entepreneur, Finance, Strategic Finance, technology, Uncategorized

Leveraging the power of collaboration in tech companies

Tracing back to the advent of collaboration

From the year 2000, a massive shift occurred quietly to most, but daringly to a few. A few large organizations saw the change that was occurring. In 2007, when I was consulting with a large $Bn technology bellwether from my alma mater, I remember how this disruption, so new and so unique, was being viewed as the single largest transformation in the industry way before most of the world heard of this disruption. This arrived with the perfect storm co-created by cloud system deployment capabilities and the penetration of high speed internet. With these forces aligned, it created the SaaS disruption. It took 10 years though for its proliferation to be the product of choice for all industries. It uniquely positioned itself to productise systems and frameworks and create workflow environments which were hitherto accessible only to the big companies at a fraction of the expense. It did something else which was more succinct though. Now companies were suddenly getting familiar with having open systems and integrations and allowing outsiders in – a fundamental shift in thinking which has changed everything.

How has this affected collaboration?

A precondition to any collaboration is an open mind. Where one can freely discuss synergies than be worried about theft of intellectual property by sheer discussion itself. With an open system environment, companies began to see how great technology could be accessed by everyone for a fraction of the cost, establishing that letting someone in can save money. Now organizations needed a nudge to say that collaborations can add business value. In 2009, I remember how an acquisition by another big bellwether of a small technology outfit in Europe was of strategic importance to them. Making less than 1% of their own top-line, this large technology company was ready to take the plunge of letting in a small team of engineers join them rather than do what might come to them easier – build their own team. A surprising move, but it gave them access to a downward integration possibility which could get them into market 3 years sooner and maybe worth billions in years to come.

Why would a tech company have this internal conversation though?

Collab 1

Phase 4

Continue reading

Advertisements
CFO, entepreneur, Finance, Innovation, Strategic Finance

How & Why Tech companies today are seeking help today

It may come as no shocker to tech firms across the world that ‘Tech development’ as an industry has been slowing down. Large enterprises don’t seem to be buying as frequently and fervently as before. Smaller development projects seem to have dried up. Growth estimates (Gartner Q1 2017) to 2020 hint at a 3% CAGR over the next 3 years.  At the same time, for the first time in history, 6 among the 10 most valuable firms in the world are technology companies! If the logic of stock price being indicative of future earnings, something seems to not add up. What is really happening and what should a tech company be doing?

Understanding it takes some retrospection.

What happened while I was working?

Over the 20-year period beginning in the mid-80s, there was a flurry of businesses which jumped on the convergence of affordable computing and leap in telecommunication and the opportunity it threw up for businesses across the world. Large enterprise technology development efforts with large organizations starting to implement technology as infrastructure to add efficiency in operations and bring data sets together became the new age conquerors of this portion of the information revolution. Some big names that emerged were the IBMs & Oracles of the world and closer to home, the Patni, Infosys and TCSs of the country.

Around 2005, a new buzzword emerged with the improvement in telecommunication ecosystems across the country – Cloud. Information could now be stored anywhere and accessed anywhere. One did not have to maintain physical infrastructure to be able to house information, which meant that a small business could now hire only the infrastructure they needed at the efficiency of a large data center. Smaller organizations now jumped in as infrastructure costs and setup costs was virtually nil and barriers to entry were virtually eliminated. A few years in, a tiny revolution was brewing with the name of SaaS. A new revenue model of charging for use and value rather than the committed models that existed. This picked up immediately as now the cost of subscribing to technology solution was close to nil. The ‘innovators’ and ‘early adopters’ of early 2005 now made way for the ‘late majority’ in less than 5 years.

Business as usual was threatened for the first time.

Continue reading

business, CFO, Finance, management

What can a CFO do for a startup?  

Business owners at the early stages of their startup are a jack-of-all-trades, trying to handle every aspect of their business for the simple reasons that they might be under-capitalized or trying to cut cost. When the business starts to grow organically, there arises a need to employ appropriate people for the various roles in the organization. The services of an accountant may be enough to provide support for recording the day-to-day financial transactions in the initial stages. Once the business moves into the growth stage, when the activities of the business are increasing, the need for strategic financial support is felt to consolidate data and provide the company with a strategic road map. This is where a CFO comes in.

The responsibilities of a CFO is no longer limited to financial reporting, audit and compliance, planning treasury and capital structure. It now encompasses the roles of corporate portfolio management, capital allocation, investor relations, performance management to name a few.

