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Why NZ CFO's have the keys to the cloud...

Thu 24 Jul 2014
FYI, this story is more than a year old

100% of New Zealand organisations have a cloud budget forecast between now and 2016 and 79% believe that they are using 2-5 cloud services already.

The IDC 2014 cloud study which covered 2,300 businesses has shown New Zealand to be in the top four countries in the APeJ region with regards to maturity of Cloud adoption.

The key differences between New Zealand and other more mature countries e.g. Australia, is their alignment of people and processes to make the appropriate decisions regarding what cloud is best for what need.

"Cloud is bringing the competitive landscape of NZ businesses closer than ever before," says Adam Dodds, Research Manager, IDC New Zealand.

"All business sizes and industries are adopting to the opportunity of leveraging compute services provided from outside of their premises to create go to market and business operations opportunities.

"The challenge to all is how you untangle your legacy infrastructure and align your organisation (with people and processes) to adopt cloud appropriately."

The key findings of the survey show:

• Cloud adoption is showing high levels of forecasted growth (+10%) across off-premises Infrastructure between 2014 – 2016 as a Service and cloud based business applications alike. There is no growth shown for on-premises cloud technology.

• The top two reasons for businesses going to the cloud are to reduce IT costs and avoid investment in owning their own infrastructure.

• The barriers to the adoption of cloud are coming down. ‘Security of information’ is still the number 1 concern to businesses (36% of businesses identify this as a top concern) followed by the technical constraints of legacy architecture (16%).

CFO - Critical in Cloud...

IDC views the role of the CFO as critical in the next phase of cloud adoption. New Zealand organisations are "giving it a go" albeit in an ad-hoc manner.

To move to a more optimised model, organisations need to be clear on the value of its business information and as an such where it should sit (e.g. in a local hosted environment or in a Public Cloud).

The CFO has an important role to play in this process. Equally, CFO's must evolve a mechanism for the governance of the use of cloud - 53% of NZ businesses are not tracking their use of Cloud, they are just using more.

"CFO's appear to be the last to the table in the new world of Cloud services," Dodds adds.

"Only 32% of businesses feel that their financial governance is set up to managed, optimise and track the flexible consumptions models of cloud.

"The concern is that the CFO views the adoption of technology as a cost-out exercise and as such all processes are orientated towards a supply chain / procurement approach rather than one of enablement, differentiation and business agility."

It will take time for the CFO to take on anything other than a control and cost out approach to technology. This will be balanced in the short term by the rest of the CXO table.

Budgets for IT are also shifting across the business with 56% of NZ organisations surveyed showing that the IT budget is now shared.

Another recent NZ study showed that Marketing and the Lines of Business are now as great or if not greater influence in the decision making process around the adoption of technology than the CIO.

Despite this the role of the CIO remains critical but it requires the function of a ‘true’ CIO. Having the right CIO amongst your team will be ‘gold’ and reporting directly into the CEO creates an executive model that is highly optimised.

"New Zealand has reacted well to the need to be more strategic in its adoption of technology as a business differentiator," Dodds adds.

"The challenge now is to find the right CIO to realise the opportunity and elevate them to the Executive table. At the same time, there is a growing role of the Chief Marketing Officer and the Lines of Business"

"If I was looking for guidance regarding the adoption of cloud I would be seeking out a service provider that can demonstrate great success in taking customers to the cloud.

"Research has clearly shown that using a service provider has a higher opportunity to be successful than taking a DIY approach.

"Organisations don’t go to the cloud to be cheaper. They go to the cloud to become more responsive to the market and more agile"

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