Tuesday, 13 February 2018

In 2018, consider the cost of doing nothing





Depending on your outlook, my column last month would either have exhilarated or terrified you. And whether you are champing at the bit, wanting to embrace the new, digital future of your business or terrified at the thought of robots taking all our jobs, you will need to start making some pretty significant decisions this year. These will need to move your organisation forward, but also give you space to be nimble in the face of future seismic shifts, and finally, should avoid painting you into a digital corner you can’t reverse out of. (Betamax video, anyone?)

It’s a decision minefield, and, my suggestion, which I hinted at previously, is don’t avoid the cost of doing nothing jobs. Those are the maintenance, upgrade and incremental innovation projects that don’t deliver an immediate ROI, but are essential for saving you money and ensuring your survival in the longer term. 

Counter-intuitively, cost of doing nothing jobs probably won’t deliver you an immediate return on investment. What they will do is maintain and optimise systems and processes, and also help you take the incremental steps that make up innovation to take your company into the future. Yes, they divert time and resources away from other activities today, but they avoid catastrophic failures, future-proof your business, and will save you money in the long-run. 

For instance, on a trip last year, soon after I landed in New Zealand, the Auckland Airport was shut down thanks to a fuel line being damaged. As a result, hundreds of planes were delayed at a critical regional hub, and time and money was spent trucking in fuel until the pipeline was repaired 10 days later. A spokesperson explained that the cost of an additional pipeline hadn’t been justified as it would seldom be used. Wait a minute, surely this exactly how you define a backup system?  

Unfortunately, it is hard to quantify the cost of not doing these jobs at the outset. You only know the real price tag if disaster strikes, as Auckland Airport found out. This means it is easy to let these jobs slide to the bottom of the priority list.  

Let’s look at things from another perspective though, and consider the future-proofing role of cost of doing nothing jobs. These projects that can shift the paradigm for your organisation for innovation, growth and success in the future. Hence the danger of not doing them today. For instance, if you are not thinking about or embarking on a project to move your operations into the cloud, you may find yourself left behind tomorrow when your competitors are offering cloud-enabled services and innovations, and you simply can’t. 

Apart from a fixation on short term ROI concerns, there are a number of reasons organisations neglect the cost of doing nothing jobs. In today’s fast-paced world, where we're all running to stand still, it might seem like there is no time to optimise or review your course. Keep your head down and roll with the digital punches. Unfortunately the pace is only going to speed up, so rather consider these projects now.  

Some companies are simply risk averse and would prefer to defer a decision and stick with what they know. Indeed, playing it safe is often rewarded in these organisations as short term improvement in the bottom line tends to focus the eye. Unfortunately, in the 1980s it might have been the case that “nobody ever gets fired for choosing IBM”, but today, this thinking could result in your company not being around tomorrow.  

Finally, many organisations lack the skills and experience to navigate this new, digital industrial era. Today, you need to hire people that have the skills to adapt, and thrive at doing things that automation can’t, and also have the ability to work with robots. An example is accountants being freed up from crunching data, and instead using their abilities to spot patterns, analyse the data and think strategically about how this informs business decisions and then providing strategic counsel for their clients.  

So now what? Firstly, start quantifying the high cost of maintaining the status quo by putting the cost of doing nothing on the agenda. Then, move away from waterfall thinking and learn from agile philosophies and their continuous iteration. This takes the pressure away from being sure you are making the right decision at the outset, to making the decision right for you, through constant improvements and vigilance. Finally, simply decide. Choose a lighthouse project, you may fail but then fail fast, learn and improve.


As published on Accountingweb - January 2018 
https://www.accountingweb.co.uk/community/blogs/kevin-philips/in-2018-consider-the-cost-of-doing-nothing 


Wednesday, 24 January 2018

A Heavy Price Tag on Doing Nothing – Part 2





Today, doing nothing is going to cost you in the long run. Fight inertia by learning its tell-tale signs and what to do about them

‘The cost of being wrong is less than the cost of doing nothing’   – Seth Godin
Last month I looked at the impact that ignoring cost of doing nothing jobs can have on a business. The type of hunkering down that resulted in the Auckland Airport having its single aircraft fuel line fail, grounding aeroplanes and costing money. But I also acknowledged there were some understandable, if rapidly expiring, reasons for this baked-in resistance to change.

