Cloud Computing: Friend or Foe? Thoughts from the C-Suite

This is the second post in the three-part series, Cloud Computing: Friend or Foe? The first installment in this series, ‘Cloud Computing: Friend or Foe? IT Weighs In,’ can be found on The App Times.

Being part of the C-suite means you make the big decisions, (hopefully) get paid the big bucks, and are held accountable if something goes awry. Not surprisingly, one of the most important choices facing chief executive officers (CEOs), chief financial officers (CFOs) and chief information officers (CIOs) is cloud adoption: Is it worth giving up an existing network, and if so, how much? Does a private or public cloud make more sense, and how much control of day-to-day operations should be relinquished? What's the total cost? For the C-suite, answering the friend or foe question as it relates to the cloud seems in large measure a numbers game. Many are learning, however, that facts and figures are just the beginning.

Costs are understandably a driving factor for C-level executives. The less spent and the more gained, the better a company's bottom line. What's more, many cloud providers now call attention to the cost-effectiveness of their services as they come to realize that IT sales are no longer purely technical: Business needs match (or trump) tech proficiencies. The result is a market filled with very specific, very well laid-out service agreements which attempt to account for any problem, provide clear times to remedy and lay out consequences for any shortcomings. What's more, these agreements no longer cloak per-minute or per-hour prices in technical mumbo-jumbo; execs know well enough to bring in legal experts to check every detail before signing any contract.

What C-suite players may not realize, however, is that some costs can't be anticipated. As a recent Forbes article points out, problems aren't always apparent before they've caused a loss in revenue - for example a slow website or transaction processing service that convinces consumers to shop elsewhere. To an exec team, the cloud may appear to be in excellent working order; even IT may agree. But if consumers or other end-users suddenly start experiencing problems, costs begin to mount. How much money hemorrhages while companies attempt to a) identify the issue, b) resolve it and c) make sure it never happens again?

Potential costs aren't keeping down cloud adoption, however, nor are potential pitfalls. According to a June 2013 survey by EvolveIP, 70 percent of C-level executives believe in the “value of the cloud,” despite having some concerns about security, performance, and scalability. Why? The dream of cost savings.

Five years ago, many IT departments were in crisis. Budgets were bloated, staff numbers were booming but businesses weren't seeing enough return. When the market tanked, so did IT jobs. Now, the industry is righting itself, but CEOs and CFOs aren't taking any chances: They want to know exactly what they're getting for their money. The cloud, therefore, represents a kind of outsourcing nirvana, a way to offload variable capital costs and replace them with predictable operating alternatives. Some C-suites take this idea and run with it, aiming to almost entirely replace their IT staff with third-party managers, convinced that the on-paper savings justify the loss of control. Fortunately, there's an alternative.

Several large scale technology providers have now introduced cloud service portfolios aimed specifically at the C-suite. The reason? To show execs what the cloud can do beyond simply saving money, and give them a better view of how cloud computing enhances their business. From a provider perspective, effective education means more contracts signed and better cash flow, but has the happy benefit of showing CEOs how they might better use the cloud on a day-to-day basis.

C-level portfolios give execs the ability to conduct internal HR housekeeping, access customer relationship management (CRM) data and peek into the evolving world of business analytics (BA). IT and the cloud have moved far beyond the simple “see problem and report it” model; providers and IT admins both have a vested interest in convincing C-suites to look past the numbers. Sure, it's tempting to cut out all but a single IT pro or go with the cheapest cloud option but these are knee-jerk tech reactions which slash current budgets at the price of future problem payouts. Informed decision making is everything, and C-suite cloud portfolios help give execs the kind of critical knowledge they need to act.

Cost is an excellent starting point for the cloud discussion: Any service looks friendly if it comes with a low enough price tag. But cloud computing, that's the just the tip of the iceberg. Reducing all staff and services to a bare minimum doesn't beef up the bottom line but rather makes it precarious; instead, CEOs, CFOs and CIOs need to look for intelligent ways to invest in the cloud which don't just bring down costs, but assist in generating revenue. The cloud is a powerful, adaptable friend - in conjunction with experienced IT oversight. Education prevents execs from being their own worst enemies.