Tag Archive: automation

  1. 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

  2. Growth Strategies in a Recession

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    While many business fundamentals remain robust, it is fair to say that the global economy isn’t exactly thriving, and chances of at least a mild recession in the near future are high.

    However, this doesn’t mean you have to give up on growth! There are multiple potential strategies that can help your business grow and prosper during a recession. Here are just a few you should consider:

    Strategy 1: Increase Marketing

    To save money during a recession, many companies reduce Marketing spend. However, historically it is the companies that don’t cut their ad spending during a recession, but in fact increase it, that fare best during the downturn and that also bounce back strongest.

    If all your competitors are cutting their budgets, and your business is increasing and fine-tuning its marketing efforts, then your business could win new customers and sell more to existing clients by being more aggressive.

    Furthermore, during a recession you can often get more “bang for your buck” in terms of marketing spend. When competitors slash their marketing budgets, consumers will be less likely to see their marketing efforts, while at the same time seeing your presence and messaging even more frequently.

    Bottom line: Don’t cut back on Marketing spend, increase it! Recessions are a great time to improve market share and achieve greater marketing return on investment at lower costs than in good economic times.

    Strategy 2: Focus on your best customers

    A recession is the perfect time to segment your customer base and market, and to focus on your most productive and profitable customers.

    Take time to analyze your available data and balance the short and long term. Who are your best customers now? Who has the most potential? Look at channel, mix, and margin, as well as just revenue and profit. Think about lifetime value (how valuable they will be to you over the full lifetime of your relationship with them).

    Recessions are also the best time to consider cutting or addressing difficult, unproductive, or unprofitable customers. After all, they’re either costing you money or there is an opportunity cost in spending time on them versus easier to work with, more profitable, more productive, or higher potential clients.

    Finally, it is important to remember the old adage: It costs ten times as much to recruit a new customer as it costs to retain an existing one.

    Customer acquisition costs have generally been getting more expensive, but recessions make it even more costly.

    Therefore, making more out of the customers you already have, and reducing and eliminating customer defections to competitors, or other causes of “churn”, are smart things to do during a recession.

    Strategy 3: Raise the game in pricing and portfolio management

    If the last couple of years of historically high inflation have taught us anything, it is that almost all companies could be better in the discipline of pricing: even “high performers” in pricing management still have opportunities to unlock additional value through more data driven approaches.

    Companies can enhance their understanding of pricing by mining past transactions, performing customer segmentation, and analyzing preference, win rate, and competitive pricing data. These insights can then be used to dynamically manage pricing or customize and evaluate pricing for individual products, services, contracts, or deals.

    Equally, during a recession, the best companies also replace broad-based price changes with strategic changes to either grow revenues or protect / grow margins.

    During a recession, companies have several pricing strategies at their disposal. These include exchanging price for value, providing additional benefits like volume guarantees, bundling products and services, adjusting service levels, or passing on surcharges for customer behaviors that result in revenue or profit loss.

    In a recession, smart companies also modify and streamline their product or service portfolios and offerings to optimize “mix” and best match supply and demand.

    Examples of this include changing or eliminating product or service families based on cost structure, complexity, or strategic fit, and migrating customers to other (more profitable) items.

    When done right, these moves can deliver streamlined operations, increase revenue, and lower costs as well as increase customer loyalty and growth.

    Strategy 4: Communicate your value to customers

    Demonstrating your value to customers is important all the time, but especially so during a recession.

    In times when customers are reevaluating their budgets and considering changes in their buying patterns, it is crucial to remind them of your value. This can be achieved by presenting hard facts and compelling data that support the benefits of your products or services, as well as their returns on investment. By doing so, you reinforce your value to customers.

    At the very least, having conversations with your clients about this will flush out their concerns and intended decisions. This allows you to work with them and come up with strategies to maintain and even grow demand by identifying solutions to the issues and opportunities they raise.

    Strategy 5: Scale Automation

    Despite the current economic headwinds, many businesses and industries are still struggling with labor shortages and skill challenges.

    Equally, companies that emerge healthier from recessions typically reduce activities that are performed manually and eliminate unnecessary or nice-to-have activities. In turn, this optimizes organizational and operational efficiency and effectiveness through enhanced and increased automation.

    Scaling automation reduces costs, improves resiliency, frees up scarce human resources, and creates fuel to invest in key priorities.

    We have been encouraging our clients to consider scaling automation within their businesses to address these issues that are drags on their revenue and profitability potential.

