Building foundations for the future requires a strong focus on streamlining operations, harnessing technology and ensuring every investment of resources or finances is maximised.
As medium-sized enterprises seek to survive and flourish in the challenging global market, it is vital that they review exactly how their resources are being used, and focus on building efficiency into every process.
Toni Jones, Partner, KPMG Enterprise, says to achieve this, organisations must consider all of the activities that are necessary, but don’t add great value.
“They need to look at ways to minimise the amount of time and resources spent on these – making them as lean as possible,” she says.
This should not be mistaken for a cost cutting exercise. Rather, the aim is to reinvest in areas that will help fuel sustained growth.
“The aim of streamlining your operations is to spend your time and money on things that add value. It's not about getting rid of people; it's about redirecting time so people can focus on providing high value, strategic support to the business to inform future decisions,” she says.
The KPMG CEO Outlook 2016 found 93 percent of chief executive officers (CEOs) in Australia and internationally are focusing on their core competencies, with many aiming to streamline internal processes.
This is a good sign, as improving operational efficiency can have a direct and immediate impact on an enterprise’s ability to grow, Jones says. A key way to begin is to map out every step in an organisation’s operations, including employee and customer journeys, to identify where inefficiencies hide.
“Mapping processes entirely, and the way they interact across the whole business, helps you identify where you could pull inefficiencies out,” Jones says.
Look for manual tasks that could easily be automated with technology, or duplication of activities by people or systems.
“If you think about finance, you want to make sure that your banking, accounts payable, accounts receivable, payroll and basic statistical reporting are all lean transactions that can be handled easily,” she says.
Jones says some enterprises are reluctant to change their existing processes, which puts them at a disadvantage in a competitive environment.
“Some smaller businesses say, ‘that doesn't matter, I don't need efficient processes’. But a lot of them still write cheques, don't get automatic downloads from the bank, manually input invoices or receive and process expenses manually and individually.”
Correcting this should serve as a ‘quick win’ for efficiency.
“You can find readily accessible value that can be reinvested into the business,” she says.
Once inefficient processes are identified, it may be evident that they can be resolved with enterprise systems and different delivery models such as Software as a Service (SaaS) and cloud technology. These can help free up time for employees to focus on higher value activities.
“Labour is a principal driver of cost in Australia and this investment is not being utilised effectively if employees are focusing their time on low value, low level transaction processing,” Jones says.
Robotic automation is the next step towards freeing up human time, which Jones says is becoming more accessible for businesses, particularly in discreet areas of repeatable and transaction processing.
“Many medium-sized businesses may consider this to be beyond them, but given the pace of development there is now a real opportunity to explore this, and how it may offer reduced manual processing, lower operational costs, higher quality and more consistent decision making, resource optimisation, and simplified outputs and interaction,” she says.
Deep data analysis has a key role in a robust approach to efficiency. Analysing the information coming out of processes can highlight where inefficiencies hide and how performance is benchmarked against industry standards.
“Data analytics performed across existing systems can be used to isolate significant points of inefficiency, illustrating the volume of rework, duplication of effort and trends in employee utilisation. Some opportunities may be able to be implemented immediately and with minimal cost, such as automatic bank feeds and automating payment processes,” Jones says.
Data also helps improve efficiencies when it comes to customer service. It is easier to measure time of service, see where repetition occurs, where customers are losing interest in a sales process, or where they are not getting the help they need, for example.
“These processes aren’t just about automation and making things easier for you. It also can tell you a lot about your customer base – that’s where a lot of the added value is,” Jones says.
All of this work in operational effectiveness, streamlining roles, embracing robotics and data, and analysing customer needs enables business to be more agile and ready to reinvest in new opportunities.
“While revenue growth may be a good lever for creating growth in the organisation, it is equally important that the operations are running as efficiently as possible to make sure margins can be maximised,” Jones says.
Having agility means there is room to move when new technologies are developed, sector disruption looms or customer expectations change.
“In an environment of increasing speed of change, having efficient operations, the right technology, people free to think strategically, and investments going into well-identified growth areas, means that any surprise shift can be turned into an opportunity.”