AICPA® & CIMA®: Thought Leadership: Governance
Governance: The key to successful cloud implementation
Navigating the complex landscape of cloud adoption calls for a comprehensive governance plan and this is vital to unlocking the cloud’s full potential, states Jay Overcash, Director of IT Security Strategy at AICPA® & CIMA®, together as the Association of International Certified Professional Accountants.
The impact of cloud solutions has emerged as a transformative force, affecting business operations, cost management and innovation.
Cloud technology has also presented a paradigm shift in how organisations manage their IT departments and financial strategies.
By migrating critical operations to the cloud, accounting and finance professionals can track and measure performance and conduct real-time analysis, a crucial factor in strategic decision-making. Cloud solutions also foster collaboration because data is accessible from anywhere regardless of geographical location, streamlining workflows across global teams.
Cloud solutions allow organisations to enhance visibility into return on investment (ROI) and deliver desired business outcomes.
Many factors make teams hesitant to adopt the cloud. ROI (aka costs) and governance are two of them. Lack of skills, security, compliance, and regulatory compliance are other reasons for not adopting the cloud.
Implementing a solid governance structure and using cloud solutions to enhance visibility into ROI is critical for organisations looking to introduce or expand cloud solutions.
Director of IT Security Strategy, AICPA & CIMA, together as the Association of International Certified Professional Accountants
ROI with cloud solutions
With traditional IT infrastructure, calculating the cost of a system can be an intricate puzzle as physical hardware, software licenses, and project costs are scattered across various departments.
Cloud solutions offer enhanced visibility into ROI by consolidating expenses into a transparent model, eliminating hardware and most underlying software costs. These solutions also provide a simplified pricing structure, allowing organisations to determine the precise cost of running a specific service.
Major cloud service providers offer robust tools for tracking and allocating expenses per service, department, or other grouping.
Forecasting operating costs, analysing operations for cost efficiencies, and examining return on investment are crucial to sound financial planning. Cloud-based governance and digital tools empower organisations in this endeavour.
Whether costs are based on individual usage or derive from software use, cloud solutions offer clear insights into costs. By combining the hardware, license, software, and support costs into a single combined cost, organisations can save time and effort on these labour-intensive efforts and focus more on value.
By setting budgets and generating alerts, cloud platforms facilitate controlled expenditure and resource allocation, ensuring organisations operate within their financial goals.
Unlike traditional on-premises systems, cloud platforms offer enhanced flexibility, enabling organisations to test projects with minimal upfront investment. This ‘Agile methodology’ promotes innovation while maintaining fiscal responsibility.
Governance is essential
Governance is critical to successful cloud adoption and ensures that IT initiatives align seamlessly with overarching business goals.
A comprehensive governance plan shapes how an organisation designs its cloud environment, allocates resources and establishes controls. Although cloud adoption shifts the data centre location, fundamental practices such as system maintenance, system operations and security and cost management remain critical.
Additionally, cloud providers incorporate governance features that allow organisations to consolidate accounts, ensuring centralised management and oversight. From a security perspective, this feature enhances visibility, ensuring that the organisation knows all accounts linked to the cloud service, and contributing to effective cloud governance by preventing organisation users from acquiring services with just a credit card.
Cloud governance enables more efficient and agile operations, and specific platforms provide organisations with unprecedented control and offer features to monitor and control costs. Spending alerts ensure that organisations are aware of potential cost overruns, providing time to manage costs effectively and enabling the ability to schedule resource usage, such as server operation times in which organisations can schedule when they need to use the server, a substantial cost benefit.
Robust governance plans are essential to prevent unchecked costs and ensure effective resource allocation. Additionally, organisations must address security, operational practices and compliance concerns, whether on-premises or in the cloud.
Business and industry-specific professions, including finance, must navigate complex regulatory requirements such as the Sarbanes–Oxley Act (financial statements), PCI (credit cards), ISO 27001 (security controls), SOC 2® (availability, confidentiality, and integrity), NIST SP800-53 and CFR Part 11 (Health Care).
Some regulations restrict detailed data or system functions from residing in public clouds. In such cases, alternative solutions must be explored to remain compliant. Cloud providers are now adapting to these challenges, offering specialised cloud environments that adhere to industry-specific regulations.
Emerging technology and redefined IT practices
Cloud governance and digital tools have emerged as catalysts for redefining IT practices, enabling greater ROI visibility and desired outcomes.
As organisations navigate this evolving landscape, the fusion of sound governance and technology-driven initiatives can provide organisations with greater agility. Cloud solutions provide flexibility to scale resources up or down based on demand, allow teams to take advantage of automated tools that facilitate faster deployment and enable businesses to respond swiftly to market dynamics and technological advancements.
It's paramount for businesses to invest in learning and development for their accounting and finance teams to fortify their skill sets and navigate the complexities of the cloud. The cloud’s integration into financial operations requires a workforce well-versed in its nuances to ensure operational efficiency.
AICPA® & CIMA® are committed to partnering with businesses, offering solutions and customising learning and development content to enhance accounting and finance teams to help businesses thrive.
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