The New-Age Fundamentals of Technology Cost Analysis: A CFO Handbook

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The constant state of flux in world economies is changing the status quo for organisations; most importantly the Chief Financial Officer (CFO). Per a recent Greyhound Research study titled, Emerging Markets CFO Priorities 2016, nearly 80% CFOs in the Asia Pacific Japan (APJ) regions expect to investigate ways to turn asset-light over the next 12 months. Twitter_logo_blue

This means shredding under-utilised assets and having just enough that allows for business-as-usual and a room for innovation.

The study also points out that nearly 72% CFOs in the APJ region are keen to reduce technology expenses and explore newer Systems of Delivery like Cloud Computing to better manage cost structures. Twitter_logo_blue

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While the CFO’s understanding about cost benefits of newer Systems of Delivery is promising, Greyhound Research believes only 3 of 10 CFO offices in the APJ region currently understand its impact on traditional methods of Technology Cost Analysis. Twitter_logo_blue

In our experience of working with the CFO’s office, we often find them running into questions like:

  • Will these newer Systems of Delivery help reduce cost in the long-term? Or is it a way to help me better manage cost structures in short-term?
  • How does these newer Systems of Delivery impact my current licensing agreements?
  • What areas of my Technology Cost Analysis should I change to reflect a true picture with these newer Systems of Delivery?

At Greyhound Research we address over 3000 enquiries (per year) from Decision Makers of global organisations and help them with issues like Technology Cost Analysis for newer Systems of Delivery. Below are some of the best practices we share with CFOs and their teams.

Use Metrics That Define Success On The Back Of User Adoption. More often than not, metrics used by the CFO’s office talk little to actual user adoption and instead work on broad-based assumptions of the entire user-base. Greyhound Research believes the CFO’s office must work on metrics that allow them to track success basis actual number of users and delivered value. This can then be correlated with the overall cost incurred to run this project. Such an analysis will not only help give a realistic picture on ROI and project success but more importantly define the direction of further investments. Twitter_logo_blue

Establish Tollgates And A Roadmap For Expansion. Newer Systems of Delivery allow organisations to get started using a credit card. This allows organisations the flexibility to try a new vendor and their services at a cost that is not prohibitive and entails negligible financial risk. Greyhound Research believes such pilots can be quickly turned into an enterprise-wide implementation on the back of appropriate tollgates and metrics. This allows the ability to measure project success, user adoption and more critically reassess vendor contracts and financial payouts. Twitter_logo_blue

Newer Systems of Delivery like Cloud Computing allows the CFO’s office a highly degree of predictability on financial payouts for IT resources. Having said that, Greyhound Research advises CFOs to use new-age metrics and tollgates to measure success and outcomes.

About The Author: Sanchit Vir Gogia is the Chief Analyst & CEO of Greyhound Research, an independent IT & Telecom Research & Advisory firm. He also serves as Chief Futurist, Founder & CEO of Greyhound Knowledge Group that operates under four brands – Greyhound Research, Greyhound Sculpt, Greyhound Technocrat and Greyhound Vivo. To read more about him, click here.

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Copyright © 2015 Greyhound Research. All rights reserved.

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