendor and making sure its security and services levels are satisfactory to the business functions. Users will need training and certain documents will need to be transferred or made accessible to the new system and how do we run the existing and new systems together while we are moving across?
There is clearly a lot more to consider here than there appears to be at first sight. So in future articles I’ll be taking a more detailed look at some of the key costs and benefits of Cloud, together with a range of other financial considerations. Much of this will be based upon a guide to this subject that I’ve recently written for the Institute of Chartered Accountants in England & Wales (ICAEW).
Chris Tiernan is former Chair for the Institute for the Management of Information Systems (IMIS) and a member of the BCS’s CIO Elite Committee.
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