For a long time terms like "SaaS" and "tech-enabled" have been bandied about with an anticipated uplift to a company’s enterprise value. But the question is, how can technological advances really drive value over the coming years? Charlie Ross speaks to Mazars LLP about how technology can best boost value in a business.
Advances in AI, machine learning and automation should not only revolutionise design, manufacturing and assembly processes, but also workflow management with software used to deliver processes with more rigour, reduced human interaction and improved process flow. These advances should drive efficiencies in operations, consequently increasing accuracy and improving margins for those businesses who adopt the new processes. Businesses able to demonstrate their ability to utilise and potential to develop software and hardware in this way are likely to command a premium valuation multiple.
Insurance is a market that has been transformed through use of data driven analytics, triangulating multiple data points to drive insight about individuals and more appropriately price insurance products. The ability to crunch large amounts of data and derive more personalised pricing than ever before is translating into increased profits for insurance brokers and a more robust understanding of the insurance book. This is a good example of monetising "big data", a theme that has been mentioned for many years but with little commercial evidence of its impact.
With advances in cyber capabilities and reporting requirements there is an increasing need for software driven governance, including risk and compliance solutions to prevent and detect security breaches and evidence that customer data is safe. This is another area expected to grow over the coming years with additional verification tools such as blockchain and facial recognition paving the way for better online security. Effectively utilising and actively developing capabilities in these tools is an excellent way for businesses to add value and demonstrate their potential as an attractive investment opportunity.
In summary, simply being "tech-enabled" within business does not in itself drive value. Utilising tech to differentiate a proposition from competitors to drive the bottom line today and, more importantly, future-proofing operations tomorrow, will be a key component of achieving a market-leading valuation.
Livingbridge are experienced investors in businesses that use technology to innovate in their sector, including email signature provider Exclaimer, specialist insurance broker Kingsbridge, and Inspired Thinking Group – a provider of marketing workflow systems. Using prior experience and a vast network of contacts, Livingbridge can help businesses to capitalise on this advantage and drive growth.
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