By John Murdock, CRO at Centage Corporation
Nothing has revolutionized the business world more than the digitization of business. There once was a time when executive teams could create a business plan annually and assume that things would more or less progress as anticipated.
But the speed of business has accelerated dramatically, upending the planning process. How an organization responds to that acceleration is probably the single most important decision the executive team will make. Embrace it, and you’ll secure the future of your organization. Sit on the fence, and you’ll soon find yourself fighting for your very existence.
No sector is exempt from the need to embrace technology, because no vertical is exempt from the digitization of business, even sugar beet farmers today use data logging and GPS to create high-accuracy seed position maps of their fields to boost yield and drive resource efficiency.
How did we get here? The driving force is the fact that everything — information retrieval, commerce, social interactions — has been digitized. In a span of 20 years, we’ve moved to a hyper-fast consumption model, driven by consumers who have essentially demanded the democratization of information.
Executives in this fast-moving business environment need to be able to make decisions quickly. Our real-time world means that business planning is an ongoing process, one that requires analysis of a host of business KPIs and what if-scenario planning nearly every day.
With that real-time pace comes a plethora of data, a great deal of which is highly valuable. Eventually, we humans won’t be able to keep up with the analysis needed to make those decisions, which is why artificial intelligence or AI is starting to emerge as a valid platform for making key business decisions. You may be loath to adopt AI, but you can be sure your competitors aren’t. Ultimately, data driven technology will transform every viable business.
Consider inventory planning. There once was a time when businesses could do quarterly, or even less frequent, planning. A few times a year they’d work with their manufacturing organizations to get commitments and place those orders. After a quarter or two, they’d assess how the business performed and then make changes.
Today, the best companies are planning inventory in real time, or as close to real time as possible. Decisions are made based on what happens in the business that day or week, amping up in the event of a big sales opportunity, or dialing back if the market changes for any reason. The ramifications of real time inventory planning on the budget are substantial, and can greatly affect P&L.
Another example is business services. CFO’s once sought to optimize for a certain utilization rate, say 80 percent, which is considered sort of best-in-class, but rarely achieved. But the gig economy gives consultancies a lot more options, including independent contractors, freelancers, third parties, and many methods for staffing and delivering services. But these options also mean not just staffing at the annual level, but also being able to staff in the next few weeks. By assessing the number of projects, number of people needed and resources needed in real time, you can get a lot closer to that 80 percent utilization rate.
I’m in sales and marketing, which means I make decisions on a daily basis around traffic to our website, the outreach we’re getting on social media, conversion rates on specific pieces of content and I need to be able to make adjustments in a rapid fashion to optimize these assets and stay relevant with the market.
I see this as a life or death decision for companies. Do you go all in on technology, or do you limp along, hoping that your business can get by without it? Good products and a healthy customer list won’t get you by forever. You need to be armed with good data, analytics, and most all, good planning processes supported by real time decision making.