Tag Archive: assessment

  1. Technology Debt – What Is It, Do You Have It, and Why You Need to Address It

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    Most, if not all, businesses today rely on IT systems of one type or another to operate.

    In an ideal world, these will be modern IT systems that require minimal and predictable effort to maintain and operate in the same capacity as when it was first commissioned.

    This does not mean there will be zero costs to maintain a well-operating system.

    • If updates are installed, hardware is kept in good working order, backups are regularly made, and performance is monitored, your system will function as expected, with costs related to these activities costs typically a solid / high return IT investment
    • If you have chosen the right IT system for your needs, configured it correctly, and have the right blend of in-house and external resourcing to maintain it (see above), it should perform as needed, cost effectively, for a sustained period of time.

    Combined, you should be empowered to focus on managing and growing your company, with your IT systems acting as enabling tools (versus constraints).

    Unfortunately, none of us live in an ideal world. Most of us must deal with some mix of old, aging, or outdated IT applications that are utilized for core business processes. Even those of us who have been able to migrate to Cloud and SaaS platforms often live in a world where, individually, these applications are great, but implementation was approached in a siloed way, meaning there is little to no integration between core systems, making seamless data sharing and automation an unrealized promise.

    Combine this with a lack of in-house IT resources to maintain or update system configurations (the people who implemented the system no longer work for you, you don’t have enough people who “know” or understand the systems well enough, or customizations and code bases have somehow become unmanageable, etc.) and you have “technology debt.”

    What this means is that, as technology, business needs, and your organization evolve over time, relative IT system performance degrades (e.g., the system gets slower or harder to use, benefits delivered decline, the system doesn’t have all the “features” etc. you want or now need, it is hard / slow / impossible to make changes, and issues with “capability fit” to current business needs and processes emerge) and / or the effort and cost required to operate, maintain, and enhance your IT systems grows.

    Does any of this sound familiar?

    Unfortunately, all too often, addressing technology debt (i.e., implementing modernized IT systems) is deferred until “pain” becomes too acute or unbearable to ignore, with IT system issues either hampering revenue growth, profitability, or operational efficiency and effectiveness, either as an organization, and / or relative to your competition.

    Letting technology debt get so bad that the rationale for modernization is “we have to” is a sorry state of affairs, based on misconceptions and fear over costs, difficulty to implement, and a general aversion to change. The reality is that, while IT system modernization is seldom “easy”, the goal is to enable performance improvement and the end result of IT modernization done well is typically a reduction in total cost of ownership / operation and meaningful returns on the investments made, both financially and operationally, with any change to business processes viewed as overwhelmingly positive over the medium to long term.

    Still, if you believe or suspect that aspects of your IT systems are holding your business back, it is still hard to know where to start: your IT department are probably well able to explain what the issues are, but less able to articulate how to solve them moving forward, because their focus and expertise is typically business continuity versus systems modernization.

    This is why Core Catalysts has developed a rapid and cost-effective IT assessment methodology that helps identify and diagnose IT issues, opportunities, and technology debt, and make recommendations on how to modernize systems cost effectively to deliver meaningful results.

    Over the course of hundreds of engagements, we have helped our clients reduce licensing and maintenance costs, update business processes, and improve profit margins, often leveraging modernized “Cloud” and “SaaS” solutions in targeted, thoughtful, and integrated ways to deliver enhanced business results.

    If you would like to find out more about our IT assessments and system modernization expertise, reach out to us today!

    –Mark Jacobs, Client Service and Delivery

  2. A Deeper Dive Into Core Catalysts Growth Services

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    At Core Catalysts, as part of our broad commitment to value creation, one of our key focus areas is helping client companies accelerate profitable revenue growth and control expenses. These efforts fall under the banner of what we call our suite of “Growth Services” offerings.

    In accelerating growth, we consider strategic growth options such as entering new markets, expanding geographically, and adding new products and services, as well as assessments of current customers and internal capabilities.

