This post is by Linda Johnson, a partner with CCP Global, which advises Fortune 500 executives on spend management; offers advisory services on supply chain improvement; and helps clients with cost cutting, risk mitigation and compliance, among other services.

Managing all spend is critical to boosting the earnings per share of any company. With 13 years of experience working with companies to reduce spend — including 50 of the Fortune 500 — we know the CFO battles to engage the entire organization in managing spend and to identify financial trends in time to control the impact on the earnings per share.

The advent of cloud computing for business has given the C-suite the opportunity to put true control of company spend in the hands of everyone and to make critical financial decisions with up-to-the-minute data. A few “best in breed” technologies even guarantee financial results.

It’s about empowering everyone in the organization to treat the company’s money as if it were his or her own.

Until now, employees would run to the closest office supply store to purchase something because the approval process was slow or the system was too difficult to use. True cloud-based applications have made even the least-capable technology user a believer. With user interfaces similar to Google or Amazon, everyone can use the procurement system and managers can approve or decline “spend” from smartphones, thereby improving productivity and more closely managing their budgets.

The frugal CFO will make certain the cloud will:

  • Achieve 100% visibility into all spend. If you can’t see it, you can’t control it. In one year, one client reduced indirect spend by $14 million in previously unseen spend.
  • Encourage the use of negotiated contracts — ease of “shopping” and auto-reinforcement reduces maverick spend. One company saved more than $10 million on toner in one year.
  • Negotiate better contracts as more procurement information is visible, and identify areas that need negotiated contracts. At one $3 billion company, 14% of spend was not even reviewed for contract negotiations.
  • Monitor savings. Auto-audit every line item. Dashboards track early payment discounts, contract savings, productivity gains, etc.
  • Leverage early payment discounts. Automate time-consuming steps.
  • Reward frugal behavior using Frugal Meter, automatic scoring on expense reports, visible approval chains on requisitions and visual indicators so that people appreciate the budgetary impact of their requests.
  • Own the budget. Tie all PO and T&E spend to the budgets they impact, visible by managers and executives alike. Know the immediate impact of all purchases on each budget prior to purchase.
  • Change direction quickly. If you’re tracking in the wrong direction, change on a dime, before the obligations are incurred. Instant information makes for rapid and nimble decision-making.
  • Speed “time to value” through easy deployment and updates.
  • Scale the cloud platform to fit your need.
  • Choose the best application for your people. To be the frugal CFO, you must ensure all employees can use the software.
  • Guarantee financial results of your cloud system.

Companies don’t spend money. People spend money. Moving to the cloud will put responsibility for company spend into the hands of those people. The frugal CFO and other stakeholders will be thrilled with the results.

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8 Responses to “12 cloud tips for the frugal CFO”

  1. Amelia says:

    Businesses go for cloud computing as it cuts costs without compromising efficiency and productivity.

    The savings a business can derived from this technology can be invested in manpower and other marketing strategies. A CFO may sit pretty with cloud computing easing day-to-day transactions.

  2. Cambio says:

    Only a couple of these concepts are 'cloud' concepts. Most are just good overall business practices that can be applied to any type of spend- regardless of whether it is in the cloud or not. Negotiating contracts, early payments, monitoring savings, tie PO and T&E, etc. these are not only cloud specific. The ironic thing is that in most instances, over the course of an amortization and depreciation scheduled time, cloud computing is MORE expensive then on-premise alternatives. You pay less upfront but more in total overall.

    • Greg says:

      Cambio, can you provide more data supporting that cloud is actually more expensive? And is this in reference to private clouds or public clouds? Thanks.

  3. Cloud says:

    Cambio,
    You are correct not all cloud applications are equal.
    Cloud applications need to be reviewed and fitted to the specific issue and business situation.
    We have seen a reduction of up to 57% in capital cost for a deployment.
    The key is deployment, we were better able to utilize available funds as opposed to tying up funds in hardware. We will pay for the operation out of cash flow and not debt.
    Any new deployment or infrastructure refresh should include a feasibility study for a cloud based solution, it is worth a look.

  4. Windingmywatch says:

    Are you serious?

    "It’s about empowering everyone in the organization to treat the company’s money as if it were his or her own.

    "Until now, employees would run to the closest office supply store to purchase something because the approval process was slow or the system was too difficult to use."

    If you have employees running out to Staples and using their company credit card to buy apps they use at work then there are some significant holes in not only the financial management oversight but in the IT security program as well.

    I think those folks are already pretty well "empowered" and I don't see how cloud computing provides any better financial or security program oversight.

  5. [...] The advent of cloud computing for business has given the C-suite the opportunity to put true control of company spend in the hands of everyone and to make critical financial decisions with up-to-the-minute data. A few “best in breed” technologies even guarantee financial results. Read more [...]

  6. Evabrianparker says:

    Apart from these assumptions, cloud technology has emerged as an upcoming field in the modern day world. Almost all the organizations running some of the other businesses in IT field prefers to move their businesses on cloud for running their daily operations smoothly.Cut Cloud Costs

  7. Evabrianparker says:

    Reasons for cloud not generating money for organizations might be valid, but in true sense the technology has proven to be a boon for several organizations. Most of the organizations feel that there is a tremendous change in their working methods after migrating entire business operations to the cloud.

    Costs get reduced because of the fact that there is no hassle of purchasing and installing hardware and software tools for daily work operations. For example, a statement presented at the technical conference on cloud computing by Richard Marcello, President of Technology at Unisys is noteworthy for all those confused about moving their services and daily operations to cloud.4 Tips to Cut Cloud Computing Costs
    http://www.cloudways.com/blog/4-tips-on-cutting-c

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