How CFOs can embrace the metaverse
Businesses must think carefully about how to use the metaverse and also generate new revenues. That's where CFOs can play a crucial role. The post How CFOs can embrace the metaverse appeared first on Sage Advice United Kingdom.
The metaverse is receiving significant hype.
Now, businesses need to think very carefully about how they will exploit the potential of this fast-emerging technology to generate new revenues.
That’s where you as a CFO can play a crucial role and help ensure your organisation is generating new, viable business models.
In this article, we discuss how interest in the metaverse is gathering pace and how CFOs can explore how their businesses can be part of it.
Here’s what we cover:
- From hype to potential reality for the metaverse
- What is the metaverse?
- How will businesses exploit the metaverse?
- What does the metaverse mean for CFOs?
- What should CFOs consider as they embrace the metaverse?
- Final thoughts: Into the metaverse and beyond
From hype to potential reality for the metaverse
Pushed as the next big thing in technology by high-profile figures such as Meta founder and CEO Mark Zuckerberg, companies and executives worldwide continue to talk about the metaverse.
In fact, 40% more companies mentioned ‘metaverse’ in their company filings documents during the first quarter of 2022, according to researcher GlobalData.
This rapid rise in chatter is a response to metaverse hype across the technology industry.
As well as Meta, other Big Tech giants – such as Microsoft and chips specialist Qualcomm – have started to explore how they will develop useful hardware and applications for this space, and how their customers might benefit.
As these developments continue to pick up pace, organisations around the globe must respond.
While many technologies connected to the metaverse remain in the labs, others – such as virtual reality (VR) and augmented reality (AR) – can be trialled and explored.
Companies must develop useful proof of concepts at the earliest opportunity.
As CFO, you hold the keys to corporate finance. You’ll play a crucial role in helping to establish explorations in the virtual world.
What’s more, many of the advances connected to the metaverse – whether that’s the establishment of payment techniques or the purchase of virtual real estate – will have a direct impact on the roles and responsibilities of finance chiefs.
With that pace of change in mind, and from initial investigations to the adoption of cryptocurrencies, it’s clear that CFOs will be at the fulcrum of this digital transformation.
What is the metaverse?
In its simplest terms, the metaverse is a network of 3D virtual worlds that uses technologies – such as virtual and augmented reality – to help people connect in richer ways than are possible in the traditional, flatter internet.
Sage’s recently released research report, The Redefined CFO, suggests the metaverse is best seen as a convergence of digital and physical lives through a range of virtual touchpoints and other environments.
Tech researcher Forrester comes to a similar conclusion, referring to the metaverse as the 3D experience layer of the internet.
Right now, the metaverse is a series of separate, tech-led developments.
Analyst firm Gartner says pioneering IT vendors are creating technologies, such as through VR headsets, that allow users to replicate their lives in a digital world.
These kinds of developments are a first important step in the creation of the metaverse.
Such has been the cacophony surrounded these new virtual worlds so far that it would be easy to think that a fully formed metaverse is already ready to explore.
Let’s be clear: the metaverse is still very much in its infancy.
As tech analyst Forrester suggests, despite the global hype, the metaverse is not here yet.
A bigger and more successful metaverse will rely on deeper virtual experiences.
Gartner envisages a world where a series of activities – from attending virtual classrooms to buying digital land and constructing virtual homes – will take place in a single online space, with multiple destinations across technologies and experiences.
What’s already clear, thought, is that the metaverse presents huge opportunities for organisations and their CFOs.
As 34% of US online adults (28% in the UK) express excitement for what the metaverse will offer, Forrester reports that 76% of US business to consumer (B2C) marketing executives plan to invest in metaverse-related activities in 2022.
As a CFO, you need to ready for this shift.
How will businesses exploit the metaverse?
So, where will the executives who are exploring the metaverse look to invest their cash?
In the metaverse, businesses will be able to connect with customers in new ways and their employees will be able to work more productively.
As hardware and software evolves, employees will be able to use VR and AR technology to view crucial information as they work.
One example is enhanced data visualisation that could provide finance teams with precise and frictionless ways of working. Talented human workers will then be freed up to work on more valuable tasks.
Then think of collaboration.
We’ve all spent more time online during the past two years and the metaverse will provide fresh depth to virtual conversations.
Through dedicated AR and VR technology, people who aren’t in the same room – whether that’s work colleagues, conference attendees or new clients – will be able to communicate as if they were.
The metaverse won’t just bring benefits to your employees and partners. Your customers are interested in this space, too.
That’s particularly true when it comes to a younger generation who have grown up playing massively multiplayer online games.
The technology of the metaverse will also spread to other customer experiences beyond gaming.
