Part of the “Digital CFO” series
A self-regulating, automatically managed home is no longer the stuff of science fiction. Using advanced technologies such as artificial intelligence (AI) and machine learning, some dwellings now include dozens of devices that help people control the temperature, monitor security, or even feed their pets.
My company, Vivint Smart Home, delivers smart home products and services that help people protect and manage their homes and families. We have completely reinvented the firm to become one of the leading smart home services companies in North America, now managing nearly 20 million devices, such as sensors, cameras, and door locks.
Yet achieving this success required tremendous flexibility as our company digitally transformed itself. We needed new business and financial systems that would help us understand market demand, offer the right solutions to customers, and “fail fast” as the business grew.
Investing in new products and channels
For many years, Vivint was primarily a security company. We sold security contracts using 2,000-3,000 field-based sales reps and an inside sales organization that sold services over the phone.
In 2012, Vivint was acquired by a private equity firm. Our products began to shift from pure security offerings to smart home solutions. We expanded our sales strategy from simple direct-to-home and inside-sales channels to retail and commercial real estate relationships.
In 2016, we developed a relationship with Best Buy. Now we cobrand products and sell smart home services in 450 retail stores. We also introduced a new equipment-financing plan that lets customers finance the purchase of our equipment when they sign up for Vivint monitoring services, which changed our financial models.
Most recently, we launched a proprietary, cloud-based AI platform that processes more than 500 million events daily. Data about these events feeds our AI engine, helping us learn how to best support customers as they manage their homes.
Deploying the right business solutions
As the pace of change accelerated, our business and financial systems had to evolve, too. Additional sales channels and new offerings demanded more sophisticated ways to analyze and manage the business. New pricing and service models required a streamlined view of finances. Public debt warranted automated controls that would support regulatory reporting and compliance mandates.
Our legacy infrastructure was highly fragmented, and homegrown solutions were unable to offer essential financial insight. Multiple systems tracked inventory, making it impossible to develop cross-enterprise visibility or simplify reconciliation. What’s more, our systems were unable to scale as the business grew and changed.
To accommodate new business processes and models, we decided to upgrade our financial systems. We chose a cloud-based enterprise resource planning (ERP) solution that promised to simplify our business landscape, improve operational efficiencies, and offer real-time visibility into business performance.
Because Vivint already used other cloud solutions, we were comfortable with our core business solutions being hosted there. Cloud also offered the benefits of lower operating costs, more flexible staffing, and automated solution updates and maintenance.
Freeing Vivint to deliver smarter home products
Our new ERP solution created a streamlined system architecture that is delivering measurable benefits to the business. Inventory reconciliation, which previously required as long as four days, now executes in as little as one hour. The old system processed inventory transactions in batch, sometimes only at month end. Now the system is updated with every transaction entered by a service technician. Instead of having a historical view of inventory, we have a clear view of current activity.
The software automated the process of calculating our subscriber acquisition cost. Replacing spreadsheets, the solution aggregates several hundred general ledger accounts, reclassifies them to the balance sheet, and amortizes costs using a declining balance method.
We can generate standard management reports and also meet ad hoc reporting requirements. This is especially helpful when we need to see different cuts of data for management reporting. We’re also beginning to implement automated controls. Over time, we expect to generate significant efficiencies and cost savings by deploying an automated control structure.
Mostly importantly, the new solution helps us take advantage of new market opportunities. With analytics-driven insight and a closer relationship with our customers, we can quickly introduce new products and offerings into our sales channels, try different pricing models, or pilot offerings in specific markets to test their popularity. Instant insight into our finances allows us to fail fast – and move onto the next opportunity without wasting time or resources.
Digital transformation is a complex process. Even the best enterprise cannot survive without good core data and solutions that support effective management. Now that Vivint has both, we can pivot the business to meet changing market demand with speed and precision.
Look for my next blog, “Top 4 CFO Lessons from Vivint Smart Home’s Digital Transformation,” Monday, January 15.