The Most Dangerous Phrase In Business

How often do you hear someone say, "We've always done it this way"? It may well have been the justification for not changing a tried and tested processand it was probably well intended. It comes with the same mindset as "If it ain't broke, don't fix it." In our day to day business lives, we should not change everything for the sake change, but at best, this approach is limiting the drive for continuous improvement and greater cost efficiency within our organisations. We will fail to learn the mistakes of the past and repeat them. At worst, it can be used to underpin the reliance of out of date skills and methods. We all believe that our competitors will be seeking competitive advantages, so if we are not focussed on advancing in the same way, we will, by definition,risk falling behind.

Among the many lessons that the Covid crisis has taught us, we have seen that businesses can change very rapidly when there is sufficient need to do so. We are much more adaptable than we previously thought. Offices have emptied and there has been an almost instantaneous move to online meetings and remote access of the company’s data infrastructure. In many cases, there has been no major short-term downside to these changes.

Whilst these measures have been essential for the long-term survival of these organisations, it is often the case that they have been the reflex reaction to the new circumstances. As we move into the next phase of our post-Covid existence, it is time to take a more measured look at how our businesses will be structured, and start to put longer term plans in place.

After the last major disruption to our economies, the financial crash of the late 2000’s, we saw organisations increase the speed and scope of their restructuring activities. It was recognised that companies devoted resources to both their core areas of expertise and a wider range of less uniquely specialised functions. These secondary tasks were a distraction from the core areas of activity, and robbed management’s attention. As a consequence of this realisation, we saw whole functions outsourced to specialist providers who could offer them at advantageous pricing, given that they could then achieve economies of scale in their provision. Functions like Facilities Management, Security, Catering, Travel,IT Support and Vehicle Management were all moved out of house, with positive results. Over the intervening period we have also seen a range of accounting functions outsourced as the technology to achieve this has improved. There are many companies, both large and small, taking advantage of the seamless integration of outsourced finance, especially for transactional systems.

The current circumstances should now cause us to re-consider this opportunity, in the light of the changing circumstance and substantially improved supporting technology.

There is definitely a place for major strategic reviews and the resultant restructuring this will cause. The major consultancies will undoubtedly be keen to support a “floor to ceiling” review and restructuring of their clients. These processes however, because of their all-encompassing nature and the scale of change resulting, take time to achieve. During this time, the world does not stand still, and both the business’s objectives and the way in which technology can support them, will continue to evolve. In its worst case scenario, a great amount of money can be invested to achieve a solution for the challenges that existed a couple of years in the past.

There is also a place for smaller scale tactical change, which will impact eithersmaller businesses or larger organisations at departmental or regional levels. The technology and necessary expertise exist to allow functional specialist organisations to take over the operation of less generic processes, and both improve the efficiency, and lower the cost of ownership of these applications. There is not always a need to replace the solutions that have been implemented, they were presumably selected and developed to address the objectives of the business. However, the capabilities of externally purchased system solutions frequently improve, while the user’s knowledge of the possibilities either erode away or are maintained by expensive continuous investment in education of staff. Suitably equipped with the latest knowledge and experience of using the applications, these staff then move on to achieve greater things either internally or by moving out of the organisation altogether, necessitating yet further expenditure.

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Tactical, limited scope change can be achieved quickly and with minimal impact on the wider business. It can also offer a welcome cost savings in both the short and longer term, while releasing headcount from tasks which do not add value, and providing access to a wide range of expertise.

We believe that over the next couple of years, and new range of business support companies will spring up, addressing a new range of business functions that were not previously able to be outsourced. These organisations will offer the expertise that allows their clients to gain greater benefit from their existing applications, while reducing their costs and internal headcount.CloudScouts is an example of this trend, offering full operation of SAP’s Enterprise Performance Management (EPM) applications, including SAP BPC (Business Planning and Consolidation), SAP Group Reporting for financial consolidation, and SAP SAC (SAP Analytics Cloud) for cloud-based business performance analysis. Cloudscouts offer a range of services including the review and reworking of existing applications, migration to cloud and cloud hosting, and full outsourced operation of the SAP applications.

This is the time to consider what longer term changes you can make to your organisations activities. New technology has been adopted and it has brought the possibility of new ways of working. The range of activities that can be outsourced has dramatically increased and now external experts can be used for niche skill areas. This is an opportune moment to review what functions you absolutely have to keep in house, and which can be performed more efficiently by external experts.

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