Making the move to the Cloud is happening at a rapid pace for organisations as they seek to become more digitally-enabled, customer/client-focused and cost efficient. This is true for back-office finance, HR and procurement systems as well as front-office, customer-facing platforms.
Whilst there are a number of benefits that can be derived from a successful finance and business transformation enabled by Cloud technologies, there are undoubtedly several challenges that an organisation will face along the way.
This article addresses a few of these challenges and lessons learned with regard to governance, which is one of the six key challenge areas we have identified when moving your systems over to the Cloud as shown on the diagram below.
It is important to get governance right at the outset of any programme, as this will set the foundation for success. When speaking with a number of senior technology and finance leaders, there are three key questions we are often asked:
Exactly when an organisation moves their system to the Cloud will depend on a number of factors, such as their existing system type, maturity of their products and perhaps most importantly, their strategic organisational objectives. This applies not only to back-office finance systems, but also to more front-office applications, such as CRM and business operational systems. This graph demonstrates product maturity/value in relation to time. The thought being that as time moves on, the maturity of the Cloud product/application (and therefore value derived from the system) increasingly rises whilst a similar on-premise application system will stagnate from a maturity standpoint. This is primarily due to the continuous release/patch cycles prevalent in Cloud-based applications as well as more investment/effort in the Cloud product versus the equivalent on-premise product. It is important to note, however, that this will differ according to an organisation’s existing systems and which systems they are planning to adopt.
The right time to move is not necessarily the time at which the two lines intersect. Success in your journey to the Cloud means transitioning when your business plan aligns with your existing project commitments, keeping in mind that your competitors will be asking themselves the same question.
In addition, some users are likely to feel they are taking a step back in terms of functionality - depending on when you choose to adopt the new Cloud technology in comparison to your existing systems. However, it is very likely that the new Cloud system will outperform the current on-premise solution and provide a more sustainable platform to help the organisation achieve its strategic goals/objectives in the long term (as shown in the graph above).
Recently, a senior IT executive at a large UK retail and consumer organisation was asked the question: why did you decide to move now? The answer was that it was never a question of whether they would move; it was simply a matter of when. They felt that the longer it was delayed, the more difficult it would be to adopt in the long term given the increasing functionality gap between on-premise and Cloud. This is consistent with what other senior business and finance executives are saying across multiple industries.
You should first consider existing transition states when developing your programme plan for moving to the Cloud.
Do not try to move everything at once - when implementing the transition, make small, frequent changes so if there is a failure, it can be contained. Moreover, assess the maturity of the Cloud systems and plan accordingly. For example, do not try to move an operational system that is not as mature in the market versus an HR system that is more established.
Equally, it’s important to plan ahead to ensure the sustainability of your operations. Explore strategic partnerships with Cloud providers who you are confident have the ability to align their plan to your organisation’s own strategic long-term vision.
Once you have decided on the timing and transition plan for your move to the Cloud, the next step is establishing the foundation for a successful programme. This is probably a separate topic in itself, but a key element is focussing on having the right governance structures in place. This enables efficient and effective decision-making, whilst also empowering individuals at all levels in the programme to be successful in their given roles.
Governance is much more than the names and titles listed on a programme org chart, or a series of governance forums. I have played a role of critical friend and advisor on a number of programmes and one of the things I regularly observe is how the effectiveness of steering groups and governance meetings could be improved by providing a greater level of objectivity and challenge to the programme.
Nearly every organisation will move the majority of their back-office systems to the Cloud over the next few years. The question is not if, but when. Whilst companies will be eager to race into a Cloud transformation programme in order to start reaping all of the benefits of the Cloud solutions, it is important that appropriate planning and governance mechanisms are established from the outset. Ultimately, overcoming the challenges faced when transitioning to the Cloud means understanding your exposure to risk and planning accordingly to deliver effective governance at all times. By evaluating the three critical factors of when to move, what the transition will look like and how to setup the programme for success, there is an increased likelihood of realising the benefits (and not putting your business at risk due to a failed system implementation).
Your plan to transition should coincide with supporting your wider business goals and existing project needs, while the process itself should take place in a way that ensures as little disruption as possible to your current operational focus. That said, Cloud systems should be tailored to address both the short- and long-term needs of your organisation.
Effective governance is essential to the future sustainability of your Cloud-based operations and this should therefore be an influencing factor at every stage of implementation. It means considering the finer details of how new systems will impact your day-to-day business function, as well as how sufficient oversight will be guaranteed by all involved in the programme, both at its outset and into the future.
As the saying goes,
“programmes do not often go wrong, they start wrong”
Hopefully the above has given you some food for thought and helps to ensure you are giving your organisation the best chance for success.
Director, PwC United Kingdom
Tel: +44 (0)7711 562540