Cfo Survey Report on the Economics of the Cloud

8/2/2019 Cfo Survey Report on the Economics of the Cloud

1/10

TheEconomicsoftheCloudCloud9fortheCFO?


2/10


2

Tableofcontents

ExecutiveSummary 3

MethodologyandtheSurveyUniverse 4

SurveyFindings 5

Appendix:Respondentcompanieslist 10

TheinformationcontainedinthisdocumentrepresentsthecurrentviewofMicrosoftCorporationontheissuesdiscussed

asofthedateofpublication.BecauseMicrosoftmustrespondtochangingmarketconditions,itshouldnotbeinterpretedtobeacommitmentonthepartofMicrosoft,andMicrosoftcannotguaranteetheaccuracyofanyinformationpresentedafter

thedateofpublication.

Thisreportisforinformationalpurposesonly.MICROSOFTMAKESNOWARRANTIES,EXPRESS,IMPLIEDORSTATUTORY,

ASTOTHEINFORMATIONINTHISDOCUMENT.Complyingwithallapplicablecopyrightlawsistheresponsibilityofthe

user.Withoutlimitingtherightsundercopyright,nopartofthisdocumentmaybereproduced,storedinorintroducedinto

a retrieval system, or transmitted in any form or by anymeans (electronic, mechanical, photocopying, recording, or

otherwise),orforanypurpose,withouttheexpresswrittenpermissionofMicrosoftCorporation.

Microsoftmay havepatents, patent applications, trademarks, copyrights, or other intellectual property rights covering

subject matter in this document. Except as expressly provided in anywritten license agreement from Microsoft, the

furnishingofthisdocumentdoesnotgiveyouanylicensetothesepatents,trademarks,copyrights,orotherintellectual

property


3/10


3

Executive Summary

"The first rule of any

technology used in a

business is thatautomation applied to

an efficient operation

will magnify the

efficiency. The

second is that

automation applied to

an inefficient

operation will magnify

the inefficiency"

- Bill Gates

"Any sufficiently

advanced technology

is indistinguishable

from magic."- Arthur C.Clarke

"Once a new

technology rolls over

you, if you're not part

of the steamroller,

you're part of the

road."- Steward Brand

"We're changing theworld withtechnology.

- Bill Gates

The advantages of cloud-computing are commonly known: You dont need

upfront infrastructure investment; scaling up is relatively easy; and the service

provider is likely to be more efficient than your company.

The ability to pay as you go from a service provider rather than spending

upfront feels natural to a CFO theres nothing new about buying services.

Whats new is that cloud-computing offers a delivery and financing alternative

to one of the bastions of corporate capital expenditures: IT.

If a CFO can see better cash flow, lower risk and visibility, he or she will likely

become a cloud-computing convert in no time. It is, however, not always a

bed of cash flow for everyone. Service level agreements, increasing monthly

costs and data ownership are all potential trouble spots that will need to be

resolved.

While it may not make sense for a company to apply a cloud-computing

model to every enterprise service, smart CFOs should seriously examine the

trend for some of their services. The big question now isn t whether to adopt

cloud computing, but rather, where and when to adopt it.

The CFO Institute, in association with Microsoft, conducted a survey amongstCFOs and senior finance professionals to gather their perceptions andunderstanding of cloud-computing, and its potential economic and efficiency

benefits.

Our CFO Survey revealed the following:

The majority of CFOs consider investment in technology as a meansto cut costs.

Reduced up-front costs, increased flexibility, and competitiveadvantage are the key benefits of implementing a cloud computingsolution.

Over 30% of CFOs surveyed are already using or are considering touse a cloud computing solution, indicating a keen interest in cloudtechnology.

A concern regarding security and compliance was the number oneimpediment to large Indian corporations in adopting a cloud

computing solution, followed by loss of control and compatibility.

One third of CFOs consider themselves responsible for taking thelead in implementing a functional and cost effective cloud computingsolutions. The majority feel that it is the CIOs responsibility

A high percentage of CFOs were not aware that cloud computing is agreen technology.

In conclusion. Given the CFOs belief that cloud computing can offersubstantial savings, process flexibility and competitive advantage, they wouldbe keen to explore its implementation provided issues related to security andcompliance and loss of control are managed effectively. CFOs also need to

be convinced that cloud computing is a proven and tested technology, whichthey expect will happen in due course of time.


4/10


4

Methodology and the Survey Universe

The survey was conducted by the The CFO Institute, in partnership with Microsoft. The results arebased on approximately 30 individual CFO responses.

(Please refer to the Appendix for the complete respondent companies list)

Respondent companies by sector Respondent companies by size


5/10


5

SURVEY FINDINGS

The majority of CFOs

consider investment in

technology as a means tocut costs

It is not surprising that a

majority of CFOs consider

investment in technology as

a means of cutting costs.

Those that thought

otherwise considered

investment in technology as

a means to improve

processes. The fact that

costs are reduced is simply

a side effect, says SK

Joshi, Director Finance,

Bharat Petroleum

Corporation.

Reduced upfront costs and

competitive advantage wereconsidered to be to prime

benefits of cloud

computing

helping the company

react quickly to markets

conditions is a benefit that

CFOs are not aware of

The majority of respondents considered reduced up-front costs, increased

flexibility, and competitive advantage as key benefits of implementing a cloud

computing solution. Surprisingly, however, most did not consider its ability to

enable a company to react quickly to changes in market conditions as a key

advantage.

INSIGHT: Michael Schrage, Research Fellow, MIT Sloan Schools Center for

Digital Business explains that the cloud can accelerate and compress both the

development and the test times for innovation and change you can do this

with suppliers and customers. It is a big deal!, he says.

