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3 Steps to an Agile Business, in Good Times and in Bad

Written by Alan Boyer, VP of Professional Services, Akili Inc.

When you’re in a period of hypergrowth, you get to say “yes” to everything. Can I hire new people? Yes. Can we buy some cool new tech? Yes. Can we throw a party for our employees? Yes!

But with all the excitement of rapid growth, efficiency often takes a back seat. Most companies focus almost exclusively on revenue growth and market share and overlook the importance of operational excellence. When the good times come to an end (and in most cases, they invariably do), they’re left reworking their costs — sometimes for the first time.

The Texas oil industry is currently tackling this challenge. From about 2005 until 2014, upstream producers in the U.S. were in a land grab. If you didn’t acquire assets, you could be shut out. And if you didn’t secure these assets by drilling and producing, you could either lose them or pay a substantial price to keep them. Money was flowing freely, and efficiency was not a concern.

But in the past year, 65,000 Texas oil and gas workers have been let go. The World Bank claims that, even at $60 per barrel, two-thirds of future oil reserves could be uneconomical. In February, the price per barrel fell below $27. So while the rest of the country celebrates lower prices at the pump, the oil industry needs more sustainable practices to thrive in the future.

Creating efficiencies often require investment, and it’s hard to get any expense approved when cash is at a premium. People are typically first or second in terms of cost, so businesses regrettably turn to layoffs. Those cuts are by numbers, such as 10 percent of each department or 5 people from each area. However, sometimes the people who have greater knowledge of your operations are let go, which can have the opposite effect on your business.

The good news is efficiency doesn’t have to wait until the other shoe drops. The following three strategies can streamline your financial and operational processes to increase return on investment — without trimming your workforce.

  1. Invest early. If your company is doing well, that is the time to start investing. This will prepare you for growth andunexpected downturns. My team recently spoke to a company that is in growth mode, but its market is in a bit of turmoil. The company’s management team and board are assessing the business, and while their current infrastructure has no significant issues, they know they can’t scale the business without continuing to hire people. They are looking at investing now in order to create an infrastructure that will allow them to grow efficiently when the market creates new opportunities.Another company we’ve worked with revamped its systems infrastructure just before the oil price collapse. The business is struggling significantly, but its transaction volumes and operational support remain constant. Although it now operates with one-third of its original workforce, the company can continue to run because of the efficiencies gained from the system revamp.
  2. Train your workforce. Efficiency takes into account people, processes, and technology, and you need all three to improve operations. New tech appears every day, and some companies simply throw technology at a problem in their excitement. But if you don’t prepare your people to use it, the solution won’t be fully used or will fail completely.
  3. Pay attention to process and productivity. Sometimes companies implement new technology while holding on to old processes. The point of new tools is to change the way a team works. You need to understand how productivity and processes work in your team to make your cost-cutting efforts successful. Find the correct metrics to measure productivity for your business. If you can measure it, you can start to change it. And if you change productivity, you will reduce costs.

As you study productivity, look for critical business processes that use Excel. It’s probably the most prolific business tool in the world, but overuse of Excel usually indicates serious problems in systems support. Pinpoint where this is happening, why, and how to fix it to reduce inefficiencies, errors, and risks in your business.

A sudden drop in profits can happen in any industry or company. If your business is thriving, take some time out from celebrating your profits and think about efficiencies as you grow. If you’re already in crisis, try to find ways to apply these strategies. You may be able to change the course of your business and save those jobs on the line.

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Time Is Money — How to Speed Up the Financial Closing Process

A Business 2 Community article written by Alan Boyer, VP of Professional Services, Akili Inc.

It takes an average of eight days for an organization to complete the quarterly financial closing process, a half-day longer than just nine years ago. However, a speedy, but efficient, close helps management understand its organization’s financial health and make important decisions in a timely manner.

Accurate financial statements are essential for all organizations, and it is up to management to create processes that ensure accurate and timely reporting. Time is money, and shortening the closing process brings big advantages.

Why an Early Closing Matters

A survey by SAP and Deloitte indicates that company leaders want to close their financials much faster than average. The reasons varied, but most revolved around time — 44 percent wanted more time for analysis and auditing before financial statements were published; 31 percent wanted to reduce time and costs associated with closing; and, 13 percent wanted to push management and financial information out as quickly as possible.

Companies often make better decisions during a shorter closing process. When financial statements are created in a timely manner, they can be used to build forecasts and accelerate innovation. An early close also makes the accounting team more analysis-driven, rather than holding them in a scorekeeper role. And it reduces workload and creates more effective transaction processing.

