Strange Changes: Why New Business Models Are Changing The Way CFOs Plan

Emmanuelle Brun Neckebrock

Have you noticed that you can directly map the transition of the CFO role to two things – technology innovation and changing business models? In our as-a-service, disruptive, customer-centric economy, competing on price alone doesn’t count for much these days. Organizations must now be delivering service along with products and anticipating (and meeting) customer needs as they arise. Knowing how to look ahead and plan well is much more important than it ever used to be.

For the previous generation of finance leaders, business used to be pretty straightforward, which meant their job was much less complex. A company would make something and sell it. Finance was mainly about managing accounting, capital expenditure, and cost control, and the role of CFO didn’t really exist. Today, very few companies are competing on price alone, and everybody wants to move up the value chain.

And with good reason. I listened to a presentation last week by Eric Falque, president, France, Benelux, and Africa, for BearingPoint. He echoed this point perfectly. In the quest for growth, companies are starting to adopt a “servitization” platform approach, integrating products and services and bundling them together alongside more traditional business models. Probably the most well-known example is Rolls-Royce selling “power by the hour.” Instead of selling aero engines, Rolls-Royce now contracts with many of its customers for power by the hour, but there are examples everywhere with hotels, cars, phones, and many other areas of industry. In fact, the average growth of a servitized business model is up to six times faster than a product-only approach.

As a CFO, you should sit up and take notice. Not just because it’s a potentially rich new revenue stream, but because it has far-reaching consequences. These include how revenue is recognized, shortened time scales for adapting and reacting to customer requirements, proactively anticipating and preparing for growth, and planning for a future that can support such changes.

The impact on financial and non-financial KPIs, as well as the extended digital ecoystem, requires a different type of planning with real-time, dynamic data and predictive analytics capabilities. Some of this intelligence will come from people and some from your systems. But none of it should come from static, outdated data – at least not if you’re going to plan effectively.

Our role as strategic advisers is to help the organization transition to new business models and, in many cases, run both a traditional and servitized model. But that requires a much better understanding of both past performance as well as defining the strategy for future performance.

There is very little point in changing your business model if you don’t adapt your insights and planning accordingly. Aligning plans, optimizing profitability, and gaining real-time insights into key financial and operational metrics to be more agile are non-negotiable for success. In the same way companies are changing how they sell and deliver products, then so too must they change the way they plan.

To discover more information on FP&A, watch the video and see how a digital CFO will thrive in the digital economy, based on the recent study of 1,544 finance professionals conducted by CFO Research and sponsored by SAP.

For more on this topic, read “Why Complacency Is An Expensive Mindset For The CFO” and “Time For Finance To Face Strange Changes.”

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Emmanuelle Brun Neckebrock

About Emmanuelle Brun Neckebrock

Emmanuelle Brun Neckebrock is CFO of SAP France. With more than 20 years’ experience, she is responsible for the coordination of SAP activities in France linked to acquisition and integration. She has recently taken over the responsibility of developing the healthcare sector within SAP France with a mission of actively promoting digital transformation in healthcare. Emmanuelle holds a degree in Finance from HEC Paris. Her blogs discuss the strategic challenges and topical issues facing CFOs.