cloud cuckoo land

IT directors are beginning to recognise the benefits of the cloud from a straight cost benefit analysis, even though it could ultimately make their role redundant. A simple spreadsheet would identify tens of thousands of pounds worth of capital costs versus a few hundred pounds of ‘off book’ monthly payments for cloud storage, not to mention the impact on the valuation of the business and its long-term credit rating.

Procurement people are playing a bigger part in determining capital investments and the low-hanging fruit for trimming is often identified in the IT department.

This is because there is a profound difference between capital expenditure and operating expenditure in terms of the impact upon liquidity and cash flow. Purchasing expensive IT kit or bolting on to existing legacy systems, it moves the cost to capital equipment which has tax ramifications as well as adding outgoings on to your balance sheet. Why therefore, would you pay for capital equipment to increase your own, ever-depreciating server capacity, a cost that will sit on your balance sheets for years to come, when you can ‘off book’ it through the rental of almost infinitesimal amounts of date storage space at low risk? And, to boot (rather than re-boot) there is the opportunity to add innovative value to that information through broader industry consultancy?

The clever IT director is the one not sleep walking towards adding additional costs to the business, but the person who embraces the benefits of the cloud and suggests a costed-out solution to the FD and the procurement team. This is the person who has his head in the clouds, but his feet on the ground.

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