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Can Cloud Computing Clear the Air?

By working together to assess this highly touted IT paradigm, CFOs and CIOs may foster a beautiful friendship.

David Rosenbaum, CFO Magazine
April 1, 2011

From a CIO's perspective?

This seems very geared towards the CIOs perspective. Almost a sales pitch to keep the CIO. I feel like so many CFOs have been held hostage by their IT departments for years and the hope of the cloud will even the playing field. So often, I hear, we can't do that. That isn't possible. That won't work. I'm happy to look toward a place of "yes" rather than that same old "no". Cathy Iconis

Posted by Cathy Iconis | April 29, 2011 09:56 am

An Architecture Perspective

Mr. Livingstone's observations are relevant and highlight an important consideration not mentioned in the article: the differential, net-present-value of cash streams for the full range of impacts is the best basis for comparing the economic impact. Considering a single, cloud offering as a simple binary alternative to a single, on-premise legacy application is a rare case. The more likely, and more productive, evaluation would include a services view (SOA, or Service Oriented Architecture perspective) of the full process, support organization and related technology investments. That does not necessarily imply that a solution which includes cloud offerings will be more or less efficient -- the characteristics of the entire solution will determine the efficiency opportunity. Also consider non-financial potential benefits such as scalability and the discipline imposed by having a service contractually provided by a third party, where informal workarounds and short cuts may be less prevalent than in the typical, on-premise legacy environment (remember "it's COBOL, it's self-documenting"). In defining the services view, consider a service oriented architecture strategy and plan based on underlying business services and their inherent value drivers (speed, efficiency, effectiveness, acceptable error rates, etc.) Not surprisingly, many organizations will find that a mix of on-premise, cloud, and, perhaps even, some remaining legacy applications works best for them. To reach that answer, you will have to reach beyond the pitches made by software and cloud vendors, self-anointed proponents and the ever-present chorus of naysayers. Good luck!

Posted by Patrick Slattery | April 12, 2011 06:33 am

Be aware of SaaS cost exposures

Whilst SaaS appears cheaper than on premises, it is only when you complete the transformation of all on-premises IT costs on the basis of Per user per Month (PUPM) can you do a true comparison. This requires knowledge of the IT infrastructure, and a detailed understanding of all staff, utility, depreciation, amortisation, data centre, DR, etc costs so that these fixed and variable costs can be correctly apportioned to each applicaiton. A recent PUPM analysis I did for a major Australian national organisation showed that their cloud solution was the MOST expensive, TOTAL cost per user per month, which was a real surprise, given that Cloud rests on the promise of 'cheap, quick and easy'. The next most expensive when ranked on a PUPM basis was their on-premises Business Intelligence and reporting system, followed by 30-odd other applications including ERP, Warehousing, finance, and leasing apps, email, etc. Be really aware of all the hidden costs of a properly integrated SaaS application with your on-premises and other enterprise applications, and include all the 3rd party costs for integration of things such as single-singon, etc. Be acutely aware of the hidden SaaS subscription costs which vary from vendor to vendor.

Posted by ROB LIVINGSTONE | April 02, 2011 12:13 am

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