PlanAxion places great importance on developing the knowledge of its affiliates. With this in mind, we organize lunch and learn (remotely!) offered to our team, regardless of their current mandate. Jean-François Oligny, a partner at PlanAxion, donated. It focused on cloud computing, and more specifically, on the impact of its architecture on the financial function of organizations. Here is a summary.

The objectives of the training

The overall objective of this training was to enable affiliates to be in a position to guide customers to better understand the challenges of cloud architecture on their organization and to highlight the importance of collaboration between IT and CPAs in the finance function. Then, the aim of this lunch and learn was also to provide possible solutions to determine the important elements (such as technologies and software) to be considered in all phases of implementing a shift to the cloud (operational, financial, financial, human or strategic phases).

What is the cloud?

Cloud computing is the use of online applications. In other words, they are hosted by third parties on the Internet around the world. There are 3 possible cloud architectures.

1 — IaaS (Infrastructure as a Service): In this architecture, only virtual servers are hosted on an external network. However, connectivity tools remain hosted within the organization. IT administrators and network managers can intervene in the IaaS architecture.

2 — PaaS (Platform as a Service): Just like the IaaS architecture, PaaS includes servers. Operating systems, middleware, and connectivity tools (development and analytics) are also added. These tools make it possible to facilitate communications between servers (such as the exchange of data between different systems). In a PaaS architecture, you pay for what you use. Such an architecture requires the intervention of developers, system administrators, and database managers (DBAs).

3 — SaaS (Software as a Service): A SaaS architecture is one where software is in cloud computing mode and where users are the only stakeholders. It is an architecture that combines IaaS and PaaS, but provides access to applications from the Internet with the payment of a license by the user. Think of Netflix or Microsoft 365, for example. In other words, when the user has a username and password and connects via the Internet, it is a SaaS application. The applications used are not hosted on company servers. Data, on the other hand, is hosted on the cloud.

It is important to see the 3 types of architecture as a pyramid.

What are the benefits of cloud computing?

The cloud allows for better agility for businesses. In a cloud architecture, organizations no longer have the responsibility to maintain servers. So IT people can focus their efforts on business activities rather than on infrastructure management. The user-pays system also allows you to pay only for business needs. Let's take the example of an organization that experiences an increase in activities every summer. She can decide to rent servers for a given time and cancel this rental at the appropriate time.

The cloud also allows for greater ease of integration between applications. These are better connected to each other and it is easier to integrate and merge systems.

The impacts of the cloud on a business

It would be a mistake to think that cloud computing is a miracle formula that is easy to implement. As mentioned above, the cloud reduces the responsibility of businesses to manage servers, as they are hosted by third parties. In this lunch and learn, we discussed the impacts of the cloud on IT and on the finance function but also its contractual and financial impacts.

Impacts of the cloud on IT

The fact that the cloud makes it possible to use servers from specialized companies that are experts in managing backups and data recovery (such as Amazon, the largest server provider in the world) affects IT teams a lot. Indeed, this directly affects the organizational impact of a company since the IT department team will tend to have fewer tasks. A review of processes will make it possible to develop new expertise and to restructure the organization. On the other hand, a reduction in headcount is still to be expected in the IT function.

When changing the organizational structure, it is important to have a change management strategy in place. Employees must be supported through the various stages. Training, relocation, layoff, etc. Communications should be clear and worked out to be well understood by everyone.

Impacts of cloud computing on the finance function

The shift to the cloud is very important for finance employees as they will have a big role to play. Understanding impacts, costs and integrated data analysis are essential for its proper functioning. The finance function needs to be able to predict the behavior of cost and organizational structure data. In addition, the head of the finance function, the CFO, will become the company's cloud co-manager with the CIO.

Contractual impacts of the cloud

With the arrival of cloud computing in businesses, it will be necessary for the main internal players to develop new expertise. Infrastructure management will give way to contract management. It will therefore be important to rely on the collaboration of procurement, legal affairs, IT and finance departments.

The tasks, which focus less on technology and more on data and contracts, will still require analysis and negotiations. Future needs must be anticipated in order to be able to negotiate usage costs (level of service, volume discounts, renewal, etc.). It will be necessary to know where the data is hosted, where it is stored and where it passes through (and to know the rules concerning intellectual property for each country where it transits).

Financial impacts of the cloud

When a business moves to the cloud, the cost structure changes. On the other hand, reducing operational costs should never be the main objective of such a shift. The reason is simple: there may be no cost savings. It is therefore important to plan a case study that will analyze the costs and benefits for each organization that wants to move to the cloud in order to predict recurring and non-recurring financial impacts.

Obviously, when we talk about workforce reduction, the IT cost will decrease (employees, implementation, development). These are recurring costs.

As for non-recurring costs, think of: severance benefits, recruitment fees, recruitment fees, change management, contract cancellation, consulting fees, data migration, software implementation costs, etc. All these costs, even if they will occur only once, are to be expected in your case study.

Is the cloud secure?

Obviously, we could not receive training without addressing the aspect of the cloud that is most controversial with identity theft: the security aspect. Jean-François Oligny specified it well. There are several factors to consider when judging the overall security of a cloud architecture.

Physical security and intrusion are very secure, in large part because nothing is hosted by businesses. Cloud applications like Netflix adopt best practices and hire globally recognized experts to ensure customer data is secure. Organizational IT departments of this size are renowned and on the lookout for any possible security breach.

The main risk of a security breach in the cloud is... the user himself. Phishing attempts are numerous, even more so in 2020 with teleworking. With logical access (username and password), all you have to do is lose your access or your computer or click on a link in a malicious email to be exposed. Raising team awareness is necessary and important to avoid major data leaks and thefts.

Above all, efforts to make a move to the cloud should not be overlooked. Cloud computing is a facilitator in achieving goals. However, its deployment requires time and preparation, as shown in the graph below.

The key to an effective and maximized cloud shift is to obtain strategic support and advice. Don't forget to do a business case study to determine if the cloud is for you. For all your questions and for advice, you can contact us Contact or contact directly Jean-François Oligny.

Cover image: Unsplash