Critical Business Decisions

Critical Business Decisions

Management is about making decisions. Every minute of every day we are bombarded with requests and have to decide. Many of those decisions are routine such as vacation approvals. Others have long-term impact and career defining implications. In the role of CEO, it is these later decisions that are of great concern and rank high on the list of critical business decisions faced by IQX clients.

CAPITAL INVESTMENT DECISIONS

By their very nature, Capital Expenditure (CAPEX) requests represent the largest investment of resources for any business. These range from routine replacement of plant and equipment to major expansion of capacity in new markets. Capital Expenditure locks-in capital and cash flow. Even putative lease agreements are now correctly accounted for as capital investments with the adoption of IFRS 16. Much capital expenditure is budgeted years in advance, but as the need for agility and competitiveness grows due to technological advances and unfettered globalisation, so has the need for addressing ad-hoc opportunities for investment increased. And many of those opportunities are time critical: for example, a new development site becomes available – who will get there first?  Unfortunately, many organisations have still not optimised their CAPEX process with the result that projects are delayed, investments are not optimized, and there is no corporate learning for continuous improvement. Implementing a digital CAPEX solution that can accelerate and control your CAPEX process is one investment that is sure to deliver a great return and delight your most senior executives.

STAFFING DECISIONS

Remember when classic economic theory taught us about fixed capital and variable labour costs? Unfortunately, in most jurisdictions, staffing decisions have significant long-term cost and value implications. Structurally, the decision to add another senior position to the organisational structure is likely to cost at least one million dollars over time. This is not a decision to take lightly. And then the selection of preferred candidate for the role, can determine the wisdom of that earlier decision. Good talent is worth its weight in gold. Misfits, on the other hand, can have catastrophic impact to an organisation’s reputation and performance. And when it comes to separation, the choice can be just as difficult – perhaps that under-performing sales person is just about to land the deal of a lifetime! It is no exaggeration to say that for most organisations, labour is the most expensive and most valuable resource. How effectively an organisation can plan for, attract, utilise and retain exceptional talent will ultimately determine its success, and there are a lot of executive decisions to be made along the way!

NEW PRODUCT INTRODUCTION

The result of an innovation culture is a stream of new products to bring to market. Of course, not every great idea is commercially or technically viable, and a lot of promising starts never make it to the price-book. The end result of a new product introduction process is a material master record in the system with a price, bill of material, production plan, component sourcing agreement, sales commission structure, agency distribution agreement, internal training and communications plan, marketing campaign, etc. How efficiently and effectively an organisation translates product potential into trading profit is a key dimension of sustainable competitive advantage. Most organisations have an ERP system such as SAP that handle all the resulting master data and transactions for successful production, sales and distribution, but have poor internal systems for managing the critical innovation and product development lifecycle. A successful automation approach ensures that people remain front-and-centre of the solution design – the process should streamline and support sponsors and product managers in the creation of new products, and not stifle passion and creativity. The solution should help address all critical dimensions and related activities, but not be too bureaucratic and prescriptive – after all some of the most successful new product introductions are just insightful versions of a precedent and require less formality than a brand-new product line.

CONTRACT PRICING

As we move towards an increasingly service-based economy (e.g. Cars vs. Mobility as a Service) rational pricing becomes ever more elusive. Within the IT industry, software pricing is a classic, where the incremental cost of rollout of software is effectively nil, yet the industry allows pricing to be charge by user! Adopting appropriate pricing models and setting appropriate pricing levels can have a dramatic impact on growth and profitability. Accepting special pricing offers and discounts to large new prospects may be well justified or disastrous.  Establishing and maintaining effective global pricing in line with competitive pressures, elasticity of demand, cost of delivery and quality standards is a key executive responsibility. These decisions need to be based on empirical data, competitive insight, environmental, economic conditions, and capacity constraints. Of the 4 P’s of marketing, Product, Place and Promotion are important, but Pricing is the easiest to adjust to deliver immediate results.

CONCLUSION

At IQX we’ve been focusing on helping Executives make better business decisions for over 9 years. We’ve applied a variety of technology frameworks including Microsoft SharePoint, bespoke .net Web Applications, and more recently SAP Fiori apps to collect standardised request data. We’ve applied Nintex workflow, K2 workflow, SAP workflow and have indeed developed our own Flow Manager workflow component to ensure that every request is subject to scrutiny by the most appropriate subject matter specialists and is escalated through the appropriate chain of decision makers.

We mobilise and simplify the decision interaction with OneList Approvals. By integrating deeply with SAP as the single source of truth for valid master data and business rules, we trigger the resulting SAP transactional updates. But we have learned that it is not only the technology that makes the difference. The business objectives must be timely, informed and confident business decisions with verifiable policy compliance and probity.

What matters most to executives is simply that we de-risk their critical decisions. This means less data and more information. Offering comparability between alternatives. Visibility to contextualise in accordance with strategies and plans. More commentary and supporting documentation. This means decision support models. The ability to request a pre- or post-approval in-flight. Taking time to understand the critical risks in their world. Enabling processes to assess the outcomes of critical decisions, and to continuously improve the evaluation framework. Retaining evidence and justifications. Ultimately, the objective of business process automation is to ensure that Executives can sleep easy, knowing they’ve made the right decision.

2019-01-10T18:43:20+00:00 January 10th, 2019|