Barriers to an Early Close

Company executives blame slower financial closing times on a variety of factors. According to the same survey, 40 percent of executives say it’s because of internal levels of review; 35 percent say it’s a growing need to identify and consolidate more detail for financial statements; and, 20 percent say it’s because more time is needed to check for errors.

Financial analysts only spend about 23 percent of their time on value-added analysis to the business. Speeding up the closing process helps analysts and others better utilize their time.

Efficiency and accuracy are essential in a closing, and many companies want to overcome these barriers and speed up their closings. The following three steps can increase the time, accuracy, and efficiency of a financial closing.

  1. Use an Automated Process

Too many manual steps in a closing can slow down the process. Using an automated system is essential for speediness. Forty-three percent of the companies that complete their monthly close in four or fewer days use an automated process. Additionally, 27 percent use some automated processes and 16 percent use little automation or none.

A highly automated system allows companies to close more than three days earlier than those not using automation. A consolidation software or enterprise resource planning system used to manage a close makes companies twice as satisfied as those using desktop spreadsheets as their primary tool for the closing process.

  1. Make It a Company Priority

Making a speedy closing process a top priority for the company will ensure that everyone involved has this in mind as they perform their daily tasks. Planning for a fast closing will also make the company run more efficiently.

When companies establish a clear program to reduce a closing timeframe, with management buy-in, they accomplish their goal 77 percent of the time, according to SAP and Deloitte. A clearly stated objective to close more quickly usually results in meeting that goal.

  1. Conduct a Post-Close Review

Assessing internal processes during the closing process, and afterward, identifies problems and areas that need improvement to speed up the close time. The review can also identify any overlapping of duties or redundancies in the process, which will create efficiencies within the company and potentially save money.

Automation, making speed a priority, and identifying ways to reduce the time associated with financial closings are ways companies can eliminate barriers to timely closings. Time is money, and these solutions promote speed, leading to potential cost savings, efficiencies, and better financial decisions in the long run.

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Business is now done online

Dominos stock is up 45% this year in an intensely competitive business. You can order Dominos pizza with an emoji on Twitter or a Facebook messenger bot. They are experimenting delivering pizzas by drones – soon, you will be able to get them delivered to you in a park!

Ripple effect examples include how Air B&B is affecting hotels. How Uber has affected taxis, Ford motor company, rental car companies, and even insurance companies. Ford has just announced that it is going down dual track– The foundation as a car manufacturer and a new path as a transportation services provider – self driving cars, electric cars and ride sharing services.

Upstarts have skyrocketed in profitability because of technology creating instant access to their products and services. Think Uber, AirBnB, Dollar Shave club, BAI, Jet.com, Blue Nile, Zillow, We work, Zocdoc

Survival of the incumbents like Amazon, Home Depot, Esurance, Netflix has only been possible from their ability to quickly pivot and invest in the newest and best modifications they can make to streamline and improve their business practices.

We are all watching the elephant in the room – Walmart to see if they can shift/pivot and continue to compete with companies that are more nimble and innovative and ahead in the shared economy game.

A great example of a winning company is Amazon. Famous losers who failed to adapt when disruption was looming include Blackberry, Blockbuster, Borders/Barnes and Nobles. Brick and mortar retail, Realtors, Travel agents, etc. are all on the verge of becoming obsolete unless they can rethink and recapture their customers through the value of their core competencies that can’t be found somewhere else faster or cheaper.

The Winning Upstarts

The Winning Incumbents

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Businesses are now run on-demand

It is a brave new world!

We are living in an online, on demand, shared economy of pay as you go, subscription based shared services with limited or no commitments required. It makes everything move extremely fast with unbelievable flexibility – making it a daily challenge just to keep up!

This is not a limited trend or passing fad. It affects every city, demographic, industry and line of business. Think about the shared resources you tap into on a daily basis – utilities like electricity, gas, and water resources, delivered via methods you simply plug into or subscribe to. Cable, data, apps, music, streaming media of all sorts. Goods and services too – Uber, Blue Apron, Stitch Fix, Dollar Shave Club.

Changes to the goods and services purchasing habits in our economy is transforming the competitive business landscape. Disruption is hitting from all sides and those unprepared to re-think, shift directions, rebuild will soon be obsolete if they aren’t already!

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We live in a shared economy

“May you live in interesting times” – an ancient Chinese proverb

You may ask what has happened to our economy? How did we get here? And the resounding answer is Technology! The basic evolution that has occurred has cycled from Mainframe à to Client Server à to the Internet à the Cloud.

To succeed and thrive in these times means you have to be nimble, agile, able to pivot very quickly as technologies change the behavior patterns of your customers.