Are You Planning For The Future?

More than half the respondents to a 2008 survey by the BPM Forum, a business performance management group, said that their budgeting process is overly burdensome. In general, employees "don't buy into the fact that [budgeting] is an important part of the strategic-planning process," says Daniel A. Szpiro, professor of accounting at Cornell University.

Which Half Are You In?

So in which 50% do you sit? Budgeting is burdensome or not? I have to say my personal experience was that budgeting was an annual process and very, very time consuming with endless rounds of complex Excel spreadsheets which had to be poured over and finger in the air estimating. The more scientific we got, the worse our estimates became because we only did it once a year and you took in an annual guess rather than look at the situations as they develop.

Recently, I have teamed up with Adaptive Planning and that's all about to change. Theirs is a SaaS based system which takes your cost and budget data and puts it into a multi user, powerful but familiar spreadsheet-style format that allows everyone to budget and plan simultaneously and to make budgeting, forecasting, planning and reporting an everyday task rather than annual.

And gone are the days of countless rounds of complex spreadsheets being rolled up and down the management tree and consolidated as each manager thinks differently, and of tiny errors getting magnified as the sheets are consolidated. Adaptive Planning have a system which cuts down time to plan by 70% and has an in-built audit and work flow for make sure everyone agrees with the assumptions on which the plan is built. Accountability is an integral part of the system.

So Why is Planning Important?

Linking budgeting to planning is a powerful way of assessing your future because it allows you at each step to measure how much impact every decision you make has on your bottom line.

Usually after an annual budget, companies only reforecast on a cigarette-packet level and try to marry that to a quick fire P&L. Then people start making decisions on tactical moves and justify it in measuring the isolated effect of that decision on costs and revenues. Too often I have seen 'double accounting' for a cost saving or financial impact and when the year is out, you find that the supposed incredible uplifts in profits actually didn't materialise.

I believe that's because most businesses do not have the ability to 'globally' analyse their business on a day to day basis and be able to truly measure the financial impacts of individual and collective decisions.

As we approach a tougher business climate, it is even more important to understand the impact of every decision and to be able to plan ahead to take account of the changing environment and market conditions - waiting until the annual budget process kicks in is way too late.

Is This Normal?

Listed company announces annual figures and shock the City with their sudden lack of performance - ah, but here are the plans to actually put that right, say the stiff-collared management to shareholders. Does this sound familiar? It's like as if the company suddenly found out their business was underperforming and in the annual budget process wrote a new plan to remedy it. Don't businesses actually plan on a more regular basis to avoid poor performance?

Apparently not. So often I have sat in businesses where each quarter is a massive shock, good or bad, like no one knew about it.

But Is This a New Management Nightmare?

Forecasting is the bain of the life of a salesperson. So more forecasting and planning sounds like a bad idea - it gets in the way of doing their job, are the arguments. But as Bill Soward, CEO of Adaptive Planning, points out in CFO Magazine recently, if the marketing guys are planning a 3 month push, you need to understand not just that sales may increase, but what resources will you have to beef up to accommodate or take advantage of the plan. It's actually common sense.

Adaptive Planning to The Fore

Most large firms have expensive, complex budgeting systems. Now Adaptive Planning make it simple and affordable for Medium and even small sized companies and organisations to be able to implement effective budgeting, planning and forecasting systems which can be cascaded down the organisation easily and make business planning an everyday task not an annual nightmare. Out with Excel nightmares and in with simple, easy to use and centrally based consolidated outlooks on your business.

As a CEO facing a tougher climate there has never been a more important time to have full control of your business - take control now and make your business far more resilient to the vagaries of the market and plan ahead knowing the full impact to your bottom line - BEFORE it happens.

Call me on +44 (0)207 193 2356 or email me at nigel.dunn@calxeurope.com for more information or a discussion.

Are you paying too much for your Telecoms?

"The UK is losing £624 million annually through over billing and hidden charges alone," it is estimated by industry sources.

Recently I had a mild epiphany. I'm a small business and I wanted to try and get my telecoms contracts under one supplier and pay the best rates for each of my requirements. I quickly found there is no advantage in being with one supplier whoever they were. Here's what happened:

- I use Skype for my day to day UK landline and international calls. For around £11.50 per month and £40 per annum for a SkypeIn number, I have a 'London' based business with voicemail and all my UK landline and international calls paid for. Of course all Skype to Skype calls across the internet are free - and I interviewed a chap in Australia for two hours only a few weeks ago for zero cost.