    To achieve success in an automation program, companies should focus on the following:

    1. Strong executive sponsorship
    2. Ambitious automation goals
    3. Clear pipeline of opportunities
    4. A well-defined change management plan
    5. Solid governance structure
    6. Effective delivery capacity
    7. A plan to redesign work to realize automation value
    8. A system for tracking benefits

    Done well, scaling automation can unlock significant growth!

    Summary

    To achieve growth during a recession, consider the following growth strategies:

    • Increase Marketing
    • Focus on your best customers
    • Raise the game in pricing and portfolio management
    • Communicate your value to customers
    • Scale Automation

    Growth during a recession is possible.

    Core Catalysts is full of experts in growth strategy, helping our clients grow both their top and bottom lines.

    If you need help with achieving growth in your business or would like to learn more, please reach out to us to schedule a discussion!

    –Mark Jacobs, Client Service and Delivery

  3. Questions for 2022 Pt. 4: Automation

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    Today we offer the final post in a series focusing on questions for 2022. You can read the previous posts on data literacy, price increases, and expense control here, here, and here.

    This week, we further explore the opportunity to evaluate (or reevaluate) business cases for increased automation in light of the current business environment, and the likely continued knock-on effects of the pandemic.

    What we already know:

    As in previous weeks, let’s take what we know about 2022, and then apply it to the question.

    The current US labor market is unlike any previously experienced in recent memory:

    • A greater than expected death rate has reduced the like-for-like labor pool
    • Greater than average retirement rates have also reduced the like-for-like labor pool
    • A shortage of affordable childcare has also negatively impacted the labor market

    These and other pandemic driven factors have given rise to unprecedented labor shortages, pressure to increase wages, greater than average labor turnover (“The Great Resignation”), and HR nightmares all around.

    Great, but so what?

    The bottom line is that many businesses cannot find qualified candidates to fill open positions. Even when they are offering above market rates, putting revenue, profit, growth, and even long-term business viability at stake, there remains a shortage of viable candidates.

    This is where the question of automation comes in.

    In our experience as consultants, we’ve often seen clients consider the investment and business case for increased automation. This is across many industries and business functions, looking at everything from the standard evaluation of more efficient heavy machinery to consideration of exotic solutions involving robots and artificial intelligence, through to more mundane decisions on IT. Many times, even when the return on investment is clear and the business benefits obvious, they hesitate to make these investments due to perceived risks, the availability of labor, and the fact that their businesses could still operate satisfactorily without increasing automation.

    In most cases this was probably the right decision at the time. But the question now is, “Can businesses really afford not to consider and implement increased automation solutions?”

    If labor is a sizable part of your business expenses, and your labor costs are increasing, now is the time to look at labor saving and automation solutions no matter what the industry or function.

    In the past, automation investment cases may have hinged on reducing existing headcount. Now, they might revolve around the mission critical reality that people cannot be found to do the work that needs to be done for the business to operate.

    Equally, maximizing productivity and job satisfaction of existing employees in the tight labor market may also provide a compelling case for investment.

    Essentially, investment cases for automation may now be about more than just simple margin improvement, or cost takeout opportunities that previously you could afford to ignore or not do. They could relate and be the answer to existential threats to ongoing business sustainability.

    Conclusions

    If, for whatever reason, you have previously considered automation but decided not to move forward, it may make sense to revisit these potential opportunities.

    Now might be the right time to identify and evaluate automation opportunities. It might also be time to implement anything that is either a quick-win or that could be transformational, be that from an operational or financial perspective.

    Core Catalysts regularly helps clients identify opportunities for increased automation and build business cases to support investment decisions. We also aid in vendor selection through to project management and implementation of automation initiatives, across all sizes, types, and durations of project. If you believe we could help your organization, why not reach out to us to schedule a call?

    We hope you have enjoyed this series of thought-starters for 2022. Thank you once again for reading and please share any thought or comments you have.

    – Mark Jacobs, Client Service & Delivery

  4. Thought Starting Questions for 2022

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    It’s that time of year again. Businesses are going about making confident predictions on what the next twelve months will hold for them. And yet, even at the best of times the accuracy of these predictions will be questionable by December. Given all that, perhaps the point of these predictions is less about being right, and more about creating engagement for the marketing folks?

    But as we all know, we are not living in normal times right now. No one can really see into the future, and it is not possible to be completely sure what the next year holds. Just as well, your time is valuable, so why waste it reading another set of bold predictions for 2022 that have questionable value just to boost someone’s marketing metrics?

