How CFOs Accelerate Modernization with Cloud Economics

It's important to choose a cloud infrastructure that can evolve to support the workloads and the associated SLAs while at a price point that resonates with CFOs.

Rob Lee

February 15, 2021

5 Min Read
How CFOs Accelerate Modernization with Cloud Economics
(Source: Pixabay)

CFOs have more on their plates than usual these days with everything they’re balancing: shrinking CAPEX budgets, increasing operational risks, looming digital-transformation investments, and lack of flexibility. However, with challenge comes opportunity, significant opportunity to change past behaviors.

Interestingly, the concerns of CFOs are actually accelerating modernization within their organization due to the economics and operational model of the cloud.  Evaluating the economic impact of cloud strategies comes down to three crucial questions. First, what is the return on investment (ROI) for migrating to the cloud or changing to a different cloud service? Second, what is the total cost of ownership (TCO) for making that migration or change? And third, how does the ROI and TCO of the new cloud solution or provider compare to a traditional on-premises or hybrid one?

The best CFOs understand that with the right outlook on the economics of cloud computing, they can optimize their investments and obtain the greatest value for their organization. And most recently, the proliferation and availability of as-a-Service models have disrupted the status quo, giving CFOs more options than ever when looking for cloud solution providers.

As-a-Service models can go a long way to help companies gain financial and operational flexibility. They can help eliminate technical debt, keep infrastructure current, embrace navigational course corrections, and free up capital expenditures to focus on all those other strategic initiatives that couldn’t be funded or executed before. At the end of the day, they need to get more done faster, and often with less. Modern as-a-Service models eliminate lengthy, costly, and difficult-to-scale contracts, giving companies the ability to scale and pay as they go, forever changing the landscape of what's possible with cloud.

Many CFOs want to purchase services the same way they sell them – on-demand with a low commitment to start and the ability to grow as you go.  The usership economy is gaining ground in all traditional IT infrastructure areas, and the benefits are clear: Research shows that many CIOs feel consumption-based models significantly accelerate digital transformation due to the transparency and agility to repurpose capital to address business demand. This is because the flexibility in pricing allows them to scale as their needs do. In fact, according to IDC, by 2021, 75% of enterprises will recognize the benefits of as-a-service consumption, driving a 3x increase in demand for on-premises infrastructure delivered via flexible/as-a-service solutions.

But, not all as-a-Service offerings are created equally - and choosing the right as-a-Service solution has never been more critical.  In selecting the right solution, it's important to choose an infrastructure that can evolve to support the demands of the workloads and the associated SLAs while at a price point that resonates with the CFOs.

Here are six things CFOs should look for when choosing an as-a-Service solution:

Elasticity: It should eliminate the need for large CAPEX purchases up-front that are sized based upon anticipated future usage. As your needs increase, it should proactively scale up the business’s infrastructure and capacity, eliminating the risk of re-buys if a CAPEX purchase is undersized. Start small and grow your environment to meet demands with predictable unit costs in a pay-as-you-go model. As a result, you can spend with present consumption, not future expectations.

Flexibility: Migrations are painful, not only because of the mechanics of moving data but also the costs. Underpinned by a flexible architecture, the migration to the right solution should be the only migration you ever need to perform.  Furthermore, a truly flexible service offering must be one that can both be moved or migrated from environment to environment, but also one that can be repurposed to meet other application needs very quickly, as urgent business needs arise.

Strong AI-driven capabilities: The right solution will have strong AI-driven tools at its core. These tools should be able to monitor and analyze telemetry data and provide predictive support. Without strong, AI-drive data management, the solution will almost always fall short.

Cost Management:  On-demand usage should be billed at a standard rate. If the company's workloads are consistent, they reserve that capacity and set a discounted rate with fixed charges for the contract’s duration. If they need more from a given solution, they should be able to choose to increase their commitment and get even better discounts for the remainder of the agreement. The solution should also maintain ownership of all assets throughout the life of the service, which aligns costs to usage and not assets underpinning the service, creating a real OPEX model.

Net Present Value Improvements: Balancing future investment with current expenses is a big challenge for many CFOs. With the right solution, CFOs can improve cash flows by augmenting CAPEX purchases and limiting fiscal year expenses to only what is consumed in the current year. As a result, they can then allocate saved capital to green-light transformation projects and address skills gaps.

Flexible Term Commitments: Short-term projects can make infrastructure planning even more of a challenge. Purchasing assets that your organization may be slow to utilize after a 12-month project ends often requires a complicated exercise in planning how to align requirements for multiple in-flight projects – and keeping their timelines on track – so they can share infrastructure. CFOs should seek a solution that allows for the ability to scale infrastructure up and down to meet changing project requirements while only paying for the actual consumption.

CFOs have always been at the forefront of critical business change. Now, as they help to drive the adoption of as-a-Service solutions, they're enabling their organizations to harness the power of cloud in a more advantageous way and unlock new opportunities for business growth.

Rob Lee is VP & Chief Architect at Pure Storage.


About the Author(s)

Rob Lee

Rob Lee is VP & Chief Architect at Pure Storage.

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