- I have a 450 free minutes to any network with Passport for my international calls which means I pay 75p upfront for each call when I am abroad then use my normal minute plan once in the call for my mobile phone - this is on a business tariff with Vodafone. I also have push email to my PDA in MS Windows mobile which does not work abroad. Average monthly cost even when travelling abroad is around £70 per month with monthly insurance.

- O2 Broadband to my office is £7.50 per month (one of the only suppliers offering a deal to double up for my wife's mobile phone) for up to 3Mb although I only get around 1Mb if I'm lucky and I have changed provider 3 times.

- Mobile broadband for demonstrations on the road was the latest - having gone to Vodafone I was going to be charged £15 per month for 3Gb of data plus £79 for the stick which would be free if I signed for 24 months. So I walked across the street to 3G and got 5Gb per month for £15 per month for an 18 month contract and a nice natty black stick for free.

By the way, to keep these costs at these levels I have a strict policy on how to make calls - that way I rarely exceed my mobile minutes by making sure I do all landline calls and international with Skype.

Is this normal?

The net effect of this is you have to shop around and be creative to get your costs down as low as you can. As I come to my year end, telephony is still one of my most significant costs behind travel and so it is important to me and my clients as it is a fundamental way of doing business for me and on their behalf.

My experience in larger companies is not dissimilar. At Genesys, where our own telephony costs for business were mainly put through Vodafone Business for mobile and then a variety of suppliers for our bridging, it was not realistic to go with one supplier and as the business grew the complexity went off the map. It was not only hard to get creative on drilling down costs, it was virtually impossible. Heaven knows how much money we could have saved had we had the will, resources and expertise to assess it and then actually get the savings.

So while being in a large company increases your buying power, you still have to be creative and shop around to get multiple vendors to manage overall costs down. No one Vendor offers the best all round deal. And rates change - constantly.

Is there a nirvana?

I am sure there is and many Telephony Resellers profess to have one. In my experience, knowing enough about the industry and wading through baffling complexities like trying to set up Local Connect Calls for Conference Bridging and having to 'average' the call costs across all customers and hope Khazakstan is not the most popular calling point for conferences, is that no one company offers the best all round deal. You have to shop around and find the best deals for your particular needs in each category. Once you go beyond the UK boundaries, it gets ever more complicated.

Assessing your costs

For those who have multiple contracts already and your Telecom costs are above say £500,000 per year, it would pay to get an assessment done to check all your tariffs and do a market survey. As we hit a more uncertain market, drilling down on in-bound costs rather than people costs should be the first point of call, if not commercially astute it certainly is morally - and the savings can be huge.

Here is my advice:

I work with Intelligentcomms who are an independent assessor and do not sell Telecoms so have no vested interest in any one Telecom company - this is vital as all Telecom Resellers who profess to do the same are trying to sell you an alternative service. That's not the right way to go about it.

Making real sustainable savings

Intelligentcomms make an initial, chargeable assessment which looks at your entire Telecom costs, line by line, vendor by vendor, across your landlines, international calls, mobile phones and data costs - everything. They then tell you how much can be saved by taking certain actions - this can be simple things like changing to per second billing to changing tariffs to even changing vendors to get optimum deals.

Savings are incredible - with as much 60% cost savings in some instances and 40% is around the average, and this can be in each category of your telephony.

And here's the best part - Intelligentcomms get paid as a percentage of the savings they deliver to you and so a) you know they are working on your behalf to maximise savings - they have skin in the game, b) it's a massive win-win and c) they even refund the initial survey charge when you take advantage of the savings.

I would be delighted to recommend Intelligentcomms - they have worked companies large and small to make sustainable savings on their Telecom bills.

Please call me on 0207 193 2356 or mail me at nigel.dunn@calxeurope.com and I will be delighted to help.

Do you prefer a stimulating job or more money?

Now I'm going to say something that may surprise you.

Boo!

No, it's not that. I was mildly surprised to read in The IOD Director Magazine this month that the fifth annual Happiness Index in a survey compiled by The City & Guilds revealed that workers from over 20 different occupations had ranked money as being only fourth on their list of criteria for judging happiness in the workplace. I know, you're asking, so why were Tanker Drivers missed off the list?

