Because critical infrastructure is…well, critical…the industrial software products that operate critical infrastructure must rely on accurate models of the world. However, building and maintaining an accurate algorithm requires significant R&D resources.
We can equate companies that operate with considerable R&D spend to aircraft flying with a heavy payload. These software companies that spend heavily on R&D need to have strong cash inflows (fuel) to offset the spend (weight of the payload). This means that companies with technically sophisticated products need to be particularly conscious of how long it takes to receive cash from their customers.
Many factors can affect cash inflows to a business: sales cycles for new customers, account size of customers, payment terms, customer churn, etc. Mismanaging any one of these factors can slow the speed of cash inflows and, therefore, cause issues in-flight.
The key to efficiency is to balance the R&D intensity of the business with the cash inflows to the business. This usually means minimizing activities like building custom features for one-off customers (who contribute to the R&D spend, but don’t add much fuel to the tank). In a world where capital is expensive, cash from customers provides flexibility and endurance. Understanding the true time to receive cash inflows helps improve budgeting for R&D and ensures that the company has enough fuel for the flight.