
3 minute read
Oracle
from Cloud Insight
by cxoinsightme
A new reality
Kirk Carlsen, Dee Houchen and Jennifer Toomey from Oracle on how to make a big move to in-demand, “as-a-service” business models
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In 2020, our humble homes became the essential support beam for both human health and business continuity, something that wouldn’t have been possible without “asa-service” applications for food delivery, physician care, day-to-day job responsibilities, and more.
The as-a-service business model certainly isn’t new. Everything from music to movies to maintenance can be delivered using a subscription model. But it’s fair to say that people value these services now more than ever, and they are an emerging opportunity for businesses looking to build new revenue streams.
In fact, many businesses are already there. In an October 2020 survey, 62 percent of all companies said they’ve implemented solutions to manage an increased demand for online interactions and services. And more than half of respondents (53 percent) believe the change will stick after the pandemic subsides, as consumers and customers settle into the “next normal.”
Introducing new revenue streams based on the as-a-service shift is one of four Big Moves that finance leaders should make to grasp opportunity and move their businesses forward.
How finance drives value in new business models Optimizing your portfolio might not be a top priority right now, but research indicates that it should be. McKinsey & Company analysis found that “companies that invest in innovation during a crisis outperform the competition on market capitalisation by 10 percent; investing in innovation after a crisis gives them a 30-percent advantage.”
CFOs and their teams are an essential part of decisionmaking for new business model innovation, and making sure investments deliver on expectations is vital.
Organisations need to evaluate their most and least profitable lines of business, locations, or products, so they can shift resources as necessary. Finance professionals who use profitability and cost management solutions can help identify areas to reduce costs and uncover investment opportunities.
Best practices for business model innovation To help finance leaders as they lead this charge, Oracle is offering a Finance Starter Kit with best practices and advice on first steps. Below is an abbreviated version of best practices as outlined in the kit.
Best practice #1: Rethink what your target customers want Collect feedback via social listening, customer community groups, surveys, events—anywhere customer voices are prominent. This will help you to identify what your customers want and don’t want, as well as what is motivating them to make a change.
Best practice #2: Analyse various business models Take advantage of scenario modeling. Model different scenarios for multiple offerings, market conditions, or other key drivers that can help you stay aligned with your revenue goals.
Best practice #3: Collaborate throughout the innovation life cycle To get the most ROI out of your innovation efforts, break down silos and create a process that involves multiple stakeholders. One of the most effective ways to collaborate is with a connected suite of cloud applications.
Best practice #4: Design for customer success Customer satisfaction is the biggest predictor of future revenue for as-a-service offerings. If your customers aren’t happy, they won’t renew. Integrated cloud suites can help you configure an offer, price it, provide a quote, simplify contract negotiations, and provide self-service options for customers to modify or change their subscriptions.
Best practice #5: Measure outcomes and respond quickly This is where finance needs to collaborate closely with lineof-business leaders to keep them informed about what’s working well—and what isn’t—so that business leaders can quickly change course for a better outcome. KPIs for a new business model might include annual recurring revenue (ARR), customer churn, renewals, and customer lifetime value.
The pendulum of crisis has swung from focusing reactively on survival, to being proactive for growth. Take some time to consider how new business models could help your business build long-lasting advantages.