Highest rated was that their job must be stimulating and interesting. Second, was job security, pretty sensible in the current climate, and third was work-life balance.

Why is this of great importance?

Larger employers offer wide ranges of incentive and employee benefit options these days - some in quite complex systems which allow employees to 'trade' benefits like extra holiday for less pension contribution or similar things. These options are innovative and sensible when compared to the Happiness Index results because work-life balance is high on employee agendas.

However, small to medium (SM) sized businesses have a real difficulty keeping up. Not only are such benefit options tough to implement as the impact is not easy to quantify not just in terms of cost but impact to the business (e.g. if more staff opt for flexible hours or more holidays, how does this impact the company's ability to take orders or keep customers happy etc), but with the demands of things like maternity/paternity, keeping up with Employment and Equalities Law, taxation and many of the new costs to businesses, it becomes increasingly more difficult to tackle employee benefits and well-being as well.

The most obvious and simple way in which SM companies try to compete with larger companies is to offer similar all round salary and bonus benefits. For the more progressive, stock options are sometimes offered although they are not ranked as a 'here and now' benefit. But, the survey is saying that isn't going to compete with larger companies as money is only fourth on the agenda.

A Practical Example

I have recently been advising a lady who was offered a job by a small company - nice salary package and exactly her industry. However, after being contacted recently by a household name in media and datanetworks, the lady stopped in her tracks not because the salary and bonus was better, in fact it wasn't, but because there were a clear set of other benefits like car allowance, comprehensive private health car, a substantial contribution to a pension plan by the employer, discounts off their own brand products but most importantly was the fact it was a large firm and therefore offered greater job security.

Recessionary Times

In tougher times, larger firms offer a safer haven for many workers as the theory is that they have the capability to ride out the storm better as they are larger, offer better employee benefits and the chances are the jobs will be similar.

However, I would not necessarily agree with this assessment. We are seeing several large companies recently who have enjoyed significant success starting to hit, quite literally, brick walls. Northern Rock and the banking community don't look quite as a safe as before, Persimmons and the building sector is particularly vulnerable, while the fall out from the credit crunch will hit larger firms who are highly geared harder than profitable smaller ones who do not have massive borrowing.

For the bold, small companies who can adapt to change more nimbly and seek out opportunities faster, a recession can be a good thing as the larger firms try to shore up their positions and go back to their core competencies in the hope of weathering the storm.

Smaller companies are not a bad option but it may mean we have to break our reliance on the Happiness Index as there is an element of risk involved.

So how do smaller companies compete for talent?

Recruiters take their money where they can get it and larger firms not only pay the bills but offer greater opportunities. Smaller firms need professional recruiters who really know how to seek out talented individuals who are more likely to take a risk in their career in return for the benefits of success at smaller companies, who can 'sell the dream' of success at a smaller firm and above all help you compete against the morass of cheap adverts and database tracking systems to find candidates dominated by larger firms and help your company stand out and find real talent.

Recently, I helped Theorem Inc start up in the UK/Europe and find their first employee to drive their exciting business into Europe. Amongst the sea of adverts and agencies recruiting for large agencies and media firms, in just 6 weeks I had found, motivated and wrenched away from the might of the AOL Corporation, a superb, dynamic and highly capable Business Development Manager much to the delight of Theorem's CEO, Jay Kulkarni.

It wasn't about the pay necessarily, certainly not job security, it will be an interesting job if you call four walls and telephone that, work-life balance will be interesting as the boss is 5 hours behind, nor was it about the stock options as this company hadn't any at the time and had thrived without a penny borrowed from VCs.

It was about selling the dream.

That is tough for any recruiter as they have never experienced what it takes to do that so it is tough to know what to look for. Besides, in a world where transactions count, there is no point in wasting time worrying about making small companies successful when the big ones have vacancies.

Step this way

If you are a small to medium hi-tech business either entering the market from the US or are building your UK/European operation and finding it tough to attract exceptional talent in these times, then step this way. It takes a special approach to find and attract real talent and that's what I do.

Please call on +44 (0)207 193 2356 or mail me at nigel.dunn@calxeurope.com for an intial discussion.

What is the difference between cost and value?