About 10% of respondents

had already implementedcloud computing. 20% are

planning to implement...

Over ten percent of the respondents had already implemented a cloud

computing solution, while another twenty percent are planning to implement in

the near future. A large portion of the respondents had no plans to install cloud

computing solutions, a thought echoed by Robin Banerjee, CFO, Suzlon who


6/10


6

... those that are not

planning to implementshould seriously consider

the needs of those that

require flexibility from the IT

infrastructure

explains that having already invested heavily in infrastructure, they would

consider it as an option when the time comes to update hardware

infrastructure. His concerns about cloud computing not being a proven

technology would hopefully get addressed by then, he says.

At IL&FS, their internal security policy does not allow the use of wifi networks,thus making it difficult to even consider cloud computing as an option, says SN

Mukherjee, Chief Operating Officer.

INSIGHT: Michael Schrage emphasises that the question that needs to be

addressed explicitly is "Are the business unit heads satisfied with the flexibility

offered by their existing IT infrastructure, as they are the ones that need to be

responsive and adaptive to the market changes. Just because you've spent a

lot of money on something doesn't mean you're getting value. There's a saying

in America that goes "where you stand" depends on "where you sit". The CFO

may be happy with how things are going, but the business unit heads may

think otherwise. Cloud computing can offer low cost flexibility with quick turnaround times., he says

Concerns regarding security

and compliance are the

number one impediment to

implementing cloud

computing...

Currently, a concern regarding security and compliance was the number one

impediment to large Indian corporations in adopting a cloud computing

solution, followed by loss of control and compatibility.

SN Mukherjee explains when we send an email, we don't know where it

goes it goes into a cloud. We are moving from data abstraction to

infrastructure abstraction, which can be unsettling.

11.5

23.1

50.0

15.4

0.0

10.0

20.0

30.0

40.0

50.0

60.0

Alreadyusingit Plantouseorare

consideringusing

it

Noplans Don'tknow

WhatisyourstandpointonadopPonofcloud

compuPng?


7/10


7

The majority of CFOs surveyed were fairly neutral when it came to their

impression of reduced time to impact compared to regular investment in IT

hardware/infrastructure.

Although the time to implement a cloud computing solution may be fast,

additional time will be required to prove that it works, says Robin Banerjee.

INSIGHT: Time to Impact - if a business unit has a new and interesting

idea, it can be easily tested on the cloud. It can give a customer the ability to

customize an order, which would otherwise take forever on traditional ERP

systemsYou use the cloud to prototype the template with a few customers...

learn from that, and that becomes your gateway. You then use middleware to

1.3

0.0

5.1

11.5

5.1

3.8

1.3

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0

1

2

3

4

5

6

7

CanCloudCompuPngsubstanPallyreducethePmerequiredto

implementanITsoluPon,ascomparedtoatypicalupfrontCAEX

basedITprojectdecision?

1=Stronglydisagreeand7=Stronglyagree


8/10


8

integrate the innovation with your existing ERP system, Michael says.

The majority of CFOs have

placed a high priority on

reducing their capex to opexratio...

The majority of companies have placed a high priority on reducing their capital

expenditure to operating expenditure ratio, which is all the more reason to

consider cloud computing as an effective means to reduce capital expenditure

and increase IT infrastructure flexibility.

INSIGHT: Cloud computing and traditional computing (ERP etc) are not

necessarily rivals. If you collaborate with the CIO and business unit heads, you

can have the best of both worlds. You can have the cloud give agility,

nimbleness and responsiveness to business process and business units, andhave the existing infrastructure provide centralized support, Michael says.


9/10


9

The majority of CFOs feel

that it is the CIO that should

take the lead in

implementing a cloudcomputing solution...

One third of CFOs consider

themselves responsible for

taking the lead in

implementing a functional

and cost effective cloud

computing solution. The

majority feel, however, that

it is the CIO who should be

held responsible for taking

the lead, and changing ITs

internal charging model to a

pay-as-you-go type

framework. Over ten

percent felt that the CEO

should take the lead.

Many CFOs are not yetaware that cloud computing

is a green technology...

A high percentage of CFOs

were not aware that cloud

computing is a green

technology.

Cloud computing can save

energy and money. When

an organisation requires

additional computing

power, a cloud computing

set up can draw on its

additional computing power

and resources, just when

its needed. Energy and

other associated costs for

running servers the rest of the time can be avoided. Cloud resources provide a

reserve that can be allocated without the need to pay for the resource sitting

idle in one fixed location. Therefore, cloud computing enables an

organisations IT infrastructure to be far greener than it is currently.

Toknowmoreaboutcloudcomputingpleasevisit:http://www.microsoft.com/india/cloud/


10/10


10

Appendix

List of respondent companies

1. ABB Limited2. Abu Dhabi Commercial Bank (ADCB)3. Alok Industries Limited4. Bharat Petroleum Corporation Ltd.5. Bosch Chassis Systems India Ltd.6. Ceat Ltd7. DCM Shriram Consolidated8. Ericsson India9. Essar Projects (I) Ltd10. General Insurance Co. Ltd11. Govt. of India12. HCL Infosystems Ltd13. Infosys Technologies Limited14. Infrastructure Leasing And Financial Services Ltd15. Ispat Industries Limited16. JSW Steel Ltd17. Maharashtra State Electricity Distribution Co. Ltd.18. Mother Dairy19. Punj Lloyd20. Reliance Comm21. Suzlon Energy Ltd22. Tata Chemicals Ltd.23. Tata Consultancy Services24. The New India Assurance Co Ltd25. Toyota26. Voltas27. Wipro

Cfo Survey Report on the Economics of the Cloud

Documents

Transcript of Cfo Survey Report on the Economics of the Cloud