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A Business Case For Cloud And Why Finance Needs A Seat At The Table

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Most businesses are by now already at one or another stage of the enterprise cloud transformation journey and a staggering 93 percent of business executives who participated in Deloitte’s 2018 global outsourcing survey, confirmed that their organisations were adopting – or at least considering adopting – cloud.

Deloitte South Africa Finance and Enterprise Performance Management Leader Phillip Hechter says that, “Cloud is not just here, but here to stay. With the potential for significant cost savings and enhanced strategic value, cloud represents a fundamental shift in how technology solutions are developed and in how they are delivered”.

However, a migration to cloud is not without its challenges and the bigger the organisation’s ambitions, the bigger those challenges.

Finance

In the latest iteration of its ‘Crunch time’ series, ‘Crunch Time 8: The CFO Guide to Cloud,’ Deloitte highlights the need for the CFO to take an active role in navigating the challenges that emerge during this process; as well as in making strategic decisions that leverage the technology’s full potential.

The lowered costs on offer with cloud, are one of its biggest drawcards. Broadly speaking, the operational costs are less expensive than those associated with on-site technology and there exists the prospect for massive returns on a cloud investment when what might be ‘unfamiliar’ cost categories – like operating model optimisation, speed-to-market and innovation – are taken into account, alongside more traditional ones.

New core finance platforms

“Cloud solutions should be the default starting point for new core finance platforms and some major Enterprise Resource Planning (ERP) providers only offer cloud-native options now. The rest are at the very least, punting cloud-optimised versions of their software. Certain components may need to remain on-site for now and ERP providers will most probably continue to support on-site technology for at least the next decade; but it is unlikely that this will continue in the long run and the industry is now focusing its investments in innovation, in cloud services”, says Hechter.

Financial treatment

The accounting for traditional computing investments is based on established capitalisation principles, which are clearly set out in accounting regulations. In contrast, when it comes to cloud investments the regulatory framework is still evolving to reflect the fact that more and more organisations – across the board – are turning to cloud-based offerings, in order to satisfy their computing requirements.

As a result, the process of determining the appropriate financial treatment for cloud investments is a somewhat subjective one at the moment and each case – along with its unique facts and circumstances – needs to be carefully considered.

In terms of tax, a move to the cloud might impact an organisation’s current tax structures and allowable tax treatments vary in accordance with a number of different factors.

Negotiating contracts

Hechter adds that, “It is important that the approach taken in negotiations is a holistic one and that all deals take into account the costs, benefits and impacts for all parts of the business. Thus, it is crucial that Finance works together with Legal, Procurement and IT. External advisors can also prove valuable, especially in organisations that lack experience in cloud contracting”.

Cloud vendors typically build their services and pricing models and – more often than not – their contracts, around standardisation. This means that they are likely to push back against any major changes to standard agreements. Cloud providers are competing for market share, though, and so there exists the opportunity to negotiate for extra benefits and service capabilities – which could be a key source of competitive differentiation.

Cloud brings with it a range of opportunities for real innovation including reduced time-to-market, scalability and a way to drive agility and innovation. There are a host of examples of companies that are using cloud to transform their service and product offerings, improve efficiency, increase customer engagement and ultimately reap significant rewards as a result. It can be done but at the end of the day, what you get out of it depends on what you put in.

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IWG GROWTH IN AFRICA – FRANCHISE OPPORTUNITIES

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Flexible working is growing rapidly, with IWG’s continued expansion across its operating brands, seeing another 156 new locations opening in 34 countries around the globe

The company has established 156 locations across 34 countries across its operating brands, since the turn of the year, continuing its mission to service a flex working revolution. Add to this the expansion of their franchising model into the African continent and they are on track to reach their target of increasing their presence in the 1,000 cities and towns where they already operate.

Flexible working, sometimes known as co-working, refers to office space, meeting rooms and co-working areas that can be rented by individual workers or corporates from one hour to several years.

A report by consultancy firm The Instant Group found demand for flexible workspace globally increased by 19% last year, stating that the growth in the supply of flexible space was ‘the number one story’ in commercial property markets around the world.

John Williams, head of marketing at The Instant Group, put the growth down to two factors, a change in how large companies were operating – specifically in relation to flexible working practices – and changes to the nature of the workforce itself.

A reluctance by major companies to sign long-term lease agreements in order to stay financially flexible was also a driver according to Williams. 

