17/05/2022

Empire News Africa

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How CFOs & CIOs are Funding Digital Transformation with OPEX, not CAPEX

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Zakhe Khuzwayo, co-founder and CFO at InnoVent.

CFOs and CIOs, collaborating to drive the accelerated digital transformation necessitated by rapid technology advances and COVID-19, now have a smart alternative to traditional financing and management of IT assets that boosts business efficiencies and competitiveness.

Rapid technology advances driving the 4IR (Fourth Industrial Revolution), as well as the impact of COVID-19, has accelerated digital transformation in organisations, transforming IT overnight from a back-end support function into an essential enabler for all business operations.

Such a shift requires greater access to top technology, resulting in IT spending reaching an all-time high as organisations swop offices for work-from-home and virtual meetings; physical shops for e-commerce platforms; and analogue systems for cloud-based solutions, automated services and advanced data analytics.

Digital transformation success

This digital business transformation requires immediate investment in new technology to modernise legacy IT systems; meet system performance and employee requirements; increase operational efficiencies; and improve customer engagement.

This is an expensive undertaking to fund using traditional models. An organisation purchasing just 100 new laptops for staff to work remotely could be looking at a R2 million investment.

Previously, this would be funded with either cash required upfront or expensive bank loans.
Either way, the organisation faced further challenges and costs, as 100% ownership also means maintaining, upgrading and eventually disposing of IT assets responsibly, which typically become obsolete in 2 – 3 years.

As a result, it often placed chief financial officers (CFOs) focussed on cutting costs and maximising profit, in conflict with chief information officers (CIOs), focussed on improving IT efficiencies.

In the ‘new normal’, however, collaboration between CFOs and CIOs has proven essential for digital transformation success. CFOs and CIOs now share a common and pressing objective of meeting business needs through digital transformation while also maximising the value of investments and containing costs.

How to fund digital transformation 

As a result, many companies are looking for new financing models flexible enough to adapt to the pace of innovation and are veering away from ownership of IT assets to partner instead with providers of cost-effective and sustainable IT leasing solutions.

This leasing option allows CFOs and CIOs to align strategic growth plans with cost-effective, innovative, and flexible IT investment – enabling swift digital transformation through immediate affordable access to the right advanced technology from a range of IT vendors.

The leasing option also delivers an impressive range of further benefits. This includes zero upfront cash payment and conserving working capital; substantial cost-savings and fixed lease payments; as well as regular technology upgrades; scalability to expand or accommodate new users; and reducing ownership hassles.

In addition to providing all these benefits of leasing, a unique value-added leasing solution developed by IT leasing company, InnoVent Rental and Asset Management Solutions, further adds subsidised finance and enables organisations to meet their environmental responsibilities.

“The subsidised finance model eliminates the need for expensive CapEx and enables organisations to preserve their working capital and healthy credit lines with banks, and to redirect their cash reserves to core business activities that can help generate profits,” says Zakhe Khuzwayo, co-founder and CFO at InnoVent. “In addition, our leasing model eliminates the hassles of 100% ownership of IT equipment including maintenance, delayed upgrades and the irresponsible disposal of equipment that is harmful to the environment.”

InnoVent’s subsidised finance offers rates below traditional financing options on a long-term leasing model. This delivers a lower cost of finance that compares favourably to traditional forms of finance, offering substantial cost savings to boost cash flow and the bottom line.

InnoVent’s unique model ensures organisations always have efficient IT devices operating at full capacity. Legacy IT equipment requires ongoing maintenance which increases operational risk, employee downtime and costs, or becomes obsolete with no resale value, requiring another CapEx outlay to maintain productivity,

The InnoVent model incorporates built-in upgrades every 3 – 4 years before the equipment becomes obsolete and ensures that at the end of the lease, this equipment is professionally refurbished for reuse or responsibly disposed of for sustainable IT practices aligned with an organisation’s environmental goals.

“With the accelerated rate of digital transformation now required, more CFOs and CIOs are discovering that their collaboration can drive the transition to the new digital era without impacting heavily on the bottom line,” comments Khuzwayo. “A cost-effective and sustainable IT leasing solution not only preserves credit lines and cash flow and drives down costs, but it also enhances business efficiencies and enables organisations to be environmentally responsible, creating a competitive edge in the age of 4IR and COVID-19. If your business relies on the latest in IT, we invite you to contact us and find out if leasing is a more cost-effective and favourable option for your organisation.”

For more information, please visit www.innovent.co.za.


By Staff Writer.