A CFO is not just a glorified book-keeper, he plays a number of important roles in a startup that are critical in providing a strong financial foundation for a growing business.

  • A CFO is like a steward to the business, working to protect the vital assets of the company, ensuring compliance with financial regulations and communicating value and risk issues to the board and the investors. The CFO will ensure that the business has important financial controls which include management of cash flows, establishing credit policies and implementing procedures to measure and evaluate optimal inventory levels.
  • As an operator, a CFO provides a variety of services such as financial planning and analysis, treasury, tax and other finance operations, to ensure the business is efficient and effective financially. An effective CFO handles projects that require significant quantitative and qualitative analysis in order to arrive at an understanding of the options that are available. Developing a company’s annual budget and interacting with the business owner and department managers to ensure that the final product accurately and objectively reflects the real requirements of the business will be the responsibility of the CFO. He might also conduct a thorough analysis of a company’s future capital investment requirements as a first step in securing additional financing.
  • CFOs take a seat as the strategist at planning table and help influence the future direction of the company. They are vital in providing financial leadership and aligning business and finance strategy to grow the business. In addition to M&A and capital market financing strategies, they can play an integral role in supporting other long-term investments of the company. . A CFO would also play a key role in any effort to seek investment from the public financial markets or to launch an initial public offering (IPO).
  • CFOs as catalysts can stimulate and drive the timely execution of change in the finance function or the enterprise. Using the power of their purse strings, they can selectively drive business improvement initiatives such as improved enterprise cost reduction, procurement, pricing execution and other process improvements and innovations that add value to the company.

Bringing in a skilled and expert personnel onto the board of the business will help give a strategic direction to the business. Outsourcing the financial support for the business will give the owners free time to focus on other aspects.

business, management, Process

Prequate: The need of the hour

In an ever-changing business environment businesses of all sizes face unexpected challenges. It is for the organization to decide how to face the unexpected. Would you want to wait for the crisis to come upon your business and then find a solution to it or have a cushion ready for the organization to fall safely upon? It is the preparedness of the organization which determines whether the business will make it through the storm or flounder under an unexpected wave.

Tsunami alarm systems across the globe help raise an alarm when there is tectonic movement under the sea-bed which could potentially cause a havoc wrecking tsunami. The alarm systems help take preventive actions to minimize destruction. Similarly a business may have systems in place that identify threats before they become serious problems, and highlight opportunities well in advance. These are signs of a proactive business. Business with robust and dependable systems have the flexibility to adjust to the new challenges and opportunities in a changing business landscape.

Stephen Covey’s book 7 Habits of Highly Effective People, was the first to popularize the term “proactive” in the business context. A reactive organization is controlled by external forces, whereas a proactive business are watching out for developing situations and uses them to control and exploit the situation for good, rather than being adversely affected by it.

post1

Building a Proactive organization

For a business to be proactive it is essential that the management fosters a culture to promote the same. Between proactive and reactive management there is a very thin line of difference Time. Time is an essential weapon. Time given to anticipate problems and devising plans is critical. Identifying tasks and responsibilities which are critical and helps prioritize and delay or delegate less important tasks. To ensure that this is followed across the organization offer guidance and explain how people can leverage time to get more done.

Processes are important in a proactive business. Dysfunctional or redundant processes can stall the proactiveness in an organization. A thorough review of all processes in the organization can help identify gaps or redundancies. Active involvement of team members in this task will help fill the gap as they are in a better position to tell you the difficulties arising out of each task and also help you anticipate and avoid future hiccups. Once you have managed to correct the processes and ensured robustness, you can move on to analyzing risk and managing them, starting with high probability and high impact ones.

Post

For people in an organization to be proactive, specific tasks must be assigned to them. Putting faith in their ability and giving responsibility helps boost the morale of the team. Everyone in the organization knows who holds the responsibility of each task and strive to perform better. A financial dashboard with the name of the person and the responsibility given to him, helps track performance. The dashboards allow all employees to see how the individuals are performing as well as how the company is doing.

Proactive businesses see trends in the business in response to the business environment without asking for the same. It is important for a business to record its past and present performance to forecast where it is headed in the future.

A proactive attitude provides numerous benefits to a business. It helps minimize malfunctions and increases the efficiency of teams. It ensures that the business in prepared for changes in the business environment and is ready to face the storm head strong.

post 2