    We also help strengthen company execution by enhancing commercial effectiveness, improving operations, building channel performance, optimizing pricing, and strengthening sales and marketing efforts.

    In addition, we offer merger and acquisition (M&A) transaction support, including commercial and go-to-market due diligence, one-hundred-day plans, post-merger integration support, and exit planning.

    We are successful in delivering material, rapid, and cost-effective results for our clients because of our unique blend of consulting and line-management experience: our people truly set us apart.

    • We bring seasoned teams with deep subject matter expertise and hands-on industry backgrounds at an executive level, as well as top consulting firm experience.
    • We use proven methodologies that are fact based and data driven to deliver practical and pragmatic revenue growth and expense control plans that will make meaningful differences to both top-line and bottom-line performance.
    • We have a reputation for rolling up our sleeves and delivering tangible results, understanding a company’s core competencies, what they need to do well, and how this should be done in order to achieve the desired results.

    Most of our senior leaders come from large strategy consulting firms, but they have also led businesses.

    These combined experiences yield a natural focus on strategic issues in complex markets, with a highly pragmatic approach and a focus on implementation.

    We work with management teams to analyze their revenue and expense structures, identify opportunities for improvement, and then work side by side with them to implement action plans that drive incremental revenues and enhance the margins associated with those revenues.

    If you would like to find out more about our Growth Services offerings and how we might help your company grow more, and be “fit” for that growth, please reach out to us today!

    –Mark Jacobs, Client Service and Delivery

  3. Preparing Publicly Funded and Non-profit Organizations for Their Financial Futures

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    Expenses rising faster than income, combined with increased revenue instability and uncertainty, are dual pressures making it harder for publicly funded and non-profit organizations to manage delivering against their missions and plan for the future.

    The first step in addressing these related challenges is to analyze and understand at a more granular level both income and expense trends and projections. Only once this has been completed is it possible to identify options to mitigate, address, or eliminate the key issues identified.

    After completing multiple similar client engagements for publicly funded and non-profit organizations, Core Catalysts has developed a rapid methodology that enables us to complete “Financial Futures” assessments that arm leaders with objective information that dissects expense and funding structures and key financial management processes to highlight the greatest risks to financial sustainability. From this, we also provide an action plan for leaders to balance budgets and position their organizations for future success.

    In just four to six weeks, senior experts from Core Catalysts with specific experience and subject-matter-expertise, working directly with client finance, leadership, and operations teams, can deliver:

    A Current Financial Health Assessment

    • Analysis of budget to actuals and implications for future surplus / deficit
    • Balance sheet evaluation to determine current “runway” and risk posture
    • Spend review and assessment of ability to support future objectives
    • Funding formulas and methodologies review to identify risks to long-term sustainability
    • Budget process and financial systems review

    Financial Scenario Planning

    • Three to five-year financial forecasts, including projections with and without identified cost-saving opportunities, to illustrate their impact on surpluses, deficits and overarching financial position
    • Fund balance trend and vulnerability assessment
    • Sensitivity analyses

    Action Plan for Sustainability

    • Prioritized list of cost-saving initiatives for further investigation, with initial (directionally accurate) quantified savings, feasibility, risks, and potential impacts to organizational stakeholders
    • Initial understanding of opportunities to increase revenue
    • High-level roadmap for executing cost-saving initiatives

    At the conclusion of a Core Catalysts Financial Futures Assessment, organizational decision makers will have a clear picture of the current and future financial position, including budget accuracy and budget-to-actual reporting, forecasted financials, and a roadmap to a balanced budget through potential cost-saving initiatives.  Clients can also be led through a prioritization process that engages leadership in defining what can be tackled first, second and third given other pressing priorities in the organization.

    If you would like to find out more about our rapid Financial Futures Assessment for publicly funded and non-profit organizations, reach out to us today!