This month I want to look at the forms this corporate inertia can take and some ways you can inoculate yourself against this, and by doing so ensure your organisation’s survival and success in the future.

Let’s start with how doing nothing manifests in an organisation.

Neglecting to optimise
In his book 7 Habits of Highly Effective People Steven Covey says continuous improvement, ‘sharpening the axe’, is the essential habit that allows you to effectively carry out the other six. He illustrates this with the story of a master woodcutter, who starts to fell fewer and fewer trees. When asked when last he sharpened his axe, he says he doesn’t have time for that, he’s too busy trying to chop down as many trees as he used to be able to. Steven’s book may date back a while now, but many of the messages are still relevant today, especially this one. In fact, this advice has probably grown in relevance and continues to grow week by week.
This lesson applies as much to creating highly effective businesses as it does to people. Too many businesses are needing to run just to stand still. And this perceived ‘busyness’ provides a convenient smokescreen for not taking the time to sharpen the axe by throwing out old, tired and inappropriate processes, activities and technology and replacing them with something more future-ready. Or even challenging existing systems that are currently working and looking for ways to improve them.

Short-termism
Understandably, during tough economic times, finance’s focus shifts to surviving the next quarter, and then the one after that. This is a sound policy, but not when the world is changing so fast that you won’t recognise it in a year’s time, and will be entirely unprepared for what your customers want. In the past one thought of short term as this year, medium term as the next three, and long term as five years and beyond. Today I would suggest this has shortened dramatically: short term is almost tomorrow, the medium term is next quarter, and long term is by year-end. Perhaps a slight exaggeration, but not too far from the truth. And for some industries even that is too long!

Business needs to balance being adaptive and responsive when direction needs to be changed with avoiding making short-term decisions that paint them into a corner in the future.

Risk aversion
In the 1980s, it might have been the case that nobody ever got fired for choosing IBM, but today playing it safe could result in your company not being around tomorrow. Unfortunately we still run the risk of clinging to this thinking and rewarding play-ing it safe. What’s more, too often we also fall into the trap of questioning cost, but if you can’t afford to do it right you best make sure you have the resources to fix it! And this applies to not doing anything at all, as well.

Lack of the right skills and experience to navigate the digital future
If all you have is a hammer, it stands to reason that all your solutions are going to involve hammering, whether it’s effective or not. This is the challenge businesses face today. They can’t solve new challenges with old skillsets.
Back in the day, succession planning meant having a pipeline of skills in the wings ready to take over when people moved up and eventually out. Today, though, this is not enough, and is yet another form that corporate inertia can take. Without new skillsets, businesses are going to keep using old ways of thinking and problem-solving, resulting in old solutions for new problems.
So, succession planning today is about hiring people that have the skills to adapt, and, crucially, thrive at doing things that automation can’t, while having the ability to work with robots. An example is accountants being freed up from crunching data rather using their abilities to spot patterns, analyse the data and think strategically about how this informs business decisions.

There are other ways that corporate inertia plays out. Look around your company and think about whether things make sense, or are simply done that way because that is how they have always been done.
So how do you go about inoculating yourself and your organisation against falling into the trap of doing nothing, especially at this crucial moment in time in the history of business?
Here are my three top tips:
·         Quantify the high cost of maintaining the status quo. Turn quantifying the cost of doing nothing into a habit. It won’t be a perfect calculation, but it should be on the agenda and front of mind during the decision-making process.
·         Iterate. Shift away from waterfall thinking where everything is planned, built and delivered sequentially and rather learn from agile software developers and their continuous feedback loop. This takes the pressure away from being sure you are making the right decision at the outset, to making the decision right for you, through constant improvements and vigilance. Or, failing fast and learning from the experience.
·         Check your ROI mindset. This is an example that is close to home for us. One of the challenges any new technology or process which changes the status quo needs to surmount has nothing to do with the ability of the solution but, in many cases the need to convince the powers that be that shifting to a better way to do something is worth the initial effort. This resistance to change and inability to calculate the cost of doing nothing today results in a real risk of missing out on long-term ROI. Don’t let your company fall into this trap.

