The CIPFA Insight publication, ‘Accounting for the Cloud’ has been developed to explain the advantages that cloud computing offers and the options for taking it forward, from a finance perspective. It highlights some of the challenges for finance teams in terms of understanding opportunities and playing their full part in developing the business case, financing, procuring and getting the best from suppliers. It provides a mix of ‘how to’ information, informed comments based on experience, and signposts to further information.

Establishing the base-case, for example, knowing what is happening now and what it costs, in theory, ought to be easy, but in practice can be much more complex. Plus, option appraisals can often focus on initial capital costs, with more limited attention given to longer-term costs arising from the decision process. This can mean that future maintenance or energy costs linked to maintaining data centres, and additional costs of physical and information security in an increasingly aggressive cyber world may receive only limited attention at the point that key decisions are made, but become increasingly important going forward. Similarly, the potential benefits arising from a more mobile and collaborative workforce may not be fully factored in.

It is also important to distinguish between the financial appraisal and the financing of the solution. Cloud computing can appear to create challenges for organisations as software and technology are now purchased ‘as a service’, with expenditure probably moving from capital to revenue. The use of whole life costing should allow for proper option appraisal and comparison between capital and revenue based procurement but there can remain a perceived difference in the attractiveness of capital compared to revenue funding because of public sector funding models.

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To read the full report visit the CIPFA website

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