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CFO’S LAST FRONTIER: ENERGY SPEND

Over the past 20 years, CFO’s have transformed themselves from the “finance guy” to true corporate agents of change. With the emergence of analytics, CFO’s have placed a lens into all aspects of their business managing change, efficiency, and holding stakeholders accountable. With the Great Recession’s severe impact on corporations, CFO’s had to be more creative than ever to squeeze all the costs possible out of their organization and familiarize themselves with all facets of the business.

Fast-forward to the much more stable 2015, the constant focus on profits and efficiency has led CFO’s to one last horizon to impact costs: energy. With the emergence of new technology, CFO’s are starting to excavate this foreign cost center to discover the impact for change in typically the organizations second largest cost center. Low and behold, they are slowly realizing there are huge opportunities for savings and finding dollars impacting the bottom line. Below we highlight how CFO’s are changing management of their real estate portfolio:

Transformation Agents
CFOs’ cost-management successes have earned them the right to become transformation agents — and for many companies, a key to successful transformation will be finding the right balance between global and local operations that support the growth agenda. Traditional building management has been purely engineering driven with little focus on costs, but the ecosystem is progress rapidly to a cost-driven model.

Business Intelligence Drive Efficiency Metrics
CFO’s work off numbers naturally so they need to understand the supply and demand energy dynamics of their property portfolio to drive the best possible business outcomes. Analytics can help them keep pace with the increasing volume and velocity of data as buildings continue to evolve through the digital revolution.

More Computing Power
Only 16% of building devices are currently connected, but with that number expected to jump to over 50% in the next 5 years, leverage more computational power is needed. CFO’s eliminated massive costs in their organization migrating businesses to the cloud so expect to see that trend continue.

Open source
Vendors are tired of being locked in to “proprietary” software with required upgrades every year costing hundreds of thousands of dollars. New “open” software allows for much more innovation at a fraction of the cost and provides the organization with more flexibility.

Accountability
Operational upkeep is no longer good enough, mandates to manage efficiency and financials associated with energy are the new norm. CFO’s will also hold vendors accountable for performance of energy consuming systems efficiency, which has previously gone unchecked and thus been costly.

ROI Payback Reduction
For years the way to become efficient is to throw major capex dollars at the problem with 5-10 year paybacks. In today’s “what have you done for me lately society,” CFO’s expect payback much quicker. Cloud and Building Internet of Things technology is making building management cheaper, more efficient, and smarter.

As evident by the points above, new technology to manage energy is making the space look like a business division with strict cost controls. As CFO’s continue to get the “whiff” of savings in this space, expect to see more change.

– Xavier Navarro

Director, Business Development