Equipping your business with the right cloud technology as part of the roadmap for an IPO
A roadmap for an IPO (initial public offering) is of immense importance as IPOs often mark the arrival of a business on the big stage. Going public helps fuel the development and growth of businesses through a healthy injection of cash, while also serving as a platform to burnish a company’s credentials.
The process that leads a business to go public through an IPO often comes after plenty of hard work, travails, and tribulations that finally positions the company on the high-growth trajectory. In short, you’ve earned it! Sounds simple and enticing? Maybe not!
A glance at the history of IPOs will reveal chequered results, ranging from failures to successes, with commendable performances sandwiched between the former and the latter. In 2012, Facebook’s much anticipated IPO crashed and burned as stocks fell at the opening, continuing the downward spiral for the next couple of months, resulting in the stock having lost US$50 billion in value.
In the intervening years, Lyft, Uber, Peloton and other renowned firms suffered similar fates, while WeWork did not even make it through to the IPO process in what remains one of the business industry’s epic flops.
However, success stories such Airbnb which more than doubled its value, and similar accomplishments by HubSpot, Beyond Meat, and Shake Shack serve as fine examples of IPO success stories.
Businesses in the digital age, especially digitally native brands (DNB) may find that there are plenty of avenues to expand their businesses and may turn to going public to help fund this growth. PwC reported 2021 as “the biggest IPO year ever”, after 2,682 IPOs that raised US$608 billion. Closer to home in Southeast Asia, a record US$9.8 billion was raised from 121 IPOs, in the period between Jan 1 to Nov 15, 2021.
The process involved in getting an IPO right is extremely complex and requires careful planning, attention to detail, adherence to laws and regulatory requirements, a slice of good fortune, and a whole lot of other things.
In this article, we examine how companies can use cloud technology as part of the roadmap for an IPO. It is worth noting here that the points covered in this are only one part of a huge process that involves many other factors. Below are some of the benefits that cutting edge cloud technology can deliver in your preparation for IPO.
Efficient and Cost-Effective Management of Your Finances
As companies grow, sometimes it is easy to forget the critical role that back office process management plays in ensuring the smooth running of a business. Even in the digital age, it is still common for businesses to manage their finances and accounts manually through the use of spreadsheets.
For companies with aspirations to undertake an IPO in the future, this could be a recipe for disaster. Manually managing critical financial processes such as bank reconciliation often result in human errors and data duplication.
An undertaking like an IPO places strong emphasis on accurate reporting, and a little slip-up can result in wide-ranging negative consequences.
Solutions such as cloud ERP systems help automate these manual processes, saving you priceless time and resources, in addition to ensuring you avoid embarrassing pre-IPO missteps that can inflict reputational damage.
Adhering to Regulatory Requirements
A slew of legislations aimed at stringently regulating the IPO process were ushered in following the dot com bubble between the mid-1990s and 2000, and the subprime mortgage crisis that triggered the 2008 financial crisis.
Businesses who undertake IPO efforts these days come under heavy scrutiny from regulatory authorities wherever they wish to go public. If you are a business on the cusp of IPO after elevation to the high-growth trajectory, ensuring you adhere to all the stipulations is critical.
Cloud ERP systems such as Oracle NetSuite offer comprehensive solutions for fast-growing businesses. This cloud ERP system has Governance, Risk and Compliance (GRC) built in and caters to different reporting and compliance standards for different countries. Having a system like this ensures you can be confident of your reporting and auditing.
Beyond the fact that data analytics is a prerequisite for businesses who are riding the crest of the digital revolution wave, it is worth noting two main reasons why it is especially important for companies on the cusp of IPO.
Firstly, investors in the present market use a cornucopia of applications and solutions that keep them abreast of what is going on. These solutions utilise artificial intelligence (AI) to provide projections of a company’s success and red flag anything that they find suspicious.
This places the onus on chief financial officers (CFOs) of businesses to implement cloud solutions that are equipped with robust analytical and predictive capabilities built on AI to their companies.
Failure to embrace these much-needed cloud systems could very well spell trouble as CFOs start to face investors who are well equipped with data and start to question the company. It is thus very important that companies not only implement cloud solutions with extensive data analytical capabilities but also reap the full benefits of it.
Risk Management Capabilities
In a highly disruptive and volatile post-Covid, endemic world that is also battling the effects of the Russian invasion of Ukraine, businesses need cloud solutions that provide them with unprecedented visibility. Having a 360-degree view allows companies to spot problems and quickly take corrective measures to allay the fear of investors.
What’s more, by virtue of its architecture, cloud solutions also provide you real-time visibility. The quantum leap in technology had already created a highly competitive business environment.
Having a real-time, 360-degree view is one of the most basic prerequisites for a thriving business to have in place. When you have your fingers on the pulse, you can allay the fears of your investors by projecting the confidence of a leader who has everything under control and is always prepared.
Oracle NetSuite is a true cloud ERP system that is built to handle complex regulatory, operational and compliance challenges as companies grow.