As CFOs oversee the migration to the cloud of their companies’ financial, HR, sales, marketing, and other enterprise systems, they must make those decisions as part of an overarching strategy rather than in piece parts, warns an industry veteran.
“Many CFOs are feeling the effects of a cloud hairball,” says Juergen Lindner, who joined Oracle two years ago as vice president of cross-application marketing after 20 years at SAP. “In the race to the cloud, a lot of sanity has been thrown overboard, so companies find that they’re dealing with very complex architectural constructs that require reconciling data across multiple systems.”
Those constructs result in a higher total cost of ownership, increased security risks at each integration point, and a range of service-level agreements from various cloud vendors that add to the complexity, Lindner says.
Meanwhile, as CFOs move into more strategic roles—as CEO advisers rather than just financial overseers—they need ready access to information across company departments, a difficult proposition when that information is locked up in individual cloud and on-premises systems. Integrating those disparate systems is a costly nightmare, and a recurring one when each individual cloud is updated.
“CFOs need visibility across the business, and they need it in real time rather than weeks later,” Lindner says. “As more companies—and more departments within those companies—consider a move to the cloud, the lack of an overarching strategy and vision can leave a CFO with a lot of blind spots.”
Companies also need to get more selective with their cloud vendors. While the number of vendors is expected to grow about ten-fold, fewer, more strategic partnerships will pay big dividends, he says.
Lindner offers CFOs the following three pieces of advice:
1. Don’t assume that the vendors of your legacy on-premises software systems are the right partners in the cloud.
“Offering what is largely software created for the on-premises era and putting it in the cloud is not the same thing as rewriting software from the ground up for a modern, digital business world,” he says.
2. Evaluate whether your legacy vendor is a real innovator with artificial intelligence, blockchain, the Internet of Things, and other emerging technologies.
Today, finance departments spend about 80% of their time on transactional, repetitive, and administrative tasks that have nothing to do with creating business value. “With emerging technology like AI and blockchain, that equation can be flipped,” Lindner says.
However, CFOs must question their legacy vendors’ emerging-technology promises, he says, as the road to actually seeing benefits may be long—and much of the heavy lifting may be left to the customer.
“It’s hard for companies to acquire the skill sets to bring these emerging technologies to life,” Lindner says. “It makes more sense to have those capabilities built in as an integral part of the applications your business uses every day, aligned with use cases that make sense for a particular function and industry and that share a common data platform with other parts of the business. You need to team up with vendors that have done the heavy lifting for you and, more important, don’t look at those emerging technologies in isolation.”
3. Understand the complexity, cost, and risk of cloud system integration.
“Some vendors have grown their cloud offerings quickly by acquiring companies that offer particular cloud capabilities,” Lindner says. “But do those acquired elements really work together as one—or is it up to the buyer to cobble those together?”
If you need visibility into all areas of your business and need to understand the interdependencies, cloud applications built on different data platforms will require you to extract data from each application, bring it into a data warehouse, analyze it, and then feed it back into the application. So much for real-time insight, Lindner says.
“It’s also important to remember that every touchpoint between systems is a potential security exploitation, which means more risk as well as more complexity in managing the environment,” he says.
Lindner maintains that it’s in the interests of most businesses to form fewer, more strategic relationships with their cloud vendors to ensure they’re laying the right foundation and to minimize complexity, cost, and risk.
Margaret Harrist is director of content strategy and implementation at Oracle.