How the Cloud Changes the CIO-CFO Conversation

In the final analysis, cloud computing may not actually save your company any money. I’ve heard that point argued convincingly by many CIOs in recent months, even those making big investments in cloud technologies. “It’s really just a different way of sourcing IT,” as one put it. “Everybody still gets paid.”

But it sure is changing the budget conversation at many companies these days. What was once a capital expenditure pitch has suddenly become an operational one, highlighting IT costs in starkly different terms. Paying for software and services “by the drink” really drives home just how thirsty your users have become.

To get a sense of how the multitude of sourcing options is changing IT budget conversations, we asked former Wall Street Journal reporter Bill Bulkeley to dive into the financial implications of cloud decision making. The resulting cover story (“What CFOs Need to Hear about Cloud Computing and Consumer IT”) explores the shifting relationship between CIOs and CFOs. It also delves into the cloud’s impact on IT governance and the complexities of managing multiple funding models.

This new ability to turn capital IT spending into a predictably paced operational expenditure line in the budget has certainly made a difference to companies like Kelly Services, the temp provider. Flattened by the depressing effect of the recession on temporary hiring, Kelly’s IT budget was whacked down to one-third its former size. That “fueled our acceleration into the cloud,” says CIO Joe Drouin.

“This shift is in its early days, but forward-looking CIOs are beginning to think of themselves as providers of services rather than infrastructure,” Bulkeley writes. “As such, they supervise operating expenditures, not capital expenditures, and they approach the CFO as partners, not supplicants, in business-investment decisions.”

Such a shift in budgetary influence marks a significant step forward in the CIO’s evolution toward being a business strategist. The CIO-CFO partnership is also deepening around core business issues like risk management, security and compliance. On top of all that, the wave of consumer devices coming into the enterprise raises additional financing questions that drive more CFO conversations.

Nobody is better prepared for this change than the CIO. Would you agree?

Maryfran Johnson is the editor in chief of CIO Magazine & Events. Email her at mfjohnson@cio.com.