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Cloud Computing Should Transform, Not Just Replace

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Is the goal of cloud computing to deliver transformative effects to the business, or is it okay to merely replace an existing system, application or process?  That's one of the questions taken up at the  recent Cloud Business Summit, held in New York and hosted by Saugatuck Technology, a division of ISG.

In a compelling panel discussion, financial and IT leaders debated the impact of cloud computing on corporate financial systems and processes. The consensus is that finance is an area that is not in sync with technology developments in businesses. It's not that financial executives are lagging in cloud adoption -- it's just that they have a different view of it.

"After years of cloud denial, were now seeing more CIOs and their direct reports bringing cloud into the enterprise," said Saugatuck's Bruce Guptill, who moderated the panel discussion. "There are thousands and thousands of case studies and examples how we can improve our value to our organizations. It's not replacing us, it’s a new set of tools and a new set of lenses creating more opportunity, and better able to see the opportunities it creates for our organizations."

However, for the finance side, it's a different story, Guptill continued. "Finance leaders have been rewarded for thousands of years for being cautious, and that has not changed, and it's not going to change." While there is more core finance moving to cloud, he continued, "there still is a natural hesitancy or caution, because if you start messing with finance, you start messing with the lifeblood of company. So anything that comes in has to be thoroughly vetted and compatible." For that reason, IT and finance tend to be "operating at two different speeds."

For many CIOs and financial leaders, there's a reluctance to rock the boat.  That's why, for financial executives, adopting cloud for key functions is often "not about transition, it's about about replacement," said Mark Nittler, executive vice president for enterprise strategies at Workday. "That’s huge, it goes against what you see or hear. It's not about the transformation of finance in our systems, but more about a need to replace them, in order to do what we need to do."

However, there's no easy way to introduce cloud -- even just a piece of it -- to financial systems without disrupting the rest of the enterprise, observed Bill Sinnett, chief operating officer of Financial Executives International. When bringing in cloud for financial systems, there are no incremental or half-steps.  "How do you go into a halfway measure around your core accounting and shift it to the cloud? There isn't a transition path," he stated.

The bottom line -- to bring in cloud and all the changes and transitions that will ripple from the initiatives -- cloud proponents will need to discuss how the changes will improve reporting and analysis of financial data. There has to be a driving business reason to get financial executives on board with the cloud, Sinnett stated. This will put enterprises on the transition path.

The key is to help financial executives look beyond general ledger and reporting and understand how cloud can address some of the larger issues that vex their enterprises. "When financial systems aren't working, CFOs don't look at general ledger for that, they look at BI, and they think it’s a reporting problem," says Sinnett. "But the reporting tool is not the problem -- it’s a data problem; they haven’t captured the right kind of data. It's a whole financial architecture problem.  They have to start to think about it differently."

Ultimately, the transition to cloud-based financial system requires the organization be prepared at multiple levels. As Jane Aboyoun, vice president of technology for the New York Public Library, explained, the cloud transformation goes beyond technology and individual applications. "The technology piece really was not the roadblock," she said. "It required a cultural change, a process change, a behavioral change, and a cultural change."