Dell's head of UK corporate and enterprise, Glenn Mallon, explains the importance of cloud financial operations to help drive financial accountability and accelerate business value
From AI and machine learning to advanced data analytics and automation, new technologies are reshaping the business landscape at an unprecedented pace. Because of this, the role of the CFO within businesses is undergoing a significant shift, too.
No longer confined to traditional financial stewardship, CFOs now find themselves more heavily involved in digital transformation projects, including the widespread implementation of AI and ML.
Organisations of all sizes are striving to transform their business models and fully embrace the power of new technologies, including AI. From startups to global enterprises, digital transformation is about making incremental improvements and driving significant change.
In recent years, many businesses have pushed to digitise quickly to benefit from better resiliency, velocity, and agility. The speed at which many did so was, in part, a response to the disruption of the pandemic as much as to ensure innovation and positive business outcomes.
However, successfully navigating and implementing a digital transformation project is far from easy. What we see happening most often is failure due to a lack of clear business priorities and top-down executive backing alongside dedicated resources and commitment. In this context, the CFO has a vital role to play.
Organisations need to lay a solid foundation to achieve success in digital transformation. Cloud FinOps (Cloud Financial Operations) is a critical factor that can help drive financial accountability and accelerate business value realisation through cloud transformation.
Cloud FinOps is an operational framework and cultural shift that brings together technology, finance, and business. The framework is designed to promote better cross-functional collaboration, drive accountability, provide greater cost transparency, and promote a transparent culture with value creation as the common goal.
Cloud FinOps enables organisations to reinvent their business models, fund value streams, and connect cloud technology investments to strategic business outcomes. Breaking down the barriers between siloed teams can lead to a better understanding of the investments needed to create positive business outcomes.
With the increased visibility of cloud costs, finance teams can gain greater accuracy in tracking cloud spending against budgets, and the business can align technology services to value metrics that result in better-informed future investment decisions and forecast demand.
With the CFO partly driving this shift, the successful deployment and implementation of Cloud FinOps building blocks enable organisations to accelerate digital transformation beyond cost savings. It also includes driving financial accountability and visibility, for example, and optimising cloud usage and cost efficiency.
Establishing a robust approach to value measurement and realisation is key to laying a solid foundation with Cloud FinOps. Goals and strategic imperatives will naturally shift and change over time, so the CFO must work with leaders to review performance metrics consistently and assess the impact.
By establishing a robust value measurement approach to track and monitor business value metrics toward business goals, technology, finance, and business leaders can work together to show how digital transformation enables the organisation to create new innovative capabilities and generate top-line revenue.
Business value metrics usually cover several factors: cost efficiency, resiliency, velocity, innovation, and sustainability.
Assigning KPIs to these metric categories helps measure cost efficiency through infrastructure savings, migration, and support costs, enhance operational resiliency, decrease time to market, enable a culture of rapid experimentation, and embed environmental and social sustainability metrics across the organisation.
Particularly with the increasing imperative for businesses to implement AI and ML, metrics against these associated costs would be wise to monitor. But alongside this, there is also a case for leveraging the technology itself to ensure more intelligent IT operations that can optimise and automate.
Cloud-based AIOps, for instance, can drive operational efficiency and agility through proactive monitoring, machine learning and predictive analytics across the entire IT estate. These solutions can contribute to successful business outcomes while helping manage costs.
The Cloud FinOps journey really starts with defining or updating metrics. Since business goals and strategic imperatives will likely change over time, reviewing the Cloud FinOps metrics is essential whenever the plans change.
Defining good metrics helps prioritise strategic initiatives, guide effective resource allocation, and generate awareness across the organisation to drive a shift in mindset with the new way of operating in the cloud.
AIOps can also help alter mindsets and drive a shift towards empowering teams across all practices. With remote telemetry data and root cause analytics that provide feedback into ops strategies, potential system issues can be detected and addressed before they become significant. AIOps can enable proactive notifications and recommendations so users can self-remediate without going through the traditional and often lengthy processes with vendor support.
Although there is no doubt that implementing Cloud FinOps can be complex and time-consuming, the benefits are well worth the effort. With Cloud FinOps and AI, organisations can save money, improve visibility, increase collaboration, improve governance, and scale their cloud usage and spending as their business grows.
Additionally, Cloud FinOps can help identify and track often-overlooked cloud-related costs, such as data transfer and storage costs.
However, to implement Cloud FinOps successfully, organisations must take a multidisciplinary approach involving finance, IT, and development teams. The CFO is a vital function within this. Under collaborative leadership, teams can better identify areas of waste, implement cost-saving measures, monitor usage and costs, and establish policies around cloud usage and spending.
These policies should include role-based access controls and compliance with regulatory requirements.
The last few years have accelerated the need for companies to modernise their digital capabilities, and the advent of AI means companies now need to go one step further. With technology-driven disruptions across all industries, it has never been more critical for organisations to transform themselves, embrace an agile mindset, and invest boldly in cloud technology and capabilities to achieve sustainable business outcomes.
Embracing cloud FinOps has become imperative for CFOs who wish to lead their organisations towards innovation and growth. It equips CFOs with the tools to drive cost efficiency, resilience, and speed-to-market, transforming the cloud from a cost centre into a hub of innovation.