    –Mark Jacobs, Client Service and Delivery

  4. Cost Control for CIOs and CTOs

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    Holding the Line and Doing More, With Less

    In today’s dynamic business environment and economy, Chief Information Officers (CIOs) and Chief Technology Officers (CTOs) are under increasing pressure to “hold the line” and “do more with less” … all at a time when baseline IT (Information Technology) operating costs are increasing based on a variety of factors outside their control (e.g., pay increases, benefits cost inflation, and technology licensing and maintenance price escalation).

    On top of this, many CIOs and CTOs are being asked to “hold the line” on enterprise IT costs, while at the same time being served with even greater and more diverse business demands for new capabilities (e.g., application upgrades and platform extensions) as well as a burning desire across all business functions to leverage transformative next-generation technology (e.g., Artificial Intelligence, Machine Learning, Advanced Automation, etc.).

    How should a modern CIO / CTO “thread this needle,” successfully delivering innovative solutions and quality services to their organization, while at the same time responding to the pressure to control costs?

    Solving the Financial Jigsaw Puzzle

    Not all IT leaders have access to decipherable, let alone insightful, financial reports and analytics – what they have is more like a financial “jigsaw puzzle.”

    Typical complications include inaccurate categorization of IT costs, IT spend allocations distributed arbitrarily across functions and departments (or intricate formulas for calculating / allocating costs with inconsistent application of capitalization rules, and / or lack of year-over-year comparability while not reflecting reality), and difficulty in comparability due to frequent reorganizations and reclassifications.

    Fortunately, one of Core Catalysts “sweet spots” is helping “untangle” financial data to create clarity and support analysis. This means that we are frequently asked by CIOs and CTOs to work with them and their teams to establish a clear picture of spend, taking into account costs incurred centrally versus in departments, salary and non-salary trends, operating and capital differentiation, allocations, project accounting, and other areas of potential murkiness.

    Re-Baselining IT

    The Core Catalysts team includes c-level operators with decades of IT leadership experience. We have worked with hundreds of IT leaders to align their organizations with new realities and an eye towards cost control.

    We work side-by-side with CIOs / CTOs to re-baseline IT strategies and operations from the ground-up, considering both existing needs (i.e., “day-to-day” operations) and future requirements (e.g., major upgrades, implementation projects, etc.).

    Our experiences show that, although daunting on the surface, re-baselining serves multiple purposes and sets the stage for ongoing, shared fiscal accountability between IT and the rest of the business, that positively changes the dynamic of how the business sees and works with the IT function.

    Since re-baselining will inherently drive change, we are also often asked to outline a people-oriented roadmap and translate practical plans into resonant stories that support and communicate the organizational imperatives for change to all key stakeholders.

    And, having re-baselined, Core Catalysts frequently works with our clients to reforecast and develop projections to tell the IT story to stakeholders at the executive and board level, underpinned by comprehensive and compelling financial business cases to illustrate returns on investment (ROI), taking into account “total cost of ownership” (TCO).

    Initial Assessment | Key Focus Areas

    A well tested approach that can be used to assist with re-baselining includes:

    Appraisal of IT Services

    • What services does the organization require to thrive?
    • Are there services missing?
    • Are there services which are no longer required?
    • Are there services that do not belong in IT (that could be outsourced, etc.)?

    Assessment of Reference Architecture

    • Has IT made the most of next generation technology (e.g., SaaS, Cloud, etc.)?
    • Has the organization any duplicated (triplicated, etc.) technology solutions and services?
    • Is it time to rationalize past and future decisions?

    Sourcing Strategy Review

    • Are the costs of services in line with benchmarks?
    • What services should IT provide internally?
    • What services should IT provide externally?

    IT Governance

    • Are business owners collaborating with IT on projects and decisions (that impact IT)?
    • Are all the costs and associated organizational impacts considered when making IT investment decisions?
    • Does IT have a seat at the table on overall business goals, objectives, and strategy, and how they can support and enable them?