Now, where to from here? What can you do today? Simply decide! Choose a lighthouse project that gives you a toe in the water, then learn and improve. The cost of doing nothing jobs are often also the small steps needed to innovate. Innovation is too often painted as a wide-ranging, paradigm-shifting, big bang event. But it includes the incremental improvements to products, services and processes.

So, this summer, once you have recharged your mind and body, why not take a look at recharging your organisation by fixing metaphorical dripping taps, automating manual tasks, overhauling legacy software that is chugging along, not broken, but not actually fixed either.
As published ASA Magazine - December 2017
https://www.accountancysa.org.za/thought-leadership-a-heavy-price-tag-on-doing-nothing-part-2/

Tuesday, 16 January 2018

End-of-year reviews: Pass me my crystal ball


Image result for end of year review
End-of-year reviews used to make sense. They are a bit of a chore, but ultimately useful, and, if things have gone well during the year, can be very encouraging. They’re a great way to take stock, see where your organisation has under- or overspent, as well as consider your wins (hopefully many) and losses (hopefully few and attached to valuable lessons). And finally, an end-of-year review forms a useful template for plotting your way forward into the next year.
Not any more unfortunately.
The year that was 2017 gave us just a taste of the seismic shifts that are coming our way. And has taught us that the fundamental assumptions we used to be able to take for granted can vanish overnight.
For instance, Brexit. What is that deal going to look like, and how is it going to play out for our businesses? And will Trump provoke a thermonuclear war with North Korea? The very fact that the man is president of the US is enough to tell us to expect the unthinkable. For me, closer to home, we saw the swift and peaceful end to Robert Mugabe’s 37-year rule of Zimbabwe arrive almost out of the blue. One week he was in power, the next week, he wasn’t. But is this really a fundamental change or just a change of face, and what is the impact going to be on business if any? And South Africa is poised to find out what happens when Jacob Zuma’s leadership comes to an end during the current succession planning in the run up to the 2019 elections. 
Even without politics, the world we live in is an interesting place. Technological changes, which have been slow, tectonic plate shifts for the last few decades, have suddenly sped up. How soon will it be before we are working alongside robots? And, in a way we already are, thanks to software automation bots. And blockchain and cryptocurrencies have gained hold on people’s imagination and wallets faster than many could have expected — a major supermarket in South Africa trialled bitcoin payments this year. These are just some of the changes coming our way.
So what to do? Abandon the end-of-year review and wing it? Absolutely not. But realise while you will still need to plan, using the best information available to you at the time, you will also need to bake extreme flexibility into your outlook. Hold the course, but also be prepared to shift, dramatically, if needed. If you don’t, you could find yourself being a Kodak in a world of digital cameras.
Things to do:
  • Still do a budget review and forecast, obviously. You need to continue to function in the world, motivate staff, negotiate bank financing and so on.
  • Stay flexible. Prepare for the fundamentals to change at a moment’s notice. Nothing is cast in concrete. Do your best with what you have at the time, and keep a beady eye on what is happening in the world, and especially with your customers.
  • Do factor in the cost of doing nothing projects. These are the maintenance, upgrade and incremental innovation projects that don’t deliver an immediate ROI, but are essential for saving you money and ensuring your survival in the longer term. A cloud computing migration strategy is one example.
  • Do consult with the coal face of your organisation. While you are being overwhelmed by macro-level issues, they hold the key to essential information on the ground. What marketing activities are most effective with their customers? What are competitors doing in their specific market? Looping in the coal face also ensures a more accurate budget, with ownership by the non-financial managers who actually spend the money.
​​Things not to do:
  • Don’t panic!
  • Don’t not plan!
  • But don’t think you can plan for every possible variable — both known and unknown. It’s impossible. Embrace the fact that major change is the new normal.
Good luck! Flexibility is the watchword going forward, and the key to unlocking the opportunities that will undoubtably still exist in our new normal.

