The CFO is critical to any digital undertaking, nearly all of which now include some aspect of cloud. As keepers of an organization’s fiscal responsibility, CFOs play a particularly important role in the funding of cloud investments and the return on investment (ROI), and they may flex this muscle as cloud and growth become more inextricably linked. Most CFOs we surveyed in our PwC US Cloud Business Survey say they have decision-making responsibility or ownership of investment decisions and both company- and function-wide strategy (80%, 75% and 74%, respectively).
And this shared responsibility around cloud decisions extends far beyond the CFO, with the vast majority of C-suite executives taking responsibility for various aspects of their company’s cloud transformation. CHROs, for example, are stepping up around change management and talent considerations, while COOs are doing so around operating model and process changes and cybersecurity. Cloud is influencing what success looks like in the C-suite. With greater expectations on what they should deliver, business leaders need to get cloud right not only so their companies can compete but also so they survive in their roles.
How do CFOs think their companies view cloud? For many, they see it as central to business strategy and critical to revenue growth. Growth is always on the CFO agenda and was heightened throughout the pandemic with a renewed sense of urgency around digital transformation and tech investments, with cloud at the forefront.
Our data shows that there’s more room for cloud to fit into the growth strategy. For example, over half of CFOs say they provide cloud-based products and services to customers and are developing new cloud-based business models. They’ve been doing this for the past 18 months as they navigated their companies through the depths of the pandemic.
Cloud provides an even bigger opportunity — it is an innovative engine that can drive new sources of revenue.
But a company’s cloud strategy should be connected to the broader business strategy — from the start. And the CFO can help make that connection. Part of this connection involves encouraging a cloud-oriented mentality, one that’s not focused on technology but instead on embracing new ways of working and bringing new products, services and experiences to market faster.
There are also cloud deals angles that CFOs might want to consider, such as ramping up cloud capabilities through an acquisition or using cloud to accelerate IT integration when bringing together two companies. Forty-two percent of finance leaders say they’ve made or are considering an acquisition in the cloud space, and 35% say they’re using cloud in deal integration.
CFOs are in the cloud game: 54% of CFOs say their company is all-in on cloud. But there are different perspectives on what maturity means, and there’s often a gap between cloud goals and actually executing on them.
Cloud has been a means to improved decision-making through better data analytics, according to 37% of CFOs, and it’s the No. 1 business outcome CFOs have been trying to achieve. Improved resiliency and agility has been another outcome CFOs have been after through their cloud investments, and about half of companies have seen value out of those areas to date. But they’re finding obstacles in the way of realizing more value. According to CFOs, the lack of integration with existing systems, governance challenges and a lack of upskilling so people can use new ways of working are the top barriers.
Reducing costs and doing more with less has been a theme for CFOs for quite some time. So it may seem surprising that only 12% of CFOs say reducing costs is where they’re seeing substantial value from data-driven decision-making. But cost savings and efficiency go hand-in-hand with improved operational resilience and agility. One thing happens and drives the other; there’s a natural relationship between the two. Implied in using automation to help drive better, more efficient outcomes and more agile decision-making, for example, is a path to cost reduction.
The CFO also has an opportunity to be a storyteller and build a dialogue around whether a company is using cloud in the right areas.
He or she will ask: where will we get the most differentiated value, and what capabilities does that value come from? The CFO can facilitate the conversation with other leaders to better understand whether a company is achieving this or whether it might mean the company needs to focus on new capabilities that drive value.
One area where CFOs see cloud used effectively is in improving ESG reporting. One-quarter of CFOs say their company’s already started to do this, while 24% have a plan in place but haven’t started. Another 15% say they’re developing a plan.
With the high risk — and cost — of a failed digital transformation, it’s critical for CFOs to lead from the front with cloud. But 40% of CFOs are only somewhat confident around measuring the return on their cloud investments. This, despite the fact that more than half say they’re all-in on cloud. This is where CFOs can step up and demand a business case and demand that cloud investments generate a return that will drive change at the company. It also allows CFOs to call on their companies to tell a better transformational cloud story.
The same goes for other aspects of cloud investments: 44% are somewhat confident about providing transparent tracking of existing cloud spending, 40% are somewhat confident in seeing cost savings and 46% are somewhat confident in how to use cloud to accelerate the value of more innovative technologies.
There are some areas where CFOs may need more education and interpretation from their fellow business leaders. For example, only 38% of finance leaders are very confident they’re taking full advantage of the R&D tax credits for their cloud investments. This presents an opportunity for the finance and tax departments to collaborate with the CIO: If quantified and documented correctly, these tax credits could generate significant savings. And only 42% are very confident in how the company is using cloud to accelerate the value of innovative technologies. This is another opportunity for CFOs to work more closely with the CIO.
Totals may not add up to 100% due to rounding. Q. How confident are you in your company’s ability to do each of the following? Source: PwC US Cloud Business Survey. July 15, 2021: CFO base of 84