• IT leaders must speak the language of finance to secure support and investment from the board

        • The capitalisation of certain aspects of cloud technology may be preferred, or even required by accounting standards for many organisations. However, to ensure the financial balance, most appropriate for their organisation, is achieved, it’s important that IT leaders work closely with the finance department. This is the prediction of a joint industry roundtable on the issue of ‘Capitalising Your Cloud’ hosted by the Cloud Industry Forum (CIF) and Deloitte.

          When analysing the costs incurred in a typical cloud development project, which included multiple stages and work-streams, Deloitte found that organisations can potentially capitalise up to 80 per cent of the total project spend.

          Considering this, the Cloud Industry Forum recently hosted an executive roundtable in partnership with Deloitte that identified four key pointers for both CIOs and CFOs:

          • Traditional cloud sales models market opex as a key driver for adoption, but this is not necessarily desirable for organisations;
          • Companies could be capitalising too few of their cloud software implementation costs;
          • Organisations may have the opportunities to start capitalising cloud hardware costs under International Financial Reporting Standards (IFRS) in the next few years;
          • Optimising financial factors during procurement decision making for cloud-centric business cases can be achieved by understanding the different profit and loss (P&L) impacts of on-premises vs cloud solutions and the balance sheet impacts (intangible vs prepayments).

          Another important discussion point was that, under the traditional view of cloud services, hardware or infrastructure (IaaS), costs are commonly expensed. However, the emergence of a new IFRS lease accounting standard (IFRS 16), which will be effective from 1 January 2019, and enhancements in contracting models have meant that some service providers have been considering the impact that the changes could mean for companies, particularly the possibility to capitalise IaaS expenditure.

          Alex Hilton, CEO of CIF said, “the role of the CIO has changed dramatically over the years. IT leaders now need to speak the language of finance to ensure they understand what the new changes to lease accounting mean for their organisation. As well as this, CIOs need to ensure their organisation can account for the different types of cloud expenditure so financial balance can be achieved. The move to the cloud is invariably a business driven decision so it’s crucial that all parts of the organisation pull together to ensure a procurement decision is made that is best for the company. Doing so will lead to successful cloud deployments with all financial factors optimised.”

          A copy of the Deloitte report ‘Capitalising Your Cloud’ is available from the CIF website.

        • Stay up to date - Click here and register for FREE OEN online membership and enjoy unlimited access to a host of benefits including the exclusive members area of the website, downloadable business tools, current and back issues archive, priority breaking news alerts, weekly e news summary and the OEN app

        • Related Articles

        • Making school safety a priority with smart technology

          Making school safety a priority with smart technology

          Tuesday 23rd Feb 2021 by clareb
          With pupils set to go back to school on 8th March, there are a number of safety measures schools need to implement to ensure the health and wellness of the staff, students and school communities.  The first lockdown and closure of schools broug...Read More...
          Omnichannel contact centre needs further transformation post-pandemic

          Omnichannel contact centre needs further transformation post-pandemic

          Tuesday 23rd Feb 2021 by clareb
          For organisations operating contact centres, now is the time to plan for a more settled future where consumer and worker habits are permanently changed from how they were before. This is according to TelcoSwitch, a provider of unified communications ...Read More...
          Over 1/3 UK consumers cease purchasing EU goods post-Brexit

          Over 1/3 UK consumers cease purchasing EU goods post-Brexit

          Friday 19th Feb 2021 by clareb
          Eskenzi PR & Marketing, a voice in the cybersecurity public relations industry has announced the results of a survey which found that over a third (34%) of UK consumers have stopped purchasing goods and services from the European Union since...Read More...
                • About Us

                  OEN is the leading source of business news and information for buyers of office equipment, supplies and services within mid tier and up sized organisations. Our multi-platform approach delivers relevant, engaging and focussed content via our main printed magazine, bespoke guides and supplements, website, digital editions, apps, and newsletters with an unrivalled reach across the industry. A highly trusted and respected brand for many years, the print version of OEN last year celebrated its Diamond anniversary.

                  For our latest Media packs and more details on our range of services click here

                • View Latest Issue