Tag Archive: communication

  1. Communication: Finance and IT Groups

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    We have been supporting clients across many industries and sizes for as many years. Our group’s collective experience is estimated at over 150 years, in fact. Our team has worked at notable consulting companies including Ernst & Young, Deloitte, Alvarez and Marsal, Cognizant, and Cap Gemini to name just a few. This coupled with team members that have worked in multiple industries and companies such as FIS, Jack Henry, BNSF, Electronic Data Systems, Lloyds of London, and the like provides us a strong base of knowledge and many lessons learned that can be shared. We support both the IT needs of the company and the finance and accounting needs, which allows us to understand both sides of the situation.

    This post draws upon that experience base to offer up ways to bridge the gaps identified with the end goal of improving business performance.

    Trends Impacting Communication

    The trends we have seen that have been causing the gaps to arise include:

    • The sheer pace of technology changes – where new options exist for business applications like CRM, ERP and BI, networks, and computing. With Artificial Intelligence tools hitting the mainstream – we are experiencing an even faster pace of change.
    • The rapid increase of Cyber Security related issues – the proliferation of ransomware, sophisticated phishing attempts, and the availability of Cyber Security insurance to help companies mitigate risk.
    • The CFO’s role in many companies has been emerging – and extending to covering the Information Technology group as well as traditional finance, accounting, and treasury functions.
    • CFOs have not typically been trained in technology topics through their education and work experience – and computer science majors have not been classically trained on finance and accounting topics.
    • The building technology debt in the company – due to under investment over the years in key applications typically expressed as, “the third-party vendor finally says it will ‘no longer support application x no matter what the price,’” and other examples.
    • The changing roles in IT with the importance placed on Chief Technology Officers (CTOs) versus the Chief Information Officers (CIOs) the various shades of CIOs.
    • The emergence of cloud computing – where companies are now ‘renting’ their compute capacity versus having a fixed asset approach with internal data center and servers. Companies like AWS and Microsoft have been experts at providing these services while providing a complex set of pricing and terms that can challenge the brightest CFO and CIO.

    Challenges: The Root of Communication Problems

    The problems we typically encounter can be broken down into several categories:

    1. Communications mismatch – the finance and accounting terminology does not match up with the technology terminology.
    2. IT groups not viewed as strategic to the business – CIOs/CTOs not having a seat at the executive table shield them from knowing the strategic direction the company is taking.
    3. CFOs uncomfortable with understanding the technology terms – and how to ask intelligent questions.
    4. IT leader talks in terms that only another tech person would understand – causing confusion and frustration. Just trying to explain Agile software development process to anyone not involved or trained on the technique!

    How to Bridge the Communication Gap

    Now for the payoff: ways to bridge the gaps we have collected over the years. No one size fits all so take the ones that meet the needs of the organization and jettison the rest.

    1. Give the IT leader a seat at the strategic table – this allows the vision to be more closely mapped to the current technology footprint. This doesn’t always require an organizational change, i.e., IT leader reporting to CEO. Just invite them into the strategic planning discussions.
    2. CFO needs to invest some time in understanding IT trends, terms and how it affects the current IT portfolio at the company. This can come from attending periodic third-party sessions on technology trends, reading magazines like CIO Magazine, Wired, etc. It can also come from understanding the current IT portfolio for the company and associated ‘road map’ if available.
    3. The CFO and CIO/CTO (or IT leader) need to invest time educating each other on their perspectives. Maybe use some outside facilitation to help enable and hold each person accountable. Take baby steps in defining some key metrics that have both IT and Financial metrics. Have each person share and explain the reporting they use to communicate to the organization.
    4. CIO/CTO (IT leader) needs to invest some time understanding the financials for the company, and how things like forecasting are performed at the cursory level. This may include taking an external class on accounting, finance, and/or the like. It could also include attending third-party presentations on economic forecasts or things like merger & acquisition classes (how companies are valued).

    How can we help you?

    If any of these ideas strike a chord with you, you are not alone. We have tools and examples of how to bridge the gaps that we are more than happy to share with you and your teams. It would be nice if there was just one book to read or one website to review that has all the answers you need. Unfortunately, that is rarely the case. Core Catalysts can certainly give you a healthy head start, however.

    All the problem areas can be overcome in our experience, and this always leads to business improvement results. We stake our reputation on it. Just ask our clients.

  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