When preaching to salespeople I often use an example holding up a small plastic trophy with a salesperson's name on it which is awarded on a regular basis to the most improved salesperson or for best performance. The actual cost of the item was a few pounds but I posed the question, 'What is the value of the object?'.

I argued, in the hands of a canny individual, such a prominent award could feature heavily in a CV, citing that as a result of outstanding performance, the recipient had risen above his/her peers and been awarded the most prestigious prize in the company. I further argued, that such an award, sold in that way to prospective employers, could add at minimum £5,000 onto their next job's salary. This would in turn compound in their earnings in years to come and thus be worth potentially tens if not hundreds of thousands of pounds. The value of the item, far exceeded the cost.

In a more spectacular example, was the explosion of the Space Shuttle Challenger in 1986 when the failure of a comparatively minor part called an O-ring caused a flare to ignite flammable gases just 73 seconds after lift off. The cost of this small item was minuscule compared to the cost of the shuttle itself and it caused the loss of 7 lives and billions of dollars. The tragedy was magnified after a 32 month investigation which highlighted that NASA managers had known since 1977 that the design had a catastrophic flaw and that flying in such cold weather was strongly advised against by its own engineers. The cost of the small item was virtually nothing compared to its value for safe flying.

Assessing Cost vs Value

In a modern era where business looks to drive down costs in purchasing we have seen innovations such as 'Reverse Auctions' and Outsourcing which have strangled out the ability for suppliers to show value. Tick box point scoring system sometimes augment the processes but in the main it is a lowest cost wins scenario, even when it involves high human content such as recruitment.

Each new recruit has an intrinsic value to the company that bears little relation to their cost. Listening to James Caan's recent talk at the Executive Recruitment Show in London he talked of the 'cost of bad recruitment' being far greater than the cost of the fee. He was talking of value. So as companies look to reverse auction the cost of their recruitment and/or outsource it, particularly to foreign countries, they are focusing on the cost rather than the value of new recruits to an organisation.

Summary

Recruiting is all about investing in the future. Each new recruit has to be part of that future and will have some contribution to the future value of the organisation which will affect its profits. Driving down the cost and pushing away the screening process to a third party who has zero skin the game other than the unit cost of the recruit, no real feel for the culture and no experience of the concept of working for their client will contribute no more value than its cost to the company.

I would support James Caan's view that the cost of the recruitment fee is nothing compared to the value of the right candidate and that should be the priority.

Where Should The Buck Stop?

Following on from my recent article on Responsibility vs. Accountability, to which I got some interesting answers, I thought I would add a follow up.

Different Viewpoints

It is interesting in media and Government statements that every major terrorist act committed by 'Fanatical Muslims' are attributed to Al-Qaeda and by association, directly or otherwise, Osama bin Ladin. The fact he may be in hiding in a mountain range impenetrable to satellites and Special Forces and possibly does not have broadband or cellular access, he is acknowledged to be the mastermind, co-ordinator and financial muscle behind the 'hydra-like' structure of the world's most powerful terrorist network - the modern day 'SPECTRE' that Fleming postulated.

He is not just responsible, he is accountable for each death.

However, when we read about attrocities committed at an Iraqi prison, or marines involved in strafing villages, these are deemed to be the actions of isolated people so officers, senior officials and the Commander-in-Chief are held in no way accountable for the actions.

In Business

Very similar situations occur in business. Nick Leeson was blamed for breaking Barings Bank yet when the Bank was sold for £1 to ING, executives insisted bonuses should be paid, denying that the very policy of greed which had created the pressure on Leeson to commit his crimes was the root cause - that flowed right to the very top.

Far more poignant is the every day outcome of such greed within Banks. Inevitably, in the aftermath of massive losses, swathes of lower level staff will be culled in order to cut costs, while Chairmen of Banks talk of changing business models. Hardly an executive job will be lost and if they are, they will be accompanied by a severance payment larger than most earn in a lifetime - for failure.

In everyday business we can all cite less prominent examples of executives shying away from accountability and pointing fingers at 'rogue' activities.

Is This a Realistic Picture?

The question I would ask is whether this is a idealistic or realistic? Should a political leader stand up for the 'mistakes' of individuals resultant from their policy decisions or executives take the blame for their staff's mistakes, large or small? Or should we make distinctions between major issues such terrorism as being special cases?