Making the Cloud add up
John Stokdyk reflects how the Cloud computing movement would benefit from some good, old fashioned financial common sense.
Sift Media’s Business Cloud Summit on Monday was a spectacular success, attracting more than 500 delegates. After three years the event and the industry it serves have really grown up, marked this week by the latest move towards consolidation in the shape of SAP’s $3.4bn bid for SuccessFactors.
The summit is mainly a stamping ground for corporate information offices and the vendors who supply them. But as Xero’s UK managing director Gary Turner pointed out, the latest business computing transformation is being led by small businesses. Turner estimated the UK customer base for web accounting systems like Xero, KashFlow, FreeAgent Central and may more like them was around 50,000.
“We’ve got more users than most of the big companies here,” he said.
My role at the Business Cloud Summit was equally subversive, as I was asked to introduce a panel session on “Making the Cloud add up”.
One of the mistakes technologists often make is to present and think about their products as evangelical movements - for example, are you Mac or Windows? Technology is a tool for the job, and at the end of a back-slapping day, we set out to bring the meeting back down to earth - as finance people often do - by getting the technologists to focus on the discipline of cost/benefit analysis. Helping to analyse the potential returns on investment and compare total ownership costs with on premise computing models were three experienced IT professionals: IDC European research manager Spencer Izard, Mac Scott from Xantus, now a KPMG subsidiary, and Tim McGinn from Westbrook International.
Just before his consultancy was taken over by KPMG in October, Xantus published report called ‘A Clearer Horizon?’ that drew on interviews with 70-odd chief information officers about their views on Cloud Computing. Over a quarter (27%) said they were spending 30-40% of their budgets on Cloud-based solutionos. Even more impressively, three-quarters (76%) thought a felt a return on investment of up to 25% “was realistic”.
At an earlier session News International CIO Paul Cheesbrough claimed cost was only the third place consideration for migrating to the Cloud, behind implementation speed/agility and innovation. Nobody contradicted him. In the case study that followed, Richard Wallace from security group G4S (formed by the merger of Group 4 and Securicor) said that moving a legacy cash tracking/management application from a managed service took out a third of the running costs overnight.