Council finance chiefs’ association gets behind cloud

CIPFA report highlights benefits of migration to cloud systems and points to need for flexibility in the business case

Local authority finance chiefs have been encouraged by their national association to look favourably on investments in cloud computing, and to think about the broad returns from its enablement of mobile working.

The Chartered Institute of Public Finance & Accountancy (CIPFA) is providing the position in a report, Accounting for the Cloud, now published in a final version after a consultation that begun last November.

CIPFA report logoIt carried out the exercise in response to reports that councils’ finance teams have been having problems with the cost model of cloud systems, notably in the shift from capital expenditure to revenue and uncertainty over future costs.

Despite these concerns, it comes out with an endorsement of the move from in-house systems and data storage to cloud platforms.

“Cloud computing is good news for government and public sector organisations, and most organisations will need to move to greater use of cloud solutions as the market continues to evolve,” it says.

While it does not take a prescriptive approach to developing a business case for the move, the report does provide guidance on some of the important steps in the financing.

Mobility factor

One of the stand-out points is that the benefits go beyond the straightforward cost savings of running the IT estate. CIPFA quotes David Wilde, the chief information and digital officer of Essex County Council, in relation to how cloud’s enablement of mobile working brings major benefits:

“Business cases will often talk in general terms about the efficiency gains that come from mobile working. The real business case is that mobility releases assets.

“If mobile working means you can reduce 125 buildings to 25 that is a massive capital receipt, together with savings in operating costs and utilities. That is the real prize that comes from mobile working.”

Another key point is in the planning for a migration. The reports says it is “probably best” to begin with a “leave nothing behind” approach, in which all the IT infrastructure will be moved to the cloud, but be ready to revise this as barriers are identified. This can change the plans to reduce the proportion to between 50% and 80%.

Finance and IT teams should also work on different scenarios, with aggressive, moderate and slow migration plans, and assess the likely impacts on key activities and policies such as the IT service desk, mobile working and the use of productivity tools. This can shed more light on the ultimate costs and benefits.

The report also advises the use of a ‘whole life costing’ approaching, which takes in all the costs of acquisition, migration and ownership and contributes to comparing the options in an objective manner.

Business case change

In addition, it says that a council should be ready to update its business case for a cloud migration as it uncovers more information relevant to costs, benefits and risks. This can be particularly important when looking at suppliers’ highly complex pricing schedules and options, which makes it difficult to develop options for the migration.

The other priority is to be clear about an exit strategy, making sure that the organisation can move to another supplier relatively easily, taking all its data, intellectual property and processes.

CIPFA reiterates its overall support for the move with the statement: “Developing a policy for the use of cloud IT to support the organisation needs to be a priority for every council.”

Image from CIPFA report cover