Tag Archive: strategic planning

  1. Annual Budgeting and Strategic Planning

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    ARE YOU GETTING READY FOR ANNUAL BUDGETING AND STRATEGIC PLANNING?

    In the blink of an eye, we are already in the third quarter of 2024, meaning it will soon be time for most businesses to gear up for their annual budgeting and strategic planning.

    In almost every industry, markets have become more complex and variable, and economic dynamics maintain a high degree of uncertainty for 2025.  Setting the financial and strategic tone for the upcoming year should be of vital importance to your organization.

    Therefore, whether your company has a very formalized set of processes and meetings for annual budgeting and strategic planning, or takes a more “relaxed” approach, effective preparation could make the difference next year between growth and success or missed opportunities and challenges.

    Here are six suggestions for how you should be preparing and getting ready for annual budgeting and strategic planning:

    (1) Reflect on the past year

    Begin by reviewing performance to date and projections for year end, looking at available financial and operational reports, dashboards of key performance indicators (KPI’s), and any documented assessments of key business initiative project outcomes.

    Ask yourself the following questions:

    • Did we meet our financial goals?
    • What were our biggest successes and failures?
    • How did our actual revenue and expenses compare to the budget?
    • What were the trends, and what were the factors that drove these trends?
    • Were there any unforeseen expenses or revenue streams?
    • What current trends might carryover to next year, and should any new or emerging factors be planned for and considered for next year?

    This reflection will provide valuable insights into what worked well and what didn’t, forming a foundation for making informed decisions for the next year.

    (2) Set Clear Goals and Objectives

    Define what you want to achieve in the upcoming year.

    If you are functionally focused, think about the goals and objectives for the year, but be mindful that these will need to “ladder up” to broader business goals and objectives, including revenue and profit, so you should have a point of view on what these broader goals should / might / will be, and how your goals and objectives will contribute to achieving them.

    All goals should be specific, measurable, achievable, relevant, and time-bound (SMART).

    Whether it’s increasing revenue by 10%, launching a new product, or expanding into a new market, having clear goals and objectives will help you guide and contribute to any annual budgeting and strategic planning efforts.

    (3) Engage Stakeholders

    Any planning and budgeting process should be cross functional, engaging key stakeholders and incorporating different viewpoints. Diverse input and perspectives (backed by solid data) are vital for creating a comprehensive and realistic budget, projecting KPI’s and numbers for next year, and identifying and prioritizing business improvement projects and initiatives.

    Whether it is meetings and workshops, or iterating Excel spreadsheets or PowerPoint decks, collaborate with relevant stakeholders to gather input and insights to help you be ready for annual budgeting and strategic planning.  The goal is to be a key contributor in ensuring that everyone is aligned with the “end product” outcomes of the plan for next year.

    (4) Analyze External Factors

    No business operates in a vacuum. Therefore, whether it is analysis of market trends and opportunities, identification of competitive threats, or general assessment of important business assumptions that are somewhat out of your control (such as interest rates, inflation, etc.), incorporating relevant external factors into your budgeting and strategic planning activities is crucial.

    Have a summary of the key inputs / outputs of your external factors assessment ready to go for when annual budgeting and strategic planning begins.

    (5) Forecast Revenue and Expenses

    Detailed situational analysis and well-thought-through goals and objectives are great, but Revenue and Expenses are “where the rubber hits the road.”

    Create revenue forecasts based on clearly identified assumptions, ideally considering blends of different scenarios to come up with “optimistic,” “pessimistic,” and “most likely” projections.

    Likewise, estimate your expenses, including fixed and variable costs, and don’t forget to account for potential investments in new projects, technologies, or personnel, etc.

    Be prepared to walk through and justify your forecasts and projections, and try to ensure that you can update them “on-the-fly” as new information, updated assumptions, and input from other business areas comes in.

    (6) Prioritize Initiatives

    Many businesses struggle with prioritization: If you have 31 priorities, you don’t really have any prioritization!

    Work to differentiate between important activities and projects that need to happen to sustain and deliver “business as usual” versus the one or two (three maximum!) initiatives that are either vital to success or will truly “drive the needle” and have meaningful impact on business performance and achievement of goals and objectives.

    Also work with other stakeholders to evaluate the return on investment (ROI) of each and every potential project or investment, understanding that resources are finite and that not every initiative should be a priority, and in fact some should not “make the cut”.

    Be ready to make difficult prioritization decisions based on facts, data, and a realistic assessment of organizational bandwidth and capacity for change.

    If you spend some time preparing, including relevant parts of these six suggested steps, you should be ready and able to make a significant contribution to your organization’s annual budgeting and strategic planning.

    However, if you believe you or your organization needs more help, be it developing a detailed budget, implementing processes, technology, and tools for annual budgeting and strategic planning, establishing monitoring and reporting processes, or communicating goals and plans across the organization to ensure buy-in and alignment, Core Catalysts can help.

    To find out more about our Budgeting and Strategic Planning support services, reach out to us today!

    –Mark Jacobs, Client Service and Delivery

  2. 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.