Posted by Steve Wilcox on Mon, Sep 28, 2009 @ 05:08 PM
This ivory tower comic from Abstruse Goose cracks me up:
As this comic illustrates, the term Ivory Tower designates a world where intellectuals engage in esoteric, over-specialized, or even useless research that is disconnected from the practical concerns of everyday life (ref. Wikipedia).
Contrast this to "empirical." Here's the definition from dictionary.com:
em·pir·i·cal
(ěm-pîr'ĭ-kəl) adj.
- Relying on or derived from observation or experiment: empirical results that supported the hypothesis.
- Verifiable or provable by means of observation or experiment: empirical laws.
- Guided by practical experience and not theory.
When it comes to "research," it's important to distinguish between "ivory tower" research and empirical research.
This is precisely why I am a big fan of The Hackett Group's research ... it is derived from experiment and observation rather than theory.
They have strong roots in benchmarking so they know how to collect vast amounts of data, analyze that data and then draw the proper conclusions and insights from that data.
This is especially important when it comes to emotionally-charged topics such as offshoring, shared services and outsourcing. To make sound business decisions, executives need to understand the facts ... not ivory tower theories.
Which brings me to our webcast on Shared Services where The Hackett Group's Penny S. Weller revealed the Top 10 insights from Hackett's 2009 Shared Services Performance Study:
#1 Shared services have reduced costs by exactly how much?
#2 Does anything else matter besides costs?
#3 What is the fastest growing driver for shared services?
#4 Reaching "Beyond the Transaction" to what else?
#5 How are "economies of skill" being leveraged?
#6 How does outsourcing fit into the picture?
#7 What 2 trends both drive and are supported by shared services?
#8 What will soon become rule rather than the exception?
#9 How important is talent?
#10 What are the globalization trends?
Enjoy the Hackett Shared Services webcast.
-Rakesh Shukla
Posted by Steve Wilcox on Fri, Apr 24, 2009 @ 10:47 AM
Recently, Karen Kroll penned a very good article for BusinessFinance titled "How AP Got its Groove Back."
The gist of the article is that "with external funding tight and sales flat or declining at most firms, more corporate executives are looking internally to identify ways in which they can squeeze cash from operations -- or at least get a better handle on its flow. When you can't look to sales to replenish the corporate coffers, you need to be better stewards of the cash you've already brought in, says Thomas Bohn, executive director and chief executive officer with the International Accounts Payable Professionals (IAPP), an Orlando-based industry association."
Most of the article presents a very interesting case study for setting up a new AP Shared Services operation at Broadridge, a $1.6 billion solutions provider based in New York.
There are lots of great tidbits including the following:
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"At this point, leading firms are automating about 80 percent of their invoices, says Kurt Albertson, director of advisory services with The Hackett Group in Atlanta. This compares with about 20 percent for other firms."
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"an in-house finance and accounting shared services center can cut AP costs by 40-plus percent, but only if tools like imaging and workflow solutions are introduced ..."
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"As Broadridge's experience shows, technology is key to transforming and improving the accounts payable process ... While all potential technology investments are scrutinized these days, the benefits of systems that can streamline the AP process increasingly are recognized by the folks holding the purse strings. "Processing paper-based invoices is very inefficient," Jones says. "Enterprises can't afford that level of inefficiency today."
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"Moreover, most executives urgently need to enhance visibility into cash flow, and technology can provide that ... executives today are eyeing projects that let them know when cash is coming and going. "
There are a lot of other interesting points in the article including a list of AP Best Practices at the end that includes a quote from yours truly:
1. Keep it simple. Avoid processes "with multiple loopbacks, and re-thises and re-that's," as these add time, says Rakesh Shukla, co-founder of 170 Systems. Along these lines, you want a single technology platform, chart of accounts, vendor master file, and so on, he adds.
2. Eliminate paper. Processing, storing, and finding paper consumes time, space, and money, notes Evie Fletcher, accounts payable manager with RDO Equipment Co. in Fargo, North Dakota. Use electronic data transmissions and imaging and workflow solutions to cut paper use.
3. Use key performance indicators. Executives who want to improve the job their AP department is doing need to focus on key performance indicators (KPIs), says Duncan Jones, a London-based senior analyst with Forrester Research. Examples include the average time it takes to process an invoice and the number of invoices each AP employee handles.
4. Bring stakeholders together. Truly improving AP requires bringing together representatives from procurement, treasury, and the supply chain, as well as accounts payable, says Kurt Albertson, director with The Hackett Group. "You have to get the four groups working together."
-Rakesh Shukla
@rakesh170
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Posted by Steve Wilcox on Wed, Jul 16, 2008 @ 10:08 AM
My wife enjoys a good cup of coffee. So you can imagine my surprise when I saw her with a styrofoam cup from the local coffee shop.
"It's actually tastes pretty good and besides, they are having a $2 special." she explained.
"$2 for a small cup of coffee and that's the special price? What's the regular price?"
"$4"
"What??? I thought our town coffee shop was supposed to be reasonably priced?"
"Yes, but this is a latte, dear"
What do I know? Not being a coffee connoiseur, I guess "lattes" are deserving of a higher price. Honestly, I have never understood the fascination with high priced coffee drinks and wonder how the average citizen can afford such luxuries today with the economy taking a one-two punch in the stomach from the collapsing housing bubble and soaring gas & food prices. Recent headlines have been downright depressing: "Net Worth of U.S. Households Declines for First Time since 2002," "U.S. Mortgage Foreclosures Increase to All-Time High as Owners 'Give Up', " and "U.S Payrolls Fall Unexpectedly." It's not a rosy picture -- has the average consumer all but given up on the economy? It appears so:
You can see that consumer confidence (correlated by 2 seperate surveys) has plummetted to 30 year lows -lows not seen since Mork and Mindy was the top TV sitcom and Jimmy Carter was President.
Make no mistake about it, dear blog reader, the average U.S. consumer is hurting. It seems unlikely that Joe & Jane Public will continue buying expensive hot beverages if they lose their house and job. More likely they will spend that last $4 on a gallon of gas ... or a gallon of milk ... or a loaf of bread ... not a cup of cappuccino.
The US consumer is retrenching and it will unquestionably be bad for the economy as 70% of our GDP is consumer spending. In fact, for the second consecutive quarter, consumer demand topped the list of CFO's external worries in the quarterly Duke University/CFO magazine Global Business Outlook Survey (chart from CFO.com):
But here is what really caught my eye -- 4 of the top 8 internal concerns are about costs.
Traditionally, when CFOs start panicking about costs, this puts tremendous pressure on SG&A functions such as AP. If the economy slows (and we may already be in a recession), you can bet your "venti, nonfat, decaf latte with chocolate sprinkles" that senior management will demand cost cutting -- especially back-office finance cost cutting. For AP, the ramifications are clear. Cut costs or be outsourced or offshored.
How would you reduce overhead if the cost cutting hammer came down? Technology? Offshoring? Outsourcing?
Can you articulate the pros and cons of each option? For example, the whole outsourcing question is a lot more complicated than just reducing costs. Other pros include lower capital expenditures and speed to benefits. But on the cons side, we are talking about sensitive financial data here so you need to consider other risk factors such as security, reliability of service and the integrity of your data to name a few.
So let me repeat my question: How would you reduce costs if the cost cutting hammer came down? I would love to hear in the comments section.
-Rakesh Shukla