Unlocking Business Value

We know that the world economy works in cycles – expansion, prosperity, contraction and recession. The severity of each contraction and recession varies, and in the same manner, the expansion and prosperity stages can also hit differing heights.
 
The ability of businesses to effectively weather these economic storms depends on how well they manage customers, talent, processes, products, and profitability, among others.
 
The best-run companies are able to use the downturn to their advantage – unlocking even more business value for their ecosystems. For these companies, surviving the crisis is just one part of the story. More importantly, they want to be ready for the upturn – the expansionary phase.
 
Here are the ten key steps leading Asian businesses can employ in gearing up for the economic upturn.
 
Step #1: Manage Cash and Cash Flow
In this challenging economy, there is nothing more important than cash and liquidity management.
 
For optimal cash management, best-run businesses have visibility into their current and future cash requirements and global cash positions. Plus, they have reliable insight that helps them better manage their receivables – and identify problems that can arise during the pay cycle, putting cash flow at risk.
 
These businesses, also, leverage features that support in-house banking, so that they can centralize cash management functions and reduce the complexities of multiple banking relationships fragmented across geographies.
 
Standard Chartered Bank’s innovative connectivity option for companies running SAP is a good case in point. This provides businesses with a single point of entry for all financial transactions. SGX-listed coal mining company, Straits Asia, recently integrated its systems with Standard Chartered’s cash management service.
 
The company now benefits from faster and more effective control of payment initiation, and automated reconciliation of payments and accounts.
 
Graeme Tivey, Chief Financial Officer, Straits Asia Resources Limited said: “Our integration on SAP with Standard Chartered has certainly taken our Group’s financial management system to a whole new level of efficiency and productivity.”
 
 “Driving integration of information across the business units and geographies is ever more critical to superior financial performance and risk management.  Our initiative with SAP is one of the innovative ways we help our clients improve working capital efficiency.  By tightly integrating the physical and financial supply chains with this type of solution, we enable companies to release hidden value, reduce operational risk, and improve efficiency,“ shared Sumit Aggarwal, Transaction Banking Head for Singapore, Standard Chartered Bank.  “Many of our clients also tell us it’s a great way to extract an even higher return from their investment in SAP,” he continued.
Step #2: Focus on the Core 
Best-run businesses are sharply focused on their core, no matter how diversified. Businesses which are focused often expand into adjacent, synergistic opportunities. OLAM International, a global leader in the supply chain management of agricultural products and food ingredients is a good example. The company, choosing to stay focused on a single commodity class, namely agricultural, has expanded into synergistic opportunities that shares supplier, customers, channels, costs and capabilities with their existing business. Examples are the expansion within their edible nuts and spices lines-of-business.
 
To survive in today’s business environment, companies must continuously look for synergistic expansion opportunities, which increase the value of their core businesses. 
 
Step #3: Stay Lean
Effective lean transformation eliminates more than the most obvious areas of wasted time and resource. A farsighted, lean agenda leverages a tiered enterprise architecture addressing the unique requirements of various business processes at the corporate, shared-services and divisional levels.
 
A leaner operation, driven by optimized processes at every level, will pay out immediate cost reductions and ultimately improve competitiveness in a recovering economy.
 
Step # 4: Manage Costs and Profitability Tightly
Best-run companies gain a deep understanding of the levers affecting organizational costs and profitability through their world-class enterprise performance management processes.
 
Improving profitability involves more than a headlong pursuit to increase revenues and slash costs. It includes the ability to identify a company’s most valuable customers and products, while testing the impact that changes in pricing and process improvements have on costs and profitability. This can give business leaders the insight to act decisively with a clear understanding of what the outcome will be.
 
Step #5: Be Agile
Succeeding in today’s tough business environment requires that an organization be agile enough to respond quickly to internal and external changes. To stay ahead, a business has to explore new ways of business growth – for example, launching a new product or service, or targeting a different set of customers.
 
