Why Most Cloud Business Cases Get It Wrong

Part 2: The CFO Playbook for Fixing Cloud ROI

By Lou Perugini | CloudTechCFO.com

From Problem to Playbook

In Part 1, I outlined the pitfalls that derail cloud ROI: broken governance after CAPEX, pent-up

demand flooding out, lift-and-shift waste, ignoring legacy costs, bad forecasting, and incomplete

models.

The good news is these aren’t technology failures, they’re financial planning failures. Which

means CFOs have the tools to fix them.

In this article, I’ll share how to pressure-test cloud business cases through a CFO lens, avoid the

sunk cost trap, and reframe cloud investments as enablers of growth.

1. Shift from Totals to Margins

Traditional business cases emphasize total cost. But in the cloud, where spend is granular and

consumption-based, the smarter lens is marginal cost versus marginal value.

•  What’s the cost of the next workload, the next feature, or the next release?

•  How much value will it deliver compared to the last one?

This mindset keeps investment decisions flexible and avoids locking the enterprise into

assumptions that won’t hold.

Pro tip: Build forecasts around unit economics like cost per customer or per transaction. That

creates more resilient plans and makes scaling decisions easier.

2. Fund MVPs, Not Monoliths

One of the fastest ways cloud ROI derails is when companies try to fund the entire “end state” up

front.

Instead, finance leaders should insist on staged funding. Release capital for a minimum viable

product (MVP) first, then evaluate whether the value justifies expanding.

•  Approve incremental spend as outcomes are demonstrated.

•  Stop funding when value stops showing up.

•  Treat each funding decision as reversible until proven otherwise.

This approach mirrors how product teams build in cloud and reduces risk while speeding up

feedback loops.

3. Attack the Legacy Estate Aggressively

Cloud ROI will never show up if you’re still carrying the cost of the legacy environment. CFOs

should demand a decommissioning plan before approving the business case.

•  Which assets will be retired, and when?

•  How will you exit leases and contracts?

•  What is the plan for headcount redeployment or reskilling?

Without this discipline, companies end up paying for two infrastructures. That’s not

transformation, that’s duplication.

4. Don’t Forget the Balance Sheet

Too many cloud business cases are written like operating expense stories, but CFOs know that

the balance sheet matters just as much.

Ask these questions:

•  Write-offs: What assets will you need to impair or retire? Don’t let the sunk cost fallacy

keep you chained to servers or licenses that no longer make sense.

•  CAPEX avoidance: How much capital spending can you skip by avoiding the next

hardware refresh or software upgrade?

•  Opportunity cost: What could the business do with that freed-up capital if it weren’t tied

up in the data center? How much innovation, growth, or sales capacity could that

investment fuel?

•  Future refresh cycles: Don’t just model today’s savings. Include the refreshes and

upgrades you’ll never need to make because of cloud.

Cloud is not just a story about shifting spend from CAPEX to OPEX. It’s a chance to reallocate

capital to growth instead of infrastructure. That’s the real balance sheet advantage.

5. Design Staged Investments, Not “One-Way Door” Bets

Cloud is flexible, but many business cases model it like a fixed, all-or-nothing decision. Instead,

CFOs should treat each initiative as a series of options:

•  Fund the first stage, then reassess.

•  Scale up what works, shut down what doesn’t.

•  Avoid long, irreversible commitments where possible.

This approach reduces risk and keeps capital liquid for other opportunities.

6. Model Enablement, Not Just Savings

The true ROI of cloud isn’t in shaving dollars off IT. It’s in what it enables:

•  Faster product launches

•  More experiments per dollar

•  Entering new markets without heavy upfront investment

•  Automating manual work in finance and operations

Business cases that only model IT savings are incomplete. The most strategic cases capture

acceleration, agility, and the opportunity cost of not moving.

7. Don’t Overlook Unanticipated Benefits

Just as many business cases underestimate costs, I’ve often seen them undervalue benefits.

Cloud has a way of unlocking upside that wasn’t obvious at the start:

•  Labor efficiencies you didn’t expect

•  New insights from data that was previously siloed

•  Entirely new revenue streams from faster product cycles

•  Reduced friction in M&A integration or divestitures

These benefits don’t always appear in the spreadsheet on day one. But they show up quickly

once teams start experimenting.

CFOs need to balance risk aversion with some risk-taking, or they risk missing the real

opportunity cloud represents. The most effective finance leaders don’t just protect against

downside. They actively create conditions for upside to emerge.

8. Pressure-Test Assumptions

Every cloud business case is built on assumptions—about demand, utilization, decommissioning

timelines, and cost discipline.

CFOs need to challenge those assumptions with sensitivity analysis:

•  What if demand doubles?

•  What if the legacy estate takes two years to shut down instead of one?

•  What if utilization gains don’t materialize as fast as promised?

Running these scenarios up front exposes risk and avoids nasty surprises.

From CF“No” to CF“Go”

CFOs have long been known as the gatekeepers of capital, often accused of slowing innovation.

At one point, the finance function was even nicknamed the “Department of No.”

But in the cloud era, that approach won’t cut it. A former boss of mine, Sean Boyle, said it best:

the CFO must evolve from CF“No” to CF“Go.”

That doesn’t mean writing blank checks. It means creating the guardrails, funding models, and

balance sheet discipline that let innovation happen faster, with less risk, and with more

accountability.

Cloud gives CFOs the flexibility to say yes more often—without sacrificing stewardship.

That’s the transformation. From business interrupter to business accelerator. From CF“No” to

CF“Go.”

Closing: The CFO’s Opportunity

If you’re a CFO or finance leader reviewing a cloud business case, ask yourself:

•  Does this case include the cost of legacy decommissioning?

•  Does it account for write-offs, impairments, and sunk costs?

•  Does it model CAPEX avoidance and the opportunity cost of freed capital?

•  Does it include future refresh cycles you’ll never need to fund?

•  Does it measure business enablement, not just IT savings?

•  Does it acknowledge upside that may be unanticipated, and create room to capture it?

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If the answer is no, the case is incomplete.

Cloud is not just an IT project. It’s a chance to rewire how your enterprise allocates capital,

balances risk, and funds innovation.

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