Our CIO explained that the on-premise software environment he inherited was archaic. There were “100+ applications being used. Users had to buy software, hardware and then maintain and support it. It took an army to keep the applications up to date with upgrades, patches and fixes and general operations and maintenance support.”
The case for moving to the cloud was easy from his point of view. His company was able to reduce the headcount required to support their applications, save on cost by reducing their infrastructure stack and avoiding non-value added upgrade and update projects. Gone were the days of servers and an army of IT, and system experts who were needed to solve specific problems across their applications.
Our CIO was also asked about security. He then rattled off a list of items he needs to manage with on-premise solutions: physical security, logical security, data centers, monitoring, disaster recovery, business continuity planning, update projects and expert staff to manage it all. He jokingly asked: – who do you think has a bigger budget for these items – my company or the cloud provider?
Our CIO panelist explained the choices that companies have to make when looking at applications. He described three paths:
Path 1: Using excel and other end user grown systems. This approach continues to rely on fragmented, disparate, fragile spreadsheets built by excel gurus to obtain outdated and stale financial data. He also told horror stories of board books not footing because of a formula error on in cell AT74 on tab 14. The board immediately questioned all other numbers and asked how this data was put together and how reliable it was. This was his first board meeting – not a great start.
Path 2: Shooting yourself in the foot with the classic buy, build and maintain approach. He proclaimed: – don’t customize yourself into a corner! This is dangerous and leads to ongoing third party costs and an application which looks nothing like the one you purchased (or the one any other companies are using). Sure the system may meet your needs right now – but at what cost and what happens when the organization changes? How will those customizations look then?
Path 3: Moving to the Cloud. This allows him to deploy world class applications that suit the business needs of the many vs. the needs of the one. While quoting Spock, he described that his vision is to build solutions that meet the common core of the business and that cloud applications are a great fit. Side benefits include – less developers, less excel wizards, less packaged customization (and costs!). The CIO’s analogy that cloud applications took him from owning the house (and all of the costly repairs and maintenance) to renting (he can get a lot more for the same or less cost without worry about the moldy drywall and rotting pipes).
The CIO closed the panel by stating that cloud-based accounting systems allow his team to focus on mission critical tasks while still meeting the needs of the business. “I enjoy renting. I get great applications with little fuss and muss compared to on-premise solutions.”
Next time, the CFO’s point of view.