Cloud Financial Governance and more…
During a recent assignment we learnt the valuable lesson of ‘translational differences’. This phenomenon is nothing new or exotic, as it is more commonly referred to as organisational silos.
Those artificial functional barriers we added to the ‘Industrial model’ organisations that are very familiar to most ‘corporate dwellers’. We do not mean to be disparaging, but merely point out a well established organisational structural flaw.
Therefore, translational differences manifest themselves in the fact that although very many employees try to do the right thing and pull in the same direction, minor differences in functional language leads to misunderstanding and ultimately sub-optimal personal and organisational performance.
Image by turtlemom4bacon via Flickr
Further factors, such as Organisational Structure (amongst many others), also play a significant part in fostering sub-optimal behavioural patterns, but our focus currently is on the functional barriers.
Having set the context, we’ll dive into the detail:
We believe that one of the major challenges in your “Roadmap to Cloud Adoption”, which might already be well defined or not, is a better appreciation of the Financing, Accounting and Reporting (FAR) issues involved.
Image by DavidErickson via Flickr
Financing
Starting with the broadest, in scope, of the three FAR challenges, the financing dimension incorporates both the Commercial and Financial Management aspects of Cloud Adoption. This is the ‘Economic’ element of the control environment and should really be the overriding aspect of each FAR element.
We need to adopt ‘economic valuation’ principles rather than accounting value principles in driving decision-making. Yet, how many Enterprise Architects or Cloud (Adoption) Architects consult or engage the Commercial and Financial management of the organisation at the design stage of the project? If you are not, then you might fall victim to ‘translational differences’ challenges later along the justification (business case creation) and / or early implementation cycles of the project.
Therefore, engage early in a collaborative framework with your financial specialists, in order to assist you with the nuances of the financial linguistic ‘barriers’ you might encounter later along your Cloud Adoption journey.
Finally, realise early on that Economic measures and drivers are NOT the same as Accounting measures and rule driven reporting processes. Ensure that you build and develop a clear differentiation and understanding between these two key concepts very early on in your journey.
[...in part 2 of this article we will develop the key differentiators between Economic and Accounting measures and introduce the Accounting and Reporting elements of our FAR issues].
Visio Virtua ©2011
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18.866667
December 22, 2011
Cloud Computing – Economic or Accounting Measurement? – Part 1
Cloud Financial Governance and more…
During a recent assignment we learnt the valuable lesson of ‘translational differences’. This phenomenon is nothing new or exotic, as it is more commonly referred to as organisational silos.
Those artificial functional barriers we added to the ‘Industrial model’ organisations that are very familiar to most ‘corporate dwellers’. We do not mean to be disparaging, but merely point out a well established organisational structural flaw.
Therefore, translational differences manifest themselves in the fact that although very many employees try to do the right thing and pull in the same direction, minor differences in functional language leads to misunderstanding and ultimately sub-optimal personal and organisational performance.
Image by turtlemom4bacon via Flickr
Further factors, such as Organisational Structure (amongst many others), also play a significant part in fostering sub-optimal behavioural patterns, but our focus currently is on the functional barriers.
Having set the context, we’ll dive into the detail:
We believe that one of the major challenges in your “Roadmap to Cloud Adoption”, which might already be well defined or not, is a better appreciation of the Financing, Accounting and Reporting (FAR) issues involved.
Image by DavidErickson via Flickr
Financing
Starting with the broadest, in scope, of the three FAR challenges, the financing dimension incorporates both the Commercial and Financial Management aspects of Cloud Adoption. This is the ‘Economic’ element of the control environment and should really be the overriding aspect of each FAR element.
We need to adopt ‘economic valuation’ principles rather than accounting value principles in driving decision-making. Yet, how many Enterprise Architects or Cloud (Adoption) Architects consult or engage the Commercial and Financial management of the organisation at the design stage of the project? If you are not, then you might fall victim to ‘translational differences’ challenges later along the justification (business case creation) and / or early implementation cycles of the project.
Therefore, engage early in a collaborative framework with your financial specialists, in order to assist you with the nuances of the financial linguistic ‘barriers’ you might encounter later along your Cloud Adoption journey.
Finally, realise early on that Economic measures and drivers are NOT the same as Accounting measures and rule driven reporting processes. Ensure that you build and develop a clear differentiation and understanding between these two key concepts very early on in your journey.
[...in part 2 of this article we will develop the key differentiators between Economic and Accounting measures and introduce the Accounting and Reporting elements of our FAR issues].
Visio Virtua ©2011
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