The Cloud

CFOs Must Lead Adoption of The Cloud

Digitization is forcing finance chiefs to shed some old habits.
Mana MojadadrApril 27, 2017
CFOs Must Lead Adoption of The Cloud

I read a quote from Warren Buffett the other day: “Chains of habit are too light to be felt until they are too heavy to be broken.”

Mana Mojadadr

Mana Mojadadr Mana Mojadadr, The Cloud

It struck a chord in me, and not just because he’s one of the world’s most successful people, with great financial instinct. It’s also an accurate description of the dilemma many CFOs find themselves in today.

Industries are being disrupted, the balance of power has shifted to the customer, and business models are now synonymous with business outcomes. Everywhere we look, we see and feel change — in our customers, in our competitors, and across our respective industries. It’s all the result of digitization, of course, with its roots in the cloud as the basic starting point.

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I think many of us are stuck in our routines of habit. Aside from outdated perceptions around cloud security, CFOs with an exclusively on-premise mindset are exactly whom Warren Buffet is referring to. We know change must happen. Rather than resisting it, I think finance department can — and should — help lead it.

It’s something we’ve had to embrace ourselves at SAP. The shift to the cloud has meant we’ve had to adapt to the way we recognize and report revenue, structure commercial agreements, support customers, and deliver our products to market. It’s impacted just about every area of our business, and finance is playing an instrumental role. I strongly advise you to consider doing the same with your own organization, if it’s not yet happened.

For example, finance has had to become an area of cloud insight and expertise at SAP so we can offer customers a choice — not just between on-premise, cloud, and hybrid landscapes, but also from a commercial perspective of opex vs. capex. That means bringing insight and proactively adding value to sales teams during commercial negotiations with customers.

It’s also redefined the relationships we have with customers. Cloud means recurrent revenue streams, which require sustainable, standardized delivery and satisfaction from a customer perspective. That makes customer renewals one of the main KPIs.

Our transition to the cloud is closely accompanied by finance at the forefront of cloud enablement. All of our CFOs can be leaders in this regard. That’s why our finance teams have had to change internally to support how the business is changing. We are increasing the level of cloud and new-business-models expertise in finance to reflect the different skill sets required to support sales.

You have a similar opportunity — and responsibility — in your own organization. Finance has both a challenge and a chance to rise to the occasion of this inevitable change.

Even if you are not yet ready to start implementing a shift to the cloud, I strongly suggest that you outline the areas that extended finance team members and related stakeholders should be involved in, and what that will require from your department (e.g., shared delivery, shared contracting, shared service-center colleagues)?

What different skill sets you will need in place? What will be the impact on your own opex/capex and other KPIs, such as operating capital, working cash flow, and ratios? How will your finance team access real time information? Where they can best apply it? How will this change the way you engage with different parts of the business, and what processes will change (or disappear) as a result?

As the world changes around you, you will be expected not just to navigate your way through it, but rather to step up and lead. That will require a different set of skills and deliverables than you have today.

As I started this blog with a quote, I’ll also end it with one, from Peter Drucker. “The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.”

Dr. Mana Mojadadr is CFO for SAP Italy.