    To this end, we humbly offer you a brief series of thought-starting questions that might actually be helpful and worth pondering if you are considering the year ahead. This will be the first of many blog posts to follow in the coming weeks, all of which will explore these questions a little more thoroughly.

    2022: What can we be confident about?

    There are three things we can be relatively sure of:

    • The Covid 19 pandemic, and its effects on business, are not over yet.
    • Specifically, supply chain issues and labor shortages are going to continue to be concerns for most of us for at least the next twelve months.
    • Higher inflation is definitely going to be an economic factor for the next twelve months, and possibly longer.

    How do these factors influence what I should be thinking about for this year?

    If you agree with the three driving points identified above, four key questions for 2022 stand out. These questions are linear and feed into each other. They are:

    #1 Does my organization have the right level of Data Literacy, and is it in the right areas and functions?

    There are some real-life “nuts and bolts” things that most businesses need to be thinking about and working on in this area.

    #2 Do we need to be considering Price Increases?

    And if they are needed, how do we actually implement them effectively, as opposed to just talking about them but not doing anything, or trying to implement them and just ending up upsetting our customers and / or not achieving any financial benefit.

    #3 Have we adequately reviewed business cost structures and all major business expenses in light of how business has changed?

    And what’s more, will it ever go back to how it was pre-pandemic?

    #4 Should we revisit (or visit for the first time) business investment cases for enhanced and increased automation?

    Historically, whether or not to invest in automation has been a decision based purely on ROI and ease of implementation. If wage inflation and labor shortages continue, increased automation may cease to be a choice and become a necessity to ensure operational viability, continuity, and long-term business sustainability. In other words, can you afford to not automate more?

    Exploring Question One

    This week, let’s dive a little deeper in thinking about the question, “Does my organization have the right level of Data Literacy, and is it in the right areas and functions?”

    What we already know:

    Once again, let’s take what we know about 2022, and then apply it to the question:

    • It’s generally accepted that inflation in the United States is currently running around 7%, and no one knows whether this is a short-term aberration, or if it will be a longer-term reality.
    • Based on current lifespans, average retirement age, and the law of averages, at least 80% of the current working population have no experience living or managing a business in a prolonged (or even relatively short) period of such high levels of inflation.
    • Likewise, most people working today are used to Just-in-time (JIT), Kaizen, and other lean manufacturing and supply chain practices (implemented across the eighties, nineties, and aughts, creating significant cost savings in a time when economies struggled) and either have not experienced or barely remember a time when things worked differently.

    Great, but so what?

    Well, the challenges of 2022 mean that having people who can work with current IT systems, pull data, and then report on and take standardized or rote actions just isn’t enough anymore.

    What businesses now need are people who can interpret the stories behind the data. People that can develop insights and actions that consider imperfect supply chains and labor availability are in high demand. These are people that can see the many complex dependencies and interdependencies, both internally and externally, that are either hidden or are not things that businesses previously had to worry about (pre-pandemic).

    Recognition of a deficit in required data literacy in many organizations is the reason why it is so hard to hire demand planners, business analysts, and supply chain specialists right now. This deficit isn’t just a supply chain and manufacturing issue. It spans across all functions, including administrative functions like HR (such as labor planning, scheduling, etc.) and finance (such as maintaining margins during times of extreme changes in expenses/revenue).

    The question, then, is as follows: Do you have the right people with the right skills to interpret and manage through a time of great variability and ambiguity? We’re in business territory that most people have never experienced, and businesses need skills and experience that perhaps they once had, but that have also likely atrophied after an extended period of disuse.

    Conclusion

    Your answers to this question will probably lead nicely to the next post on price increases. A subset of data literacy is the ability to pull together all the information needed to identify whether or not price increases are needed, how much they should be increased by, and the data that is needed to justify increases to customers. Even if you have this capability, when is the last time you asked for a price increase, and how well did it go?

    Here at Core Catalysts, we’ve helped multiple clients analyze their data literacy. In doing so, we’ve also helped clients identify issues and opportunities with meaningful impact to their top and bottom lines, and then helped them fill important gaps in organizational capabilities. This allowed them to take action to capitalize on available opportunities, spanning everything from IT system evaluation and implementation through identifying and hiring new employees. If you believe we could help your organization with this, why not reach out to us and schedule a call?

    In the meantime, we hope reading this article and thinking about these questions has been worth your time. We welcome comments and additional thoughts, and please reach out if you’d like to talk more about your current organizational data literacy and tackling some of these challenges!

    – Mark Jacobs, Client Service & Delivery