Created by Ted Vahan, ERA Analyst
As the roles and responsibilities of the C-suite continue to evolve, more CFOs are providing strategic supervision in their organization’s technology infrastructure upgrades—especially in managing the costs associated with such projects.
According to Grant Thornton’s 2017 CFO Survey, to continue “to seize opportunities for future business growth, CFOs will have to manage IT costs while modernizing IT infrastructure.” Yet, this isn’t without obstacles as CFO’s top three challenges include managing costs (51%), maintaining legacy systems (41%), and overseeing seamless business integration (40%).
As CFO’s are tasked with managing the costs of current IT infrastructure, in addition to managing the costs of integrating new technologies and the subsequent transition, there are a few things to keep in mind at each stage of the process.
As your organization is planning to upgrade its IT infrastructure and transition to cloud-based technology, you will have to determine what programs and vendors are most aligned to your budget while also meeting your organization’s expectations.
Here are a couple of questions to get you started:
- Are you using a cloud-service vendor that has the right services that will fit your organization’s needs?
- How much bandwidth are you currently using and how much bandwidth have you committed to use in cloud services?
- Do you know what within your current system will be replaced by applications within the cloud?
These and other questions will help determine your organization’s IT infrastructure needs and projected bandwidth use prior to the development process. As a result, your organization will be able to accurately assess usage and requirements and select an appropriate vendor to build out the infrastructure. It’s also important to realize that different vendors’ infrastructure and software are not compatible, so you likely won’t always be able to seamlessly switch to a new provider and these integration points need to be carefully planned.
During the development stage, you should also be mindful of cost-effective use of cloud data services. When you set up an account with a cloud-services vendor, they are likely to charge you at a rate that assumes services are being accessed 24 hours per day. During the development phase, your team is more likely using services 40-60 hours per week, out of an available 168 hours. Some applications don’t require constant use outside of business hours as well. Using tools and vendors that help manage that availability can help reduce cloud service cost by as much as 60%.
As the cloud infrastructure is being built out, you will have to manage the costs of both the legacy system as well as the cloud system. However, as your organization’s IT team begins to transfer data to the cloud system and sunset the legacy system, your costs will adjust accordingly. During the transition, you want to determine what software licenses will need to be reviewed and renewed, and which will require new licensing. Many Independent Software Vendors now have both cloud versions as alternates to their premise-based systems and in some cases these products have moved fully into the cloud. Of course, some major systems, like Salesforce.com, have always been delivered via the cloud. At this time, you can also determine when it’s appropriate to discontinue maintaining your environment including data center equipment like servers, warranty costs, as well as staff and facilities.
Upgrading an organization’s IT infrastructure and transitioning data to cloud-based services can be a costly endeavor, especially in the short term. But by asking the right questions during the planning stage, monitoring your cloud service usage during the development stage and determining what services can be discontinued during the transition phase, you can help your organization achieve its goals on budget.