    IT Organization and Culture

    • Is the current IT organization structured for effectiveness?
    • Is IT culture focused on efficiency?
    • Is the CIO / CTO empowered to make organizational decisions?
    • Is there ‘shadow IT’ in business units or other non-IT parts of the business?

    Financial Impact of IT Operating Costs

    • Based on re-baselining, what are the revised financial projections for IT spending?
    • What financial impacts would this have on the organization (a) in the short term, (b) in the medium term, and (c) in the long term?
    • What are the key messages and “stories” that need to be communicated, and to whom?

    IT Cost Control is a Team Sport

    Our approach to IT cost-control depends on the adoption of an efficiency and effectiveness mindset for technology stakeholders across the organization … cost control is a “team sport.”

    To that end, we recommend that CIOs / CTOs engage their peers in their efforts to reduce IT operating costs: the Chief Financial Officer (CFO) and Chief Human Resources Officer (CHRO) are often key partners in these efforts and should co-sponsor any transformational work, with the Chief Executive Officer (CEO) supporting any drive for shared IT governance and decision-making.

    How is Core Catalysts Different?

    Unlike many larger firms, Core Catalysts is platform agnostic, meaning that we are neither tied nor beholden to any one solution provider and can recommend technological approaches and system selections that are exactly calibrated to our client’s needs (versus our own).

    Equally, while we have meaningful offshore resource capabilities for custom development, software implementation, and system integrations, we do not have the same pressure to “feed the beast” as larger firms, and our business model is also not predicated on tying our clients to long-term support contracts that are costly for them but profitable for us … we have no interest in building systems that only we understand and can maintain!

    Put bluntly … we put what is right for the client first and foremost.

    Finally, for every engagement, our aim is that the client realizes true and ongoing economic value from our services, measured as a multiple of our fees: our goal is to deliver a return at least ten times greater than the dollar value spent.

    To achieve these ROI levels, we approach all work by understanding expected business impacts first, and then planning our efforts accordingly, while challenging any assumption that prevents us from providing maximum value or lessens the business case for our efforts.

    In addition to bringing experienced teams and proven tools and methodologies to each engagement, we pride ourselves on our ability to bring a sense of urgency, combined with a pragmatic approach focused on delivering “dollars and cents” value to our clients … if it doesn’t make sense to you, it doesn’t make sense for us.

    Next Steps

    If you would like to find out more about our IT Cost Control assessments and IT system modernization business case generation expertise, reach out to us today!

    –Mark Jacobs, Client Service and Delivery

  5. A Pragmatic, Phased Approach to System Modernization

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    Find Out How We Reduce Technology Debt For Our Clients:

     

    Core Catalysts consults for a wide range of clients in several critical industries, including financial services, healthcare, insurance, telecommunications, and more. In today’s technology-forward business world, we find that many clients cite system modernization as one of the major business challenges they need our help to solve.

    However, they may not express their challenges in these terms. Our clients’ requests more frequently sound like this:

    “We have aging applications that our vendors no longer support. Our IT and BU teams are coming near retirement ages, and they are the only ones that can make changes and understand our systems.”

    “We can’t roll out new products or services very easily because of the time it takes our IT teams to react, and this is affecting our ability to grow our business.”

    “We just acquired a new company with aging systems, and we want to move to new platforms for the good of both businesses.”

    In each of these cases, and many more, what companies identify as a challenge can be summarized as “technology debt,” the result of aging systems.

    What Is Technology Debt?

    Technology debt refers to the costs that businesses incur as a result of outdated technology. It stems from the cumulative cost of cutting corners in system design, implementation, and maintenance over time.

    • Forbes presented striking statistics in a recent article on the subject: companies that had the least technology debt posted annual revenue growth of at least 20% more than companies that had the highest technology debt.
    • Studies from CodeScene, CIO, Gartner, and Stripe all cite that the organizations waste 23 to 42% of their annual development time and expenses on technology debt.

    No business should let technology debt increase over time so that it severely impacts an organization’s agility, efficiency, and financial health.

