Bridging the IT Gap: Demonstrating Cloud Value to Finance Executives
How to demonstrate cloud value in bridging the IT gap in the finance sector?
When discussing the value of cloud outsourcing with finance, IT representatives should emphasize critical advantages like greater speed, reliability, and security, says Joe Krotz, cloud and infrastructure solution architect at LightEdge.
The invisible divide between IT-based and finance-based mindsets in a business environment — the “IT gap” — is a common tug-of-war in budget planning. While these varying perspectives likely occur in several areas of IT budget planning, they can be particularly pronounced when discussing the outsourcing of cloud hosting.
On paper, finance executives may argue that it’s cheaper to manage IT environments and resources in-house rather than outsource to public or private cloud providers.
But that doesn’t factor in other critical elements such as speed, reliability, and security. These benefits may be difficult to estimate in terms of dollar value, but the competitive advantage provided by cloud providers’ high-grade, secure, and scalable infrastructure is worth its weight in gold. And then, of course, when you consider factors such as reputation loss and breach prevention, the added value of cloud outsourcing is hard to ignore.
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Cybersecurity Risks Should Give Everyone Room for Pause
When discussing the tremendous benefits cloud outsourcing provides, safeguarding IT systems from the growing threat of cybercrime should be top of mind. The truth is that all businesses face the risk of cyberattacks, and the resulting costs can be staggering. The statistics tell the story:
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- As of 2022, the global average cost per data breach was $4.35 million
- Cyberattacks increased 125 percent globally in 2021, according to the World Economic Forum
- Global cybercrime costs are expected to reach $10.5 trillion annually by 2025, up from $3 trillion in 2015
Don’t Forget Reputational Harm
Cybercrime costs can include a lot more than the ransoms themselves. Among those cited by industry experts are damage and destruction of data, lost productivity, theft of intellectual property, theft of personal and financial data, fraud, post-attack disruption to the normal course of business, costs for forensic investigation, and restoration and deletion of hacked data and systems. And here’s a big one — reputational harm.
When cyberattacks result in sensitive customer data being exposed, companies can suffer considerable harm to their reputations — which can ultimately translate to their bottom line. Various studies have shown that consumers care a lot about data breaches and how companies manage them. A study by Ponemon Institute found that 65 percent of data breach victims lost trust in an organization as a result of the breach, while another study found that 80 percent of consumers in developed nations will defect from a business if their information is compromised in a security breach.
Cloud Providers Offer a Higher Level of Security
As demonstrated by these statistics, cyberattacks can prove to be extremely expensive. Consequently, most companies want to have the highest level of security possible – a capability known to be offered by quality cloud providers. As an essential piece of their business model, cloud providers invest heavily in higher-level security systems and staffing levels to keep their customers safe.
Another security advantage the cloud provides over on-premises servers and infrastructure is segmentation from user workstations. Statistics show that one of the most common ways attackers infiltrate networks is through phishing emails, which usually enter through user workstations. Outsourcing cloud hosting allows companies to gain added safeguards since users aren’t operating on the corporate network.
Predictable Costs
Businesses that want to keep their cloud environment within their walls may be in for a rude awakening when it comes to costs. A large upfront investment for hardware and software will be needed for in-house hosting. If you’ve already undertaken this expense, maintaining and eventually replacing that equipment is on the horizon. This hefty expense can be tough for many businesses to absorb, which leads to one of the major attractions of cloud outsourcing — a more predictable (and sometimes lower) cost.
Rather than laying out thousands of dollars to purchase and maintain your own equipment, cloud outsourcing via an OpEx model can provide predictable costs for budgeting purposes. In an OpEx approach, customers pay a fixed, recurring (usually monthly) cost for cloud hosting and storage. Of course, the “rude awakening” I mentioned earlier can also be said for public cloud costs, which are notoriously higher than many companies anticipate. That’s a major reason so many enterprises choose a colocation or hybrid model; it’s the Goldilocks approach to cost.
Competitive Advantage
Cloud outsourcing is helping organizations better compete, and that competition is right in line with growth strategy. How does it provide a competitive edge? Reliability, scalability, and speed are three good examples.
- Reliability: Most cloud providers have invested considerable time and money to ensure high uptime for their service. While many businesses allocate significant funds to avoid system outages, most individual companies simply can’t match the huge dollars spent by cloud providers to keep their systems continually up and running. Consider whether your organization has cloud failover addressed and whether it can quickly respond to a service outage. If not, cloud outsourcing can give you that higher level of reliability that will make you more attractive to customers.
- Scalability: The ability of cloud providers to easily expand a company’s cloud capacity keeps organizations agile and makes accommodating growth easier and faster. Instead of the time and expense to purchase more hardware, adjustments in cloud capacity can be made at the flip of a switch. The same is true should a company need to reduce capacity since cloud providers can accommodate requests in real-time.
- Speed: The volume of data and storage capacity handled by cloud providers far exceeds a typical company’s resources. Along with this, cloud providers generally have faster connection rates since they have the resources to afford greater bandwidth and speed. Faster connections mean faster speed-to-market for your customers.
The advantages of cloud outsourcing may be challenging to quantify. But having an earnest conversation with finance executives about the long-term benefits — including enhanced security, scalability, reliability, and competitive advantage — will likely go a long way toward advancing your viewpoint.
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