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Steve O'Neill

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Steve O'Neill - EMC

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CFOs and the Third Platform of Computing

10 December 2014  |  1848 views  |  0

The profound shift which we have experienced in the advancement of technology in the past five years is clear, and there has been a fundamental change in how consumers, employees and businesses interact with technology. Business technology is no longer just about accessing data from your desktop. It has instead become a way in which to drive efficiencies, recognise new opportunities and develop and drive new revenue streams.

 

But it’s not just additional opportunities. New technology in the hands of consumers and employees is squeezing old IT systems and this ageing IT infrastructure is struggling to cope with the added demand of new mobile and tablet devices, plus additional access to applications enabling online shopping, banking or simply viewing content via different mediums. Whether it’s a case of driving new revenues or supporting user expectations, the message remains the same; if you don’t keep up, you won’t have a business left. You only have to look to Blockbusters and Kodak to see examples of businesses that have fallen prey to this and been left behind by the technological revolution.

 

Within this context, CFOs are ideally placed to drive innovation and help the business prioritise. When you look for an executive owner to help unlock new opportunities within any business through technology, a clear candidate isn’t immediately obvious.  Sales are focused on the current business model, IT runs the existing infrastructure and may find it hard to embrace large scale change, or have the budgets to enable it. The CFO is a more neutral person: unprejudiced by legacy investments and more concerned with the long term profitability of the business than with short term investments. When you consider the potential for IT to deliver new revenue streams and become a profit centre for the business, the CFO becomes an ideal candidate to facilitate this transformation.

 

To look more closely at the opportunity, today’s society is increasingly characterised by the collision of four major technologies: internet based services or the ‘cloud’, mobile technology providing ubiquitous internet access, social networks facilitating new connections between consumers and businesses and the large repositories of data underpinning it all.  As IDC states, the ICT industry is in the midst of a once every 20-25 years shift to a new technology platform to support growth and innovation; this new shift has been labelled the ‘third platform’ of computing. This ‘third platform’ represents the adjustments and investment required to support or adapt IT systems to cope with modern ICT demands from mobile, apps, cloud, big data and social technologies. As data usage and mobile access continues to grow this year, embracing the third platform will become increasingly important.

 

In my view, IT now fulfils three key roles:

  • First, IT is an enabler of modern business practice. Whether this is in delivering e-commerce, streamlining financial reporting or making employees effective whilst on the move, modern IT is vital in ensuring productivity and competitiveness. This is generally seen as a cost to the business.

 

  • Second, IT increasingly is the product of a modern business. Amazon and Tesco both built website infrastructure to support their direct sales e-commerce models. Today, both businesses sell their technology platform and, in the case of Amazon, their brand to other businesses.  This represents an immediate revenue opportunity to the business.

 

  • Third, IT enables new business models. Businesses may find that the information they obtain as part of one business process is valuable to another – whether this is automotive telemetry data that can be sold to insurers, anonymised patient data that can be sold to actuaries or pharmaceutical companies, or customer insight data that informs new marketing and sales practices. This enables the development of entirely new business models and revenue lines.

 

This increased role for IT in the context of the third platform makes one thing clear; if you don’t adapt and update your IT infrastructure to meet with the increasing demands being placed on it by employees and customers, then in the long term you won’t be able to compete in your industry. Technology is shaping our advances more than ever and now is the time to invest in your systems which will underpin your business as a whole. Avoiding short term CapEx in the interest of cost savings could well result in long term losses and the eventual decline of any business.  CFOs can’t be ‘CF-Nos’ when strategic investments in technology could be instrumental in driving future profitability.

 

There’s no question that the information technology shaping the context for modern business growth is complex, but it needn’t be overwhelming. My message to CFOs of any ambitious business is that you need to educate yourself to the point where you can have meaningful conversations with your colleagues, suppliers and consultants and set yourself up for growth in the digital context of the third platform of computing.

 

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