    A Solution Is System Modernization

    System modernization can comprehensively solve technology debt through a phased, prioritized, and pragmatic approach:

    1. Clarifying challenges
    2. Assessment, prioritization, and planning
    3. Implementation

    This approach can positively impact the reduction of technology debt without excessive investment. It also provides a way to emphasize quick wins and incremental improvements, which contributes to essential organizational buy-in.

    Clarifying Challenges for System Modernization

    Most technology-debt-related challenges share certain characteristics with each other. Although our services and solutions are highly customized based on a business’s individual needs, identifying common threads inspires confidence and leverages our experience solving modernization issues across many industries.

    These are some of the most common challenges our clients face:

    • The issues they are facing are complex and interdependent. There isn’t a single out-of-the-box solution that will meet all of our clients’ needs.
    • The client’s current efforts to modernize are time-consuming and involve many parts of the organization, thereby detracting from current business priorities.
    • The decision makers for these efforts cross the entire organization, and each person has a different risk tolerance.
    • A major driver has recently appeared to give steam to making the changes now.

    Core Catalysts recommends starting the system modernization process by clarifying these common challenges as they relate to a specific business. This helps our team fully understand what resources, personnel, and approach we should implement.

    Assessment and Prioritization

    The next step is a straightforward evaluation to determine whether system modernization is a viable solution and what approaches to take to ensure success. The following evaluative questions prove useful to our clients at the beginning of their modernization journey.

    • Is there an obvious business case for making the changes?
    • How many resources will be required to help with the modernization?
    • How much will it cost?
    • What are the risks associated with modernization?
    • Who will make the major decisions on modernization efforts (governance structure)?
    • Will we need external assistance from consultants?
    • Do we search for off-the-shelf solutions versus custom development?
    • Do we have the right team to make major modernization decisions?
    • Do we have the right teams to implement changes?

    Strategic Planning for System Modernization

    After a client has concluded that they are ready for modernization, our management consulting firm recommends following these specific, practical paths to get started:

    • Document the current state of business processes, IT support systems, back-office systems, like billing and collections, and more.
    • Document the future state needs of the organization (business units representing end clients and all supporting organizations) and tying these to the overall corporate strategy.
    • Identify the priorities for modernization and high-level timing (i.e., the wish list).
    • Determine what solutions will be needed (third party software, new platforms, and more).
    • Develop overall budget needs and clear with executive leadership and the board if needed.
    • Research third-party solution providers.
    • Develop procurement processes for soliciting and deciding on third party providers and solutions.
    • Plan for organizational readiness and change management.
    • Structure the overall implementation resources required.
    • Form a strong governance and program management structure.

    Proven IT Implementation Approaches for System Modernization

    This phase requires a heavy dose of patience, many “reality checks,” and disciplined execution to achieve sustained success. From an approach standpoint, we’ve had success with the four approaches listed below, each of which offer their own unique benefits:

    1. Microservices architecture: A modern, modular approach to software development and deployment, microservices architecture allows clients to lower costs and reduce technology debt in a manner that “layers” into the organization with minimal disruption.
    2. Cloud migration: This approach reduces reliance on an unreliable vendor, lowers licensing costs, and taps the skills of current staff. Phasing the migration strategy removes on-premises, insecure environments and replaces them with a cloud-based solution.
    3. Core consolidation: Core Catalysts has used this method to consolidate all portfolio companies on an enterprise accounting platform to prepare for sale. This delivered best-in-class reporting, and the data uncovered new revenue streams.
    4. Open-source solutions: Although open source was traditionally considered a threat to corporate security, every name-brand technology leader uses this approach at the sponsor, creator, consumer, or community level. Not without risk, open-source solutions may provide a significant benefit for businesses looking to modernize.

    Connect With Core Catalysts to Learn More About System Modernization

    We’ve learned many lessons about how to effectively and efficiently serve our clients as they move into the implementation phase of their modernization project. We look forward to an opportunity to share them with you.

