Move to the cloud for a brighter financial outlook
Financial officers can appreciate the benefits offered by the cloud computing model such as cost savings and possible new revenue streams, but they need to understand the full picture before signing off on any cloud project.
The top priority for any CFO has to be the financial security and viability of the business. They must work to ensure an organisation has the tools to make or save money, while at the same time invest wisely into new solutions. Moving to the cloud is a case in point, as it can offer significant cost savings and potential for new revenue streams, but there may also be the fear of the unknown.
A survey for Interactive Intelligence suggests that many are putting this fear aside and leaping into the cloud. It shows that nearly three-quarters of businesses operating a contact centre are looking to move to the cloud. So, with many of their competitors likely to be taking advantage of the benefits that the cloud can bring, what do CFOs need to consider if they wish to level the playing field?
Not all expenditures are equal
When an organisation moves to a solution provided in the cloud, such as communications-as-a-service, the first difference CFOs will notice is that expenditure for these services moves from being mainly CapEx to being mostly OpEx. No longer will the business need to buy in most of the hardware associated with communications over IP, instead the functions of these devices will be provided remotely.
The advantages of this are numerous, but probably the most important to a business today is flexibility. Using OpEx to purchase key functions requires less administration than CapEx, meaning decisions can be taken more quickly and services implemented more rapidly. This also provides business agility, allowing solutions to be increased or reduced overnight with little expense.
How much of the cloud solution is paid for through CapEx and OpEx depends on the type procured and how much of the IT infrastructure businesses want to transfer.
All-in or Hybrid?
Some might think that basing all their telephony systems in the cloud would save money, with services being accessed through a public network or a VoIP, meaning that there is no carrier relationship onsite. This would completely eliminate CapEx costs for their phone system, requiring only a monthly rental or per use payment.
While this appears to offer better long-term budgeting, it is worth noting that if the VoIP connection is lost, then so is all access data or calls, which can be very costly indeed. This is particularly true for those businesses that rely on telephony for purchases or financial transactions, such as a retailer or a bank. Every minute that a customer can’t be contacted is time lost for selling. Research from CA Technologies estimates that the global amount of revenue lost to IT downtime is $26.5 billion and among those departments most affected are sales and finance.
The safest option is to create a private cloud by purchasing and installing an infrastructure on the premises. However, this relies heavily on CapEx and can be very costly both in terms of installation and continuing maintenance, making it only suitable for the largest organisations.
The most cost-effective option is a hosted hybrid model that offers the best of both public and private cloud networks: infrastructure operated by the vendor is deployed on a company’s local network with voice and data kept on the premises ensuring continued access and security, while the logic and routing is in the public cloud and offers the public cloud price model.
When moving to a hybrid solution, CFOs need to be aware of who owns the onsite equipment and its cost. Some vendors might just rent out the equipment for a monthly tariff that could be supplementary to the service charge while others will offer the opportunity to buy the equipment for a lump sum or a payment plan spread out over a certain period. Only by being aware of the full picture, can CFOs effectively advise on and sign-off the most appropriate cloud solution for their enterprise. This ensures the procurement of innovative technology at an affordable price that will streamline the business.
Dave Paulding is regional sales director UK and Middle East, Interactive Intelligence.