Almost two-fifths of UK consumers want to use augmented reality (AR) and the metaverse to find product information as part of their buying journey, whether it’s trying on outfits via a virtual wardrobe or visualising how new furniture might look in a room.
GlobalData says new and innovative use cases are announced regularly.
It points, for example, to Manchester City Football Club’s recent announcement that it plans to create a virtual stadium in the metaverse.
With assistance from tech giant Sony, the club hopes to allow supporters to watch live games virtually from anywhere around the world.
Such is the pace of development that analyst Gartner says 25% of people will spend at least one hour a day in the metaverse for work, shopping, education or entertainment by 2026.
In short, the demands of your tech-savvy staff and customers will continue to evolve.
You and your company will need to invest in the metaverse to meet these requirements.
What does the metaverse mean for CFOs?
Consultant Accenture says almost three-quarters (71%) of global executives believe the metaverse will positively impact their organisations, with 42% suggesting it will be transformational.
With so many C-suite leaders beginning to think about their strategy, can your business really afford to be left behind?
The good news from Sage’s research is that almost a third (30%) of UK finance leaders believe their businesses have already entered the metaverse, while over half (58%) saying they have moderately progressed into the metaverse but still have a way to go.
That’s a positive perception of developments connected to a technology that, for many people, is still at a nascent stage of development.
For finance chiefs who are looking to help their organisations complete the shift to the metaverse, there are a number of important factors to bear in mind.
One of these areas is crypto.
Gartner expects the metaverse to have a virtual economy enabled by digital currencies and non-fungible tokens (NFTs), which are non-interchangeable units of data stored on a blockchain.
Finance chiefs must understand as soon as possible how these emerging technologies will be used across their organisation’s processes.
Once again, Sage research suggests early signs are positive: almost half (44%) of UK finance leaders believe decentralised currencies will prove extremely viable as a long-term payment solution.
Just 2% of UK finance chiefs have no interest in using cryptocurrencies for payments.
Digital real estate, meanwhile, is another area that could require your specialist input as CFO.
Similarly to physical assets, digital land and online real estate is limited. Such scarcity means people and organisations are willing to pay for these virtual assets.
Some investors are putting an early stake in the ground.
In 2021, the average cost of digital land was around $5,300 (£4,200) – in comparison, the average UK home costs £240,000.
Over the past few months, combined land sales in the metaverse have risen by 1,000% and the sector is estimated to double in size through 2022.
What should CFOs consider as they embrace the metaverse?
What’s clear is the metaverse and other related technologies, such as digital currencies and NFTs, are supporting a fundamental shift in the roles and responsibilities of CFOs.
Rather than simply fulfilling your traditional tasks in a physical world, you must embrace advanced technologies and think about how your business operates in a virtual environment.
No one expects the shift to the metaverse to be straightforward.
As well as significant technological barriers that will need to be overcome, organisations and their CFOs are likely to encounter a range of cultural factors.
You’re going to need to consider these issues, too.
One of the key elements will be ensuring people have the right skills to make the most of the metaverse.
More than half (54%) of UK finance leaders say they are creating professional development training around the metaverse, according to Sage’s research.
Beyond skills and capabilities, companies and their CFOs can utilise a range of tactics to prepare for the metaverse.
Sage’s research suggests UK finance leaders are focusing on several key areas:
- Preparing for new regulations (49%)
- Exploring new finance or accounting processes (47%)
- Purchasing real estate via NFTs (44%).
It’s worth noting that, despite the confidence of many finance chiefs who responded to Sage’s research, there’s still significant amounts of groundwork to be completed.
Take payments, for example: just 13% of UK finance leaders currently accept cryptocurrency payments, while a third (33%) have plans to do so during the next year.
Even when foundations for crypto and NFTs are put in place, CFOs are likely to encounter other challenges.
Prime among these are the environmental concerns associated to the huge computing power required to verify Bitcoin transactions.
It’s those kinds of concerns that lead a quarter (25%) of UK finance chiefs to say the lack of alignment with sustainability policies is the biggest barrier to their business adopting crypto.
Other challenges include finding the right talent to manage these currencies (23%) and concerns related to information security (21%).
Final thoughts: Into the metaverse and beyond
The metaverse isn’t here yet, but it’s coming.
Early forays into VR and AR are being combined with new developments in related areas such as digital currencies and NFTs.
Major technological and cultural challenges will need to be overcome before the metaverse becomes manifest – yet it’s being formed as we speak.
Even when these challenges are taken into consideration, it’s important to recognise that big-name backing from major technology players means it’s a case of when, not if, the metaverse becomes a business reality.
So, now is the time for you and your senior peers to think about how you and your business can make the most of this fast-emerging space.