knowledge-based-approaches

Being part of the early conversations

Finance plays a role in the development stages of project evaluation, but they are mostly absent or underutilised in the early stages of new growth initiatives.

In many organisations, the CFO's main role begins once proof of concept has been established. At this time, they prepare a business case to help the organisation to decide whether a project should continue to be funded or be terminated.

The industry Technology Roadmap can provide a basis for the CFO to work in partnership with those involved in the initial project evaluation. It contains information that can be used to test the assumptions underpinning projects that are to be financed to ensure that they are sound.

Using the roadmap

The semi-conductor industry uses a three step approach to their roadmap, the International Technology Roadmap for Semiconductors (ITRS)

Step 1: Project applications need to be standardised

To ensure that organisations take a disciplined approach to decision making, Finance first needs to make sure that those involved in evaluating early stage projects do so on a consistent basis.

Step 2: Facilitate a constructive dialogue with others involved in new project evaluation processes

The technology roadman can be used by the CFO to facilitate a constructive dialogue with other C-suite executives to understand and make a judgement about the significance of a technical and/or economic problem.

The discussion should focus on:

  1. what is the problem that needs to be addressed
  2. why should we invest in this solution
  3. is the timing appropriate
  4. have alternative funding sources been considered?
  5. what are the risks?
Step 3: Ongoing performance evaluation

CFOs can use the technology roadmap as guidance to identify projects that might need to be discontinued or those that may require additional short-term resources to increase their chance of being successful.

CFOs can use the timeframes and the solutions outlined in the roadmap to raise important questions about how probable external threats are (duplication, advances in competing technologies, failed technologies) to the project to better understand the potential of the project to lead to future growth of the firm.

 

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