CFOs are reorganising businesses to drive more revenue from services, according to a study by cloud ERP vendor FinancialForce.
The study revealed that services – direct or linked to product sales – accounted for more than half of a company’s revenue for 71% of CFO respondents. One third of respondents said that subscription-based services have become “significantly more important” for their companies over the last five years.
In addition, more than 55% of the CFOs said that services now generate a higher percentage of revenues compared to five years ago.
Generating more revenue from services will require “substantial changes in strategic planning”, according to 45.5% of respondents, with particular impact on staffing and operations. Yet, adopting a services business model would bring challenges to CFOs. Almost 40% said “staffing and skill sets” would be the largest “pain point”, with billing, invoicing and accounts receivable, and planning budgeting and forecasting closely behind on 37.9% and 36% respectively.
With regard to having technology platforms to support service-related revenues, 56.5% of respondents said they somewhat agreed that their company has the appropriate technology in place to cope with service-related revenues, with 17.4% strongly agreeing that these systems had been implemented.
John Bonney, CFO of FinancialForce said: “Cloud computing and the prevalence of mobile and connected devices have accelerated the shift towards the services economy, effectively giving every company the opportunity to sell/upsell its customers on subscription-based offerings – creating valuable recurring revenue streams.
“This transition is changing the underlying architecture of business, as well as changing the role of the CFO, bringing the office of finance into conversations on customer experience and satisfaction as contract and subscription renewals become more important to overall business performance.