November 18, 2020

CFO’s should take the lead on implementing cloud computing strategies

Cloud computing is becoming a long-term reality for business operations across the globe, and Deloitte South Africa’s Finance & Enterprise Performance Management Leader Phillip Hechter has illustrated the factors that must be considered when developing a cloud strategy. 

South African businesses are currently engaged in a balancing act between the cost of digitization and the quest for innovation. While the larger firms have been quick to hop on the digital bandwagon, the small and medium enterprise (SME) sector has been weary of the substantial costs involved in a struggling economic environment.

Nevertheless, even SMEs have reportedly begun to see the value in the various Industry 4.0 technologies on offer, particularly with respect to cloud computing. This reflects a global trend, where the efficiency that results from cloud integration has rapidly gained favor across all economic segments.

“Cloud is not just here, but here to stay. With the potential for significant cost savings and enhanced strategic value, cloud represents a fundamental shift in how technology solutions are developed and in how they are delivered,” says Phillip Hechter, explaining the global perspective on cloud computing.

CFO's should take the lead on implementing cloud computing strategies

Nevertheless, the integration of cloud platforms requires careful strategising, so as to generate maximum value from a minimal investment. According to Big Four accounting and advisory firm Deloitte, the Chief Financial Officer of any organisation should take the reins on cloud transitions.

The primary area for cloud integration within the business operation lies in finance and accounting, particularly involving enterprise resource planning (ERP) capabilities. As these platforms are moved to the cloud domain, a certain degree of regulatory ambiguity has emerged in terms of accounting principles.

CFO’s are crucial in managing this ambiguity and ensuring regulatory compliance. Cloud integration could affect every aspect of financial operations, including the taxation profile. As a result, CFO’s need to administer close supervision during the transition process, but not without help.

“It is important that the approach taken in negotiations is a holistic one and that all deals take into account the costs, benefits and impacts for all parts of the business. Thus, it is crucial that Finance works together with Legal, Procurement and IT. External advisors can also prove valuable, especially in organizations that lack experience in cloud contracting,” says Hechter.