    Contact Core Catalysts today to learn more about every phase of system modernization and how to partner with our team to resolve technology debt.

    About Core Catalysts:

    Based in Kansas City, Core Catalysts is a leading business consulting firm, helping clients nationwide resolve challenges related to process improvement, IT implementation, product and service commercialization, revenue enhancement, financial modeling, program and project management, and much more. Well-known as a high-quality solutions-delivery firm, we are on time and on budget every time, offering results that meet, and often exceed, your expectations.

    References:

    Kupper, Jeffrey and Richards, Doug. “System Modernization & Managing Your Technology Debt.” Presentation, 11th Annual FEI Kansas City Professional Development Day, Embassy Suites Olathe, Olathe, KS, November 13, 2023.

  6. Efficiency and Effectiveness Assessment: Could You Benefit?

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    When your annual budget is heavily reliant on grants or federal, state, or local funding, your financial resources are limited. Trying to allocate them in a way that drives down expenses and maintains (or even improves) services can feel impossible.

    Does this sound familiar to you? Is it time to think about new ways to save? Core Catalysts might be able to help you, leveraging our proprietary efficiency and effectiveness assessment methodology.

    We work with clients to review their existing and past budgets, evaluate current operations, and develop recommendations in a streamlined and targeted manner.

    Working together, we seek to propose recommendations that are practical, quick to implement, and around which consensus can be built. We provide detailed roadmaps for any key recommendations, including:

    • Estimates of the financial and personnel resources required to achieve these savings
    • Likely timeframes to implement recommendations and accrue the projected benefits
    • Detailed information on critical action steps, considerations, and relevant assumptions
    • Suggestions on the deployment strategies, communication management, and other aspects necessary for successful implementation

    Using proven processes and approaches, our experienced teams collaborate cross-functionally with client subject matter experts to identify achievable opportunities for both revenue growth and expense reduction. These savings typically amount to between ten and twenty percent of total projected expenditures during a five-year period (i.e., if your planned expenditure over the next five years is $500 million, we typically identify potential efficiency and effectiveness savings worth between $50 and $100 million), with at least a ten times return on investment for our clients versus the cost of the assessment.

    Below is a sanitized real-life summary of the results of a recent engagement, for a client in the transportation industry:

    Functional Area Recommendations
    Operations Successful implementation of improved recruitment and retention processes in key operational positions offers significant bottom-line benefits

    Improvements in staff scheduling and labor optimization offer cost savings with zero impact on front-line services

    Leverage of predictive maintenance techniques offer opportunities to improve operational KPI’s (such as vehicle up-time and cost-per-mile to operate)
    Procurement Review of procurement processes, current vendor agreements, expenditures, and other relevant measures suggest modest potential savings opportunities

    Additional savings opportunities, via implementation of shared services and collaborative procurement arrangements, offer large and worthwhile benefits
    Finance Alternative approaches to employee benefits, such as an on-site primary care clinic, offer potential efficiency and effectiveness savings while also delivering a superior employee experience
    Technology Significant opportunities to leverage technology to digitize systems and processes and improve automation, to deliver both top-line and bottom-line benefits

    Large opportunities to improve efficiency and effectiveness through expansion and improved use of the existing technology systems and architecture
    Real Estate, Facilities, and Other Assets Under-utilized land, buildings, equipment, rights of way, and facilities offer significant monetization and savings opportunities

    Multiple savings opportunities available from improved energy efficiency, any of which could be funded 100% by outside sources
    Revenue Enhancement Multiple opportunities to increase revenue from existing operations

    Several potential new revenue sources also identified

     

    To be clear, our approach is not about unrealistically reducing the budgets allocated to core service, or about reducing operational standards through cutting corners. What we do is help our clients look outwards for sensible benchmarks and viable solutions to the individual challenges and unique situations they face.

    If you are interested in finding out more about our efficiency and effectiveness assessment methodology, which is part of our Growth Services offering, then please give us a call!

    – Mark Jacobs, Client Service & Delivery