Featured Article by Chris Unruh, Grant Thornton LLP
During the past several years, cloud-based business applications and solutions have emerged as the next frontier for the IT function. The cloud has the potential to transform the way companies operate and enable businesses to access world-class software with little upfront cost.
The growing dominance of cloud technologies also means the scope and nature of the IT function is shifting. As companies move away from on-premise systems, which require time and budget to maintain and upgrade, and toward cloud solutions, which are generally updated on a regular basis by the vendor, businesses can save money and IT can focus their resources on helping the organization use the new functionality.
Through this transition, more IT professionals are taking on the role of business analysts and advisors. A recent survey from Grant Thornton found that more than 75 percent of chief information officers (CIOs) feel that IT has helped the most to develop the strategy and objectives for how the cloud will be used in their organizations, and nearly half of CIOs reported that cloud computing is important for advancing their business strategies.
While cloud solutions can boost efficiency, reduce IT costs and increase agility, these investments also have far-reaching implications for business strategy and operations. CIOs and IT leaders must first determine how cloud technology can support their company’s priorities and then consider its impact on operations. The key, then, is to identify areas or functions that are particularly well-suited for cloud applications.
IT professionals can use the following four steps to determine where and how the cloud can deliver the most value in their organization:
1. Choose great applications from great companies. When considering a solution, executives should evaluate the software provider and its viability. If software companies don’t have the strategic direction or funds to deliver on their vision, organizations can be saddled with cloud applications that can’t evolve with the business. Companies should also avoid selecting a wide range of software providers with one-off solutions, which requires organizational resources to transfer and integrate data among various solutions, enable analysis and generate reports.
2. Determine the total cost of ownership and ROI. Undertake a thorough cost-benefit analysis that considers all relevant factors — not just the product price, but also ancillary and opportunity costs. Although a cloud solution enables an organization to avoid a capital expense, costs for implementation, systems integration, data conversion and training, among other components, can all affect the price tag. The value to the business — as measured by better performance or the ability to pursue new opportunities — should also be considered to get a full picture of the total cost of ownership. A cloud solution’s capability to scale as the business expands can also pay dividends by reducing growing pains.
3. Assess organizational capabilities. Companies need to determine the degree of process redesign that will be needed for business functions to adapt to cloud products. Since most cloud solutions are provided with out-of-the-box, best-practice features, organizations that have grown accustomed to making frequent modifications in order to accommodate existing processes must be prepared to adapt their organization. In some cases, a change management effort may be required to facilitate adoption and ensure that employees can get the most from enhanced functionality. While one of the benefits of cloud solutions is automatic updates that alleviate the need for IT to manage the rollout of new versions, companies may need to commit resources for ongoing testing, training and support.
4. Consider governance and compliance. Companies in certain industries will be better positioned to take advantage of the cloud’s functionality. The regulatory burden may elevate the importance of reporting and compliance — a key feature of many cloud applications. In addition, regulations on handling sensitive data such as credit card numbers or personal information could also affect the decision on what functions to move to the cloud. These factors must be weighed against the benefits of access to real-time information, seamless report generation and systems with analytic tools.
The cloud has tremendous potential to deliver value, but its applications and services have implications that extend beyond IT. By clearly defining business objectives and determining how cloud technologies can support them, IT leaders can be better positioned to make the right decisions on where and how to integrate the cloud into their organization.
Chris Unruh is a principal with Grant Thornton LLP’s Technology Solutions practice and leader of the firm’s Enterprise Resource Planning/Human Capital Management (ERP/HCM) practice. Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd, one of the world’s leading organizations of independent audit, tax and advisory firms.
Unruh has nearly 20 years of experience and specializes in providing financial and human capital management solutions across a broad range of industries, including health care, life sciences, consumer and industrial products, engineering and construction. His areas of focus include financial/HCM process analysis as well as system design and implementation. He brings extensive experience managing multiple solution implementations, ranging from custom development to packaged systems, working directly with organizations on finance, budgeting, planning, manufacturing, human resources and payroll systems. He has led numerous complex multisite implementations, including the establishment of shared service centers.
Prior to joining Grant Thornton, he was a partner with MarketSphere LLC, serving as its ERP/HCM national practice leader until it was acquired by Grant Thornton in 2013. Previously, he was an ERP leader in Arthur Andersen LLP’s business consulting practice. He received a bachelor’s degree in business administration in accounting and management information systems from Kansas State University.
