The transition to XaaS (Everything as a Service) has become increasingly decisive in an organization’s quest towards sustainable, profitable growth. Furthermore, the role of the CFO during this process is crucial.
It’s no news that cloud technology, big data and mobile devices have left their permanent marks on the market landscape. This has consequences for virtually every business sector. Organizations that manage to market their products faster, simpler and mobile are often winning over the competition. That being said, many established organizations, both big and small are facing challenges to truly adapt to this technological breakthrough.
While mobile phones hit the consumer market during the mid-1990s, many discussions rose over the necessity of mobile phoning. “Why do I need a mobile phone? Why would I want to be available at all times?” Two decades later that attitude has totally changed. In hindsight that might sound obvious, but are we prepared to look at the next two decades in a similar fashion? Technological breakthroughs have disrupted certain sectors completely and changed the landscape accordingly in the course of just a few years. A computer that predicts a patient’s diagnose or a commercial trip to Mars may sound like utopia now, but may be viable innovations 5 years from now. Now more than ever, organizations need to be flexible and agile to adopt these changes into their business models. The only way to do that is to say goodbye to the traditional models of financing.
Product development and innovation offer key opportunities for surviving a time of globalization, fast-paced technological development and shorter product life cycles. Buying hardware and software is getting trickier knowing they age so quickly. Many organizations have therefore switched to external, specialized vendors that offer leasing options and introduce pay-per-use models. This has its effect on financing models. Switching to new technology requires a (steep) investment while borrowing capacity in banks has decreased, making them hesitant to provide venture capital. Bigger organizations are more often cumbersome in managing change. That means that resistance from company parts, employees and shareholders need to be addressed first before changes can be introduced.
Movers and Shakers
All challenges aside, the transition of complete organizations to adopt an Xaas model is inescapable in the battle of keeping up with new technologies. The last years we have seen a huge increase of technological start-ups. They have sincerely shaken the market. Simply look at what Airbnb has done to Real Estate or Uber to transportation. Established technological companies have not stood still either. IBM for instance has transformed their business from being a hardware provider to service provider. Essentially, every organization can make the transformation to Xaas, but for many it remains a bold step to invest in innovation.
Gatekeeper of Innovation
While new business models are seeing the light every day, the guiding role of the financial function remains unquestionable. Simply providing insights is not enough for the current CFO; finance is responsible for innovation actually taking place. An organization’s expertise in these following areas are key to success: financial efficiency, business acumen and sustainable, profitable growth. Few CFOs succeed in all three areas.
Crucial role for CFOs
Switching to an Xaas model is not easy and demands a whole new outlook on how to finance technology. An organization can’t waste time evaluating thousands of alternatives, but needs to be selective in its choice for technology which facilitates sustainable growth. This offers opportunities for the CFO: on the front side of the innovation process, they must take on the role of accelerator. Finance doesn’t have to be the monster in this story, but can make a true impact as a performance accelerator towards sustainable, profitable growth.
CFO Executive Summit in Prague
If you are interested in learning more about the changing role of today’s CFO, make sure to check out our upcoming event in Prague – CFO Executive Summit
Besides the robust and interactive program of the event itself, you will have the unique opportunity of networking with over 100 top financial experts from all over Europe.