Time to Scrap Your Plans: Rethinking Your Approach to Budgets and Strategic Initiatives
By Joseph Giunta, Partner at New Bridge Consulting Group
As we know, Covid-19 and the events of the last few weeks will have far-reaching impacts on our business operating models; not just from a financial perspective but also in the way we deliver services to our clients and how workforces keep employees safe. There are many companies that will survive and have been executing well thought-out business continuity plans; smaller companies that will perish, while others that will benefit in the long-term from a new sense of purpose given more streamlined operating business models.
Many companies have had to retreat from the marketplace through no fault of their own. There are many great companies in this country run by great leaders, individuals who lead from the front with a great sense of humanity for the community. These companies have attempted to keep their employees on payroll while trying to weather these health and economic storms. Few companies have the luxury of being able to do this for a prolonged period of time and are financially stressed.
It’s time to throw away your budgets and plans, start over again and put your corporate values to work. Actions will speak louder than words. How many times have you heard that “We are a customer-driven organization” or “our employees are our greatest asset”?
While these may sound like canned statements, this is the lens in which we need to look at our businesses during trying times. As corporate leaders it's important that we stabilize our workforce; doing everything in our power to ensure our people’s safety giving them the ability to perform their duties while caring for their loved ones. Additionally; when looking at initiatives, review for appropriateness and relevance to today's new reality. Will these initiatives help your customers today as well as tomorrow? There is a new normal that must be taken into account.
Revenue plans and large-scale initiatives need to be reviewed under a different lens. It makes sense to be thinking about your revenue and expense forecasts on a rolling 12-month basis, as there’s a great deal of uncertainty and this may help you make more informed decisions.
After a review of revised revenue and profitability forecasts, many companies just simply may not have enough capital to sustain themselves, while those that are fortunate and able to withstand this economic downturn need to evaluate their current business model. What has changed, what is the current norm and what parts of this are here to stay? We know that it's difficult to focus on the future while in the midst of a crisis such as this, but it's necessary to be thinking ahead.
Many companies have set up crisis centers and war rooms to manage through these events. There's lots of data being gathered that can be leveraged during these times.
- What are the difficulties your employees are having?
- What can you do to better service your clients today and tomorrow?
The challenge will be gaining an understanding of these changes and aligning management to the new direction and then of course how fast can you start redirecting resources towards your gaps in digitalization.
In our discussions with clients there are several emerging themes:
- Customer Support:
- Customer needs are rapidly changing
- Increased need for support to compensate for their lack of infrastructure and your own shortcomings.
- Increased need to eliminate paper and physical contact requiring access to more contactless digital capabilities.
- Position yourself to service the client with rebounding demand in the future.
- Supply Chain and Vendor Optimization:
- Insufficient business continuity and resilience resulting in fracturing your processes and your ability to deliver services to your clients. This has resulted in the need to reevaluate whether outsourced functions are more mission critical than initially thought. Many will reevaluate whether these capabilities should be in-sourced.
- Revised revenues, lower operating margins and a need to reduce expenses.
- Strengthening of Infrastructure:
- Support model for remote employees: according to a Gartner study 74% of CFOs surveyed said that their firms will look for a portion of their staff to work remotely on a permanent basis in the future.
- Need to provide consistency of service to your customers and robust operating model for your employees.
- Strengthening of business continuity and resilience.
- Retooling of employees for new in demand skill sets.
- Customer needs are rapidly changing
To address these emerging themes, two areas of focus for many companies will be Digitalization and Expense Management. Focusing on the digitalization and the opportunities you have to transform your operating model can yield you improvements in delivering customer value, operational efficiency and enhanced employee productivity.
- How does your customer engagement model need to change? How will you address the deficiencies in your digitalization capabilities?
- Ensuring that your customer benefits from your supply chain optimization-by enhancing your digital capabilities between you and your vendors enabling straight through processing from the vendor allowing you to seamlessly integrate as part of your customer offerings.
- Are your manual capabilities properly integrated with your digital offerings?
- Do you need to insource vendor capabilities supported by digitalization?
- Ensuring your infrastructure is capable of supporting remote access for both your clients and employees for a sustained period of time including appropriate technical support models- inclusive of robust business resilience and continuity plans.
- Enhancing workflows leveraging new tools increasing straight through processing and controls (e.g.-Ops risk, Cyber, Fraud)
- Expense Management
- Identifying volume/transaction driven functions that can be outsourced as a variable (per transaction) cost vs fixed internal staffing expenses.
- Re-prioritizing IT spending to align with the new normal.
- Leaning on the experience of the past few months to enhance virtual and alternative work capabilities to lower occupancy and travel expenses.
- Upgrade skill sets and increase bandwidth with new hires that have recently become available in the marketplace as a result of this economic downturn.
Today, Covid-19 is rapidly reshaping many industries. Business will forever be changed. New business models are evolving quite quickly. Opportunities exist for those who identify these changes, adapt and differentiate themselves with their customers. Those that fail to adapt quickly and execute a plan will face a very limited future.
New Bridge Consulting Group helps clients improve their business, operational and infrastructure capabilities.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.