Can cloud computing improve management decision-making?
Cloud computing has been described as “the future of business,” amid predictions that it will soon dominate IT spending. But how can management best harness the power of the cloud?
According to recent research conducted for the Chartered Institute of Management Accountants (CIMA), the adoption of cloud computing is “almost inevitable” for small and medium-sized enterprises (SMEs), given its cost and efficiency benefits, despite concerns over data security and legal protections.
SME benefits
A 2014 survey of nearly 200 SMEs across a range of industries revealed a number of benefits of cloud technology:
- Increased security than that otherwise affordable by most SMEs
- Reduced or zero technology staff costs
- Capital expenditure on hardware replaced by operating expenditure on cloud services
- Elastic services with flexible provision of information anywhere and anytime, on any internet-enabled device
- Simplified software management, with cloud software installed and updated centrally.
Yet despite these benefits, the survey found that only one in four firms had adopted cloud technology for business systems, with finance and management accounting systems least likely to use the technology.
Reasons for adopting cloud
When asked why they had adopted cloud systems, the main reasons given were easier systems administration (59 per cent) and cost efficiency (56 per cent), followed by better system scalability (50 per cent).
However, most cloud users have adopted a private or hybrid cloud set-up (66 per cent), reflecting concerns with systems security or loss of control to a centralised provider. This was the most common reason given by businesses which had decided against adopting cloud technology, with 66 per cent citing worries over data security and protection, followed by a lack of confidence in efficiency gains.
The security worry reflects media reports of data leaks from major companies such as Apple and Sony, despite experts’ suggestions that cloud security is more robust than typical SME systems.
Business usage
Among key business areas, non-finance functions such as sales, logistics and production were cited as the main area for use of cloud technologies (59 per cent), followed by management accounting processes (34 per cent) and CRM (31 per cent).
However, only 19 per cent had brought cloud computing to financial accounting processes, reflecting security issues. Should these concerns be allayed, businesses could gain substantial efficiencies, the report said.
Greater information?
Despite cloud’s potential flexibility benefits, the survey found that most access occurred within business premises and during working hours.
An overwhelming 93 per cent agreed that cloud technology had contributed to decision-making, with 32 per cent saying it had improved, although there was little change seen in collaboration.
The research found that management accountants have a key role to play in not only assessing the cost and other benefits of cloud technologies, but also providing managers with clear information.
With only large companies seen able to fund their own information systems, cloud technology is set to become even more widespread among businesses, giving managers an incentive to pursue cloud’s benefits.
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