“Market demand is growing by as much as 30% each year in some global markets and it is our understanding that the majority of companies are still not aware of their options in flex space, they are still learning about the types of space they can access and the costs involved,” Williams says.

Two major brands that have used Regus to grow in Africa are Google and P&G. Google has 50 employees with Regus in Kenya, and P&G has 100 employees in the country.

Though they have the finances and resources to build their own offices, startup costs can be expensive, and getting an office up to spec with high-speed broadband, useable meeting rooms and desk space can take up valuable time.

Plus, using flexible office space reduces the commitment for these big organisations, many of whom are still testing the water in new African cities.

A report on the Future of Work in Africa released by the World Bank, shows that access to digital technologies could set Africa on a different path to the rest of the world.

While there is globally a focus on new and old sectors, in Africa digital transformation will predominantly enable advances in productivity and efficiency in current sectors.

IWG is currently seeking driven landlords, private equity firms, multi-brand franchise operators and high net-worth individuals to partner with to buy into the lucrative flexible working market at attractive returns.

With the first franchise centre already open in Angola and new centres opening in Guinea and Djibouti in September, the company is determinedly targeting the African continent for development and investment opportunities for early adopters of the franchising model.

Eligible franchisees will commit to opening a prescribed number of centres within a period of 5 years, have a proven track-record in business, property or investment and will work closely with Regus to find and design ideal locations and uphold IWG’s strict operating standards.

In return, franchisees buy into an established global brand that provides multiple revenue streams including monthly memberships and referral fees; leverage their highly effective marketing strategy and global sales platform, which generates 100,000+ enquiries every month; have access to IWG’s entire network of world-class operational support; and diversify their investment portfolio to include an industry that will have created 30 million jobs across 16 of the world’s countries by 2030.

To find out more: https://franchise.iwgplc.com/

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Nigeria’s Manufacturing Power Couple On The Future Of Manufacturing In Nigeria

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Chief Razak Okoya: Chairman Eleganza Group And Rao Property Investment Company

Chief Razak Okoya is an industrialist who has managed to transform a small trading company into one of the largest conglomerates and indigenous manufacturers of household products in Nigeria.

As founder of Eleganza Group and leading property investment company RAO Property, he employs about 5000 people across Nigeria. In his interview with Forbes Africa, he discusses the trends that will influence the competitive Nigerian Manufacturing sector in the next decade.

Chief Folashade Noimat Okoya: Managing Director, Eleganza Industrial City

Chief Mrs. Folashade Okoya has been at the helm of affairs of the Eleganza Group and RAO Property Investment for the past decade using her strong entrepreneurial drive to further strengthen the goodwill of both organizations and its corporate positioning in Nigeria.

Under her watch, Eleganza Group has risen to new heights strengthening its position as a leading indigenous brand in Nigeria as well as one of the benchmark manufacturing companies in the country.

She talks about the stigma of women in manufacturing and the need for greater automation in the manufacturing process in Nigeria.

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Nigeria’s Biggest Corporations: A Pan-Nigerian View To The World

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At the beginning of the Japanese Economic Miracle, were the likes of
Akio Morita – Co-founder of Sony. In setting a Mission for Sony, Morita had
resolved to set for Sony Corporations the Mission to make Japan known for quality at a time the country was known for cheap-copycat product. It is indeed in this vision, that True Nigerian Experience was founded with a mission to showcase the Best of Nigeria.

According to the International Monetary Fund in 2018, Nigeria is regarded as the biggest economy in Africa with a Gross Domestic Product of about $400 Billion Dollars – Leading the entire 54 African Economies both in Population of over 180 Million people and GDP.

The Nigerian Economy is ranked the 30th largest Economy in the World. To mention a few, Nigeria’s Nominal GDP is bigger than the Republic of Ireland (US $373 Billion), Israel (US $370 Billion), Hong Kong (US $363 Billion), Singapore (US $361 Billion), Malaysia (US $354 Billion), Denmark (US $351 Billion), Colombia (US $333 Billion), Philippines (US $331 Billion), Chile (US $298 Billion), Finland (US $275 Billion), Czech Republic (US $242 Billion), Romania (US $ 240 Billion), Portugal (US $239 Billion, Peru (US $225 Billion), Greece (US $219 Billion), New Zealand (US $203 Billion) and over a hundred other countries’ economies in the World.

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