This week’s STREET SMARTS is focused on a growing trend in the realm of finance – shifting the focus away from revenue and onto operating expenses.
CFO Magazine is predicting steep increases in corporate investments on IT infrastructure and cloud based services. The reason? “Technology investments are starting to pay off, creating urgency in management and boards to drive even more gains in operating income”, according to CFO correspondent Akhilesh Tiwari. Why? Here’s a few theories:
One is that we technology and business consultants have been telling our clients over the last five years that they have to speed up to succeed. So perhaps these clients listened to what we said and decided to speed up ROI as well. The more income they can generate from the business, the more they can invest in the business.
Second, companies that stress operating income over top-line growth signal to me that they’re throttling back the accelerator a bit from the days of winning market share at all cost. Instead, they are consolidating, cashing in, and redeploying those resources to say, “Let’s see how our investment gains can be put to best use in increasing sustainable operating performance gains.”
Another catalyst for change in this area is the democratization, if you will, of who is participating in IT decisions. We notice the increasing clout of business-side-of-the-enterprise buyers, including CFOs, CMOs, and CHROs in influencing, and in some cases driving, IT decisions. Many IT groups are managing on zero-based budgets, so perhaps it’s no surprise that a new focus on financials has come to the fore.
For more regarding the impact technology is having on CFOs and OpEx, click here