Monday, 18 December 2017

A Heavy Price Tag on Doing Nothing



The business world is a bewildering, fast-moving place right now. But don’t fall into the trap of bunkering down and doing nothing, because this will cost you in the long run, says Kevin Phillips

The largest enemy of change and leadership isn’t a “no”, it’s a “not yet”. “Not yet” is the safest, easiest way to forestall change.’ –  Seth Godin

On a recent trip I took to New Zealand, the Auckland airport was closed down and its operations curtailed when the pipeline delivering jet fuel was dug up by accident. It seems impossible that there was such a massive single point of failure for the airport, which is a pretty significant regional hub. One stakeholder said in a radio interview that the cost of laying an additional pipeline wasn’t able to be justified as it would only be used infrequently, if ever.

Surely that is the very definition of back-up?

So instead, hundreds of planes were grounded and delayed, fuel needed to be trucked in, inefficiently and at great expense, and only ten days later was the pipeline repaired and put back into action. This management philosophy, based on the assumption that nothing can go wrong, may have been acceptable a few decades ago, but is way, way out of place in today’s world of rapidly changing requirements and expectations.

Three horsemen of the inertia apocalypse

Warren Buffett once said at his annual investors’ meeting: ‘Inactivity strikes us as intelligent behaviour.’ And it’s hard to argue with this if it’s conscious, mindful inactivity and a result of a careful evaluation of the situation and a decision that the status quo is the least risky course and the best use of available resources. However, mindless, knee-jerk inactivity, resistance to innovation and improvement, and even a lack of maintenance and monitoring are a different kettle of fish altogether.

‘I’ll think about it.’ In my experience, this response to innovation, a new process or product seldom delivers a decision in a positive way that can drive a business forward. Whether it’s to avoid change, a fear of failure when undertaking something new, the perceived (or real) risk of upsetting the boss, laziness, or the dreaded ‘If it ain’t broke, don’t fix it’ thinking, the usual outcome is no decision at all!

Most start-ups or other companies setting out to change and improve the way things have always been done for their clients will empathise. Your competition in closing a sale is often not another company offering a similar product or service, instead, it’s the ‘not yet’ or ‘we’re thinking about it’ response.

Or, what I like to think of as the three horsemen of the inertia apocalypse: resistance to getting moving, moving faster, or changing direction. And this unholy trinity coagulates to form a dangerous situation where cost of doing nothing jobs are neglected for another day.

Cost of doing nothing jobs

Cost of doing nothing jobs? A strange choice of words perhaps, but I like to think of these as the jobs that cost money but are not directly revenue generating, at least initially. These are the maintenance, optimisation and improvement tasks that will divert time and resources away from elsewhere, but because they are preventive or future-proofing your organisation, it is hard to quantify the cost of not doing them as this is largely opportunistic. Until the situation becomes critical, that is, and they end up costing you big time.

These are also the projects that can shift the paradigm for your organisation, building a foundation for future innovation, growth and success. Hence the danger of not doing them. An example is moving your operations onto the cloud. Neglect to spend the time and money today, and you may find yourself behind tomorrow when your competitors are offering cloud-enabled services and innovations that you simply can’t.

Take my hometown, Cape Town. Like other cities and regions around the world, we are currently at the start of what looks to be a long-term drought situation. All of a sudden, the leaking taps that could have been fixed months and years ago are critical – but people were busy, or would have had to adjust their household budget, or just didn’t know where to find a good plumber. Months and years ago the cost of doing nothing would have been hard to estimate. Today, as water levels drop and water costs rise in the city, the cost of doing nothing is all too apparent.

Step it up a level, and you’ll see the cost of doing nothing has also resulted in the status quo being preserved. While summers get hotter and the winter rainfall season gets shorter, ‘management’ (in other words city officialdom) has continued to rely on large dams in specific catchment areas for our water.

