Accounting for the Cloud – White Paper
Cloud computing has huge potential to support modernisation and efficiency improvements across the public sector but in particular in health and social care. Using simple tools such as Skype to assist with remote consultation; providing easy access to patient information for a busy and more mobile workforce; delivering cost effective and flexible storage for the vast amounts of data that will be generated through digitally enabled care, imaging and remote monitoring; supporting advanced analytics; and, enabling patients to see and comment on their records; all become easy and cost effective using the cloud. Indeed, Microsoft has recently announced Healthcare NExT, expanding our healthcare specific solutions enabled by our trusted cloud technology. It is important therefore that finance teams, clinicians and policy makers, as well as IT professionals, have a shared understanding of what is possible and how.
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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