CFOs: Cloud Computing Cuts Costs, Improves Margins

By CFOGlobalHQ / October 16, 2013

Safra Catz, CFO of Oracle

Safra Catz, Chief Financial Officer of Oracle Corp., recently announced that the company will be transitioning to cloud computing in an effort to lift profit margins. As the world’s largest database-software creator, this revelation from Oracle Corp. mirrors a growing sentiment among CFOs that cloud computing cuts costs and improves margins.

Indeed, the benefits of cloud computing are threefold:

  1. Net present value. This represents the cost savings one year out minus the cost of the initial investment.
  2. Benefit-cost ratio, which is determined by dividing the out-year cost savings by the expense of the initial investment.
  3. Discounted payback period – or the amount of time needed for the cost of the investment to be recouped.

According to the latest research, the economics for cloud computing in a mid to large-sized company are incredibly strong. Most companies will experience a complete return on investment within 3-4 years and the cost of cloud computing is up to 65 percent lower than the existing architecture and workflow process. In fact, some businesses even report a savings of as much as 88 percent.

For any company looking to make a comeback, keep pace with competitors, or simply evolve with the times, cloud computing is a technical solution that CFOs should be willing to consider as a necessary investment.

So why should CFOs consider cloud computing to strengthen their IT capabilities?

  • Improved efficiency. Perhaps the largest benefit of cloud is the ability to use it for storage and collaboration. This makes any workflow process more efficient and inadvertently makes employees more productive. Combined these benefits create a powerful synergy that improves a company’s ability to perform.
  • Minimize costs. In most cases, CFOs will spend the most on the staffing budget. It often times composes over half of any financial plan, especially because quality IT workers are expensive. Making the transition to cloud, however, doesn’t need the manpower that other computing solutions demand.
  • Reinvesting savings. Minimizing costs from cloud computing gives CFOs the opportunity to reinvest those savings back into the business. Whether the IT resources are used elsewhere or cash flow is improved, cloud computing makes your budget more flexible.
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