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Cloud providers need to up business speak

Those selling cloud might want to pay some heed to the advice coming from the Cloud Industry Forum and Deloitte over the need for more attention to the financial details of a potential deal

Resellers might have moved away from just talking to customers about speeds and feeds and have developed a pitch that emphasises the business benefits of tech but there is a need to work more of the finances into the conversation.

The Cloud Industry Forum and Deloitte have looked into the financial side of selling the cloud and concluded that MSPs must work more closely with finance departments at their customers.

Deloitte has found that it is possible to capitalise cloud costs with established accounting standards and do so to around 80% of the total project spend.

The firm warns the channel not to always pitch cloud as a positive because it is an opex rather than capex expenditure because not all finance teams want to take that approach.

"Historically, cloud technology has made reference to the potential benefits of transferring costs from the balance sheet (capex) to the income statement (opex). However, an unintended consequence has been the perception that few, if any, cloud related costs can be capitalised.
This may not be the desired outcome for every organisation and the capitalisation of certain aspects of cloud technology may be preferred, or even required by accounting standards," stated the Capitalising Your Cloud Deloitte report.

Deloitte also found that many customers were not capitalising enough of their cloud software implementation costs and could have opportunities to do the same with hardware costs in the next few years as IFRS lease accounting standards come into force.

The final tip from the Deloitte research was for the channel to get to grips with the financial implications of choosing to go for cloud or an on-premise solution and be in a position to explain the impact on the balance sheet.

“IT leaders now need to speak the language of finance to ensure they understand what the new changes to lease accounting mean for their organization,” said Alex Hilton, CEO of the Cloud Industry Forum.

“As well as this, CIOs need to ensure their organisation can account for the different types of cloud expenditure so financial balance can be achieved. The move to the cloud is invariably a business driven decision so it’s crucial that all parts of the organisation pull together to ensure a procurement decision is made that is best for the company,” he added.

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