Businesses need to rapidly align resources and people so as to drive speed, efficiency, and profitability. This is key to achieving a high level of organizational agility – and ensuring focused execution across the business.
Step #6: Develop Deep, World-Class Talent
Who can lead the company into new markets? Who are your leaders of tomorrow? Are the right employees staying? Are the wrong employees leaving? Without the right talent, you risk not only missing the opportunity to cut costs, increase market share and revenues, but you have to spend even more to acquire new talent.
 
Best-run organizations effectively manage and develop their talent pool. They look within to identify critical skills and roles, actively develop promising employees, nurture their skills, and groom potential successors for key positions before they are vacated.
 
Step #7: Drive Strategic Investments
The downturn presents best-run businesses with endless investment potential – in expanding into adjacent opportunities – including both upstream and downstream.  But do you have the proper insight and tools to make the right strategic investments – especially in these times of tight credit? 
 
Having access to capital is definitely a major factor, but more importantly, it is the deep business intelligence that unearths the potential for strategic growth. 
 
Step #8: Improve Risk Management Significantly
Major trends of the last five years – such as globalization and radical shifts in business models – have escalated the need for business agility while simultaneously throwing up roadblocks. The impacts of these trends have triggered ripple effects from a governance, risk, and compliance (GRC) perspective.
 
Organizations that have moved to an integrated GRC approach have been able to realize a new level of confidence and transparency regarding compliance. In addition, businesses have realized significant benefits:
  1. Optimized risk-return portfolio
  2. Reduced GRC costs
  3. Improved business performance and predictability
  4. Business sustainability
  5. Greater business agility

Step #9: Strengthen and Nurture the Business Network

In every industry across the globe, companies are improving their bottom line by focusing on what they do best, while partnering with others who have superior expertise and cost advantage to provide the other elements.

 

To succeed, companies such as P&G and Apple have deepened their understanding of customer segments and have orchestrated a customer-focused business network to deliver on shorter product life cycles 

 

The following lessons learned from successful customers provide a good model for leading Asian enterprises.

 

  • Lesson #1: Deploy a robust IT-driven business process platform for your business network.  Leading companies choose to deploy a strategic business process platform that integrates business processes, end-to-end, on one open platform.
     
  • Lesson #2: Extend your business process platform to customers, suppliers, and partners. Business process platforms can support multi-enterprise processes through business process integration and scalable composition across customers, suppliers, and partners.
     
  • Lesson #3: Manage risk and optimize performance across the business network. As companies seek to optimize their processes across the business network, visibility into risk, compliance, and performance are essential to make insight-based decisions.
     
  • Lesson #4: Empower your business users. Business users need to work in their user environment of choice for maximum productivity. And they need to collaborate on information and processes within their communities. Rather than force change in user behavior, companies can enable collaboration and increase productivity by bringing processes and analytics to familiar user environments.

 

Step #10: Operate Best-Run Systems and Processes

To achieve clarity and transparency, best-run businesses use world-class solutions to help close the gap between strategy and execution – optimizing the performance of the business as well as the business network. These solutions help customers become clear enterprises by providing insight for improved performance, efficiency for optimized operations, and flexibility to quickly adapt to changing circumstances.

 

The clarity provided by such a solutions portfolio, and the corresponding ecosystem, can help companies preserve profitability by addressing challenges such as cash management, risk mitigation, customer loyalty, streamlining of operations, sustainability, and talent management.

 

Unlocking new business value is complex. However, we know that a business that does not enrich and revitalize itself with new value is likely to experience the same challenges it did in the preceding economic cycles. The plan is to change the game. This needs insight, efficiency and flexibility.   

 

Success depends on your ability to address the challenges posed by complexity and increased demands for accountability.

 

Clear enterprises – those that can see clearly, think clearly and act clearly – have the ability to overcome complexity by understanding what’s going on in every aspect of their business and their business networks.

 

They operate with increased speed, relevance, and accuracy. They are prepared for risk and uncertainty, and they adjust their operations as market conditions change to remain accountable to all stakeholders involved.

 

In short, Asia’s leading enterprises need to embrace these best-run business steps if they want to run businesses that are transparent and accountable; lean and agile; and customer-centric and collaborative.

 

 

 

 

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