Now, with shifting weather patterns and a growing population, they’ve realised, all too late, that there is a need to change the approach to water management. What worked last year, won’t work next year. The crisis management that is upon us now will come at a price which with more innovative forward planning or attending to some of those cost of doing nothing jobs in a more timely fashion could have been managed more effectively and at a fraction of the future cost. The old adage ‘a stitch in time saves nine’ springs to mind.

Innovate to survive

In the business world, cost of doing nothing jobs are often also the small steps needed to innovate. Innovation is too often painted as a wide-ranging, paradigm-shifting, big bang event. But it includes the incremental improvements to products, services and processes and asks the question, what is next?

It’s not surprising that an unhealthy attachment to the status quo, and resistance to change, is part of the fabric of most organisations. Companies are often still built to Industrial Revolution specifications. When assembly lines were the heart of an operation, things needed to be repeatable, predictable and risk-free. Similarly, the Waterfall Method worked for hardware design but should never have been transplanted lock, stock and barrel into a software world. Now that the Industrial Revolution era is heading to a close, this type of thinking is becoming increasingly egregious.

The culture of risk-aversion and a steady as she goes approach is exacerbated by tough economic times, cost cutting and management protecting their pensions instead of rocking the boat and challenging the status quo. And this means that cost of doing nothing jobs fall by the wayside until it’s too late as they are the easy targets when looking for costs to cut.

Start-ups don’t have this inability to change, nor an attachment to the way things have always been done. This gives them a window of opportunity to innovate and delight your customers that you simply don’t have.

And while the inertia of its members might be baked into the business model of every gym contract, organisational inertia has reached its sell-by date and may leave you grounded, like it did the planes passing through Auckland.


As published in Accountancy SA Magazine - November 2017 https://www.accountancysa.org.za/regulars-a-heavy-price-tag-on-doing-nothing/ 


Thursday, 7 December 2017

Give Inertia the Boot

Image result for inertia business

Have you noticed that problems are solved and decisions are made differently today, especially by millennials? What’s the first thing that they do – and you probably do too, even if you are definitely pre-millennial? They Google it, of course.

Back in my day, pre-Google, we’d probably think about what we’d done before in similar circumstances, perhaps consult whichever was the prevailing canonical guide on the topic – updated at least once a year – and maybe phone a friend. Or, if we were really entering new territory, we’d call in the management consultants, who’d probably do much the same thing, just at a heftier price tag.

The upside of doing business today is that we have research, case studies, discussions, opinions, thought leadership and news related to our decision at our finger tips. The downside, however, is exactly the same. We have so much information, so many takes on a matter, and so many rabbit holes to explore that reaching a decision can be more difficult and time consuming than ever before.
Welcome to analysis paralysis. But supercharged for the digital age.

Today we can’t afford to be hamstrung by inertia. A wait-and-see, ‘nobody ever got fired for choosing IBM’ approach is no longer tenable. We’ll be sidelined by start-ups who have no interest in preserving the status quo, as well as our nimbler traditional competitors, who took the opportunity to act. Meanwhile we’ll still be commissioning one last piece of research and running one more cost-benefit analysis.

Right now, we should all be considering the opportunity cost of doing nothing when figuring out what to do next. Which, I know, is a tough sell in a business world driven by short-term ROI objectives. In the past, cost of doing nothing projects typically related to maintenance type tasks. The equivalent of ensuring you service your car every year, even though it’s running perfectly well today, to avoid costly repairs in a few years’ time when a tiny niggle becomes a catastrophic breakdown. Or, to save every month on fuel, because you’ve kept your car running efficiently.

Today, in business, these projects are more significant. Such as deciding to spend time and money on the automation of manual, repetitive (and probably boring) work, to free up your time to be more strategic. And even reviewing systems that currently work but that could be improved would not be wasted energy to keep you and your business ahead of the curve.

This month and next, I discuss these cost of doing nothing projects elsewhere in this magazine. Happy reading and let me know what you think.

Three ways to zap inertia
  • Curtail your short-term ROI mindset. Next quarter’s figures are going to be irrelevant if your business isn’t around next year.
  • Quantify the cost of doing nothing as a matter of course. It won’t be perfect, but it will be on the agenda.
  • Decide! Choose a lighthouse project that gives you a toe in the water, then learn and improve.
As published Accountancy SA - 1st November 2017
http://www.accountancysa.org.za/viewpoint-give-inertia-the-boot/ 

Wednesday, 8 November 2017

Spreadsheets: a victim of their own success?



There is so much talk of digital disruption today, that it is easy to forget that one of the most significant disruptors of them all has been sitting quietly on our desktops for the past three decades. Yes, the humble spreadsheet software, most likely Microsoft Excel.

And even though my accounting days go back to the comptometer, I can barely remember a time when spreadsheets were literally that, sheets of paper spread across my desk!

And thank goodness too. I shudder to think what life would be like for accountants and companies without the multiple capabilities that spreadsheets give us. Especially in today’s data-centric world. From rapidly carrying out arithmetic involving multiple rows, columns and tabs of figures, to compiling information from various sources, to running scenarios using different figures, to analysing data thanks to pivot tables and macros, and even running small pieces of software. Spreadsheets really are our data workhorses.

So it’s not surprising that spreadsheets have escaped the finance department and are very often how finance and the rest of the company communicate with each other. It’s quite strange how everyone, whether in actual fact they do or not, is expected to have some level of Excel know-how. Designers don’t expect anyone else to be able to use Photoshop, for instance.

Yet any job title is expected to complete spreadsheet-based expense claim forms, or update a forecast with figures for next year, or apply a new budget, adjusted for a tough economy.

But sadly the spreadsheet has also become a victim of its own success. Several things typically happen when spreadsheets reach critical mass in terms of users, data or both. Spreadsheets get bigger and bigger, more and more complex, and increasingly prone to breaking, and certainly less likely to be trusted for accuracy. Only the initial author understands the logic of how it was set up, and if they leave the company, this insight goes with them.

Meanwhile as more non-financial people contribute to the spreadsheet, version control is abandoned, people do things that only make sense to them, including adding up their figures with a calculator and typing final amounts directly into the spreadsheet as plain text. (It happens!) Things happen manually, slowly and errors creep in: the domino effect of a single misplaced comma can be catastrophic, and like a needle in a haystack to track down.


Suddenly your spreadsheet is no longer saving you time or money, or giving you an accurate, up-to-date view on critical business information. But instead is a millstone that is weighing you down and putting you at risk.

A 2015 study gained unprecedented insight into the extent of this problem. Using more than 15,000 of Enron Corporation’s spreadsheets as the dataset, the study showed that:

      24% of the spreadsheets with at least one formula contained an error, and of these, six out of ten had dependent cells;
     76% of the spreadsheets used the same 15 functions -- barely scratching the surface of Excel’s capabilities.
     One in ten emails sent either included or referred to spreadsheets, and often errors in and updates to the spreadsheets were the discussion point.

Don’t you think it’s time we stop overburdening the hard-working spreadsheet? And stop demanding, or expecting, non-financial managers to get up to speed with financial thinking: after all, spreadsheets digitise existing finance functions, they don’t necessarily de-mystify them for the rest of the organisation.

The answer isn’t in closing ranks, however. I have long argued that the best way to get the right information as well as buy-in from the company, especially at budget and forecast time, is to decentralise this function to the coalface. And the only way this can happen, is by giving non-financial managers tools that are intuitive and easy to use, and don’t require them to understand what is going on under the hood. It is far more important that they are able to set, and manage their own budgets, with the room to be nimble and responsive to changing market conditions, than it is for them to navigate and understand cumbersome spreadsheets.

The good news is that this frees up the accounts department too. So instead of hunting needles in haystacks, or reverse engineering bizarre ways people have used Excel, we can turn our minds to more strategic, impactful activities.

Perhaps it’s time to give the overworked spreadsheet a helping hand?

As published Accