internet of things: how finance should embrace the coming flood to drive top-line revenue growth
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Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals
Internet of Things: How Finance Should Embrace the Coming Flood to Drive Top-Line Revenue Growth
• Recognize the opportunity IoT will present in the short and near-‐term
• Recognize companies driving new revenue streams for their businesses
• Understand implica=ons of mone=zing IoT services on the finance department
• List ques=ons finance professionals need to ask if IoT is a possibility for their business
Learning Objectives
After attending this event you will be able to:
Proformative Event Notes
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Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals
Internet of Things: How Finance Should Embrace the Coming Flood to Drive Top-Line Revenue Growth Mike Beamer, President, goTransverse Mike Murphy, CPA, Chief Business Officer, goTransverse
7
Ready to Generate New Revenue from IoT?
Internet of Things (IoT)
8
What is it? Marketplace Impact
Mone=za=on & Cos=ng of IoT
Financial & Accoun=ng Implica=ons
Internet of Things
What is the Internet of Things?
9
• Machines, devices, structure, living things, & physical environments
• Physical world beginning to “talk to us”
Talk
Act Listen
Factors Enabling the Revolution
10
Low Cost Sensors & Actuators
Cloud Elasticity
Mobile Computing
Industrial IoT
Leveraging IoT
11
Services
Revenue Costing & Optimization
Monetizing IoT
12
Service Subscrip9on Usage Maximize Revenue
$-‐
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
Usage Revenue
Subscrip=on Revenue
Future IoT Impact
99% of physical objects will eventually become part of a connected network and IoT
has the potential to generate 19 trillion in value!
- Cisco Systems!
IoT products/service suppliers with generate incremental revenues exceeding $300 Billion by 2020. !
- Gartner!
The IoT Market, valued at $655.8 Billion in 2014, is set to grow at a compound annual rate of 16.9%. !
- International Data Corp!
IoT-ready Businesses Must:!!Ø React quickly to the market!Ø Launch new business models!Ø Package/price for maximum revenue!Ø Forge new distribution channels!Ø Recognize Revenue, esp with
consumption-based offers!
!
Polling Question
15
CASE STUDIES: Driving New Revenue Streams & Cost/Optimization Management
Hemisphere
16
• Featured on GPS World: Hemisphere Debuts Atlas GNSS Correction Service
• Reinvented a storied brand with “disruptive” new product
• Expanded dealer channel offerings – Provided more oppty for selling to
and supporting customers
• Compatible with existing hardware – No need to push upgrades – Sell into competitor’s install base
International Assets Systems
17
• IAS is a cloud-based transportation solution • Featured on Reuters: Top Logistics IT Provider for 3rd Consecutive Year • Dynamic logistics technology segment, volatile pace of change • Using mobile devices to improve timeliness and accuracy of data • Leveraging IoT to keep pace and even anticipate customer ever-evolving
requirements
Polling Question
19
Implications of IoT services for Finance
20
Implica=ons of mone=zing IoT services on the
finance department
It will have implica=ons, you will need to look at
bundling
Look at cost of hardware
component over life=me, etc.
Revenue Implications
21
Understand what elements you are selling
ü Impacts on contracts, invoicing, timing, etc
ü Different sources of data (or revenue triggers) impacting revenue & how to capture, measure
Revenue Schedule/Plan
22
ü How to schedule/plan for revenue streams
Measurement & Monitoring
23
What tools will you need to measure & monitor transactional details?
Margins and Cost Accounting
24
ü How will you manage costs for items that are delivered as a service?
Accounting for Inventory
25
ü How will you manage inventory?
Cost Accounting
26
ü Cost deferrals • Example
Key Metrics
27
ü Understanding the impact to EBITA and Cash Flows
Metrics As Indicators
28
ü What Metrics will you use to measure the business?
Pro Tip: Revenue is a lagging indicator
Changing Business Models
29
How to effec9vely communicate a Changing Business Model?
Iden9fy key stakeholders and ensure they understand change taking place
Transi9on and Proforma Results
How to compare Historical Business to Migrated “new” Business
Thank You
Q & A
• Thanks to our speakers
• Join us at www.proformative.com to continue the conversation with your peers in our community
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A Few Final Items
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Polling Question
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