Survival – then what?

Organisations emerging from the global economic malaise need to gear up for growth, says Charlotte Darth.

“Any investment you make needs to provide a good return. You need to identify improvement projects that can provide a rapid and significant payback”
-Charlotte Darth, Lawson Software

Remember when you were too busy making money to look at your processes and deploy new technology? The current economy is very different and focus is on survival. A recession does not last forever; it is time to gear up for growth. It sounds radical, but this is perhaps the best time to consider process improvements and the deployment of new technology. Sales revenues are slowing, margins are getting squeezed so your immediate reaction is to stop projects and postpone investments. But is this really the right thing to do or a knee jerk reaction? When does the smart money invest in the stock exchange? Likewise, manufacturers and distributors should think about the opportunities the current slowdown offers. There is no magic solution to driving costs down – you need to take tough decisions and invest in cost reduction to get a return.

Action plan

Any investment you make needs to provide a good return. You need to identify improvement projects that can provide a rapid and significant payback. If you have the money in the bank it is easier, but whatever your situation you need to focus on improving efficiency and growing your business as the market recovers. One of the fundamental steps you need to take is to automate your processes to drive operational costs down. This involves deploying best practice processes and supporting these with the right business application to improve efficiencies and cut costs. You need a clear picture of exactly which processes and technology can deliver the most value and the largest cost saving to your business. Lawson offers a service that uses a unique tool, Opportunity Analyzer, to help you map, target and plan improvement projects. We can deliver a quantified and ranked list of opportunities so that you know exactly what economic effect each process improvement can bring.

So what happens when the economy picks up? Will you end up back knowing that you need to review business practices and invest in new technology to support your long term growth aspirations? Leadership position can be lost through not investing – the cost of not doing something now may actually be far higher than the cost of investing now. Think how much more effective and efficient you might be in the future if you had a single view of your customers, a clear picture of demand, better visibility of the orders and inventory in your supply chain, up to date financial information on costs and margins for decision-making and staff that could focus on managing exceptions as opposed to firefighting? A few small percentage improvements that reduce operational costs can quickly aggregate up to a major difference in bottom line performance, both in the short-term and as your business starts to grow again. Some companies that have deployed integrated enterprise resource planning systems report improvements such as operational costs 20 percent lower and working capital tied up in inventory down 25 percent.

The cost of doing nothing

It might seem that doing nothing is the low cost option, but can you afford it – and, how high is the true cost of doing nothing? Also, companies are under pressure to deliver positive results to shareholders expecting real value of their investment as well as some form of regular dividend or payment. Think what reducing your operational costs by 10 percent could mean for your bottom line and your ability to outgrow your competitors. According to Aberdeen Group, Lawson clients averaged a 22.9 percent performance improvement. Start by identifying pain points and non-value adding tasks that simply adds time, cost and complexity. Evaluate and quantify the potential return improving your processes could make and compare with the cost of implementing the change. You may well find you cannot afford not to be investing in process improvements and new technology.

Charlotte Darth is the Marketing Director of Manufacturing & Distribution Industries at Lawson Software. Darth has spent 15 years in the enterprise software industry in different sales and marketing management roles. Prior to joining Lawson in 2008, she headed marketing for Syncron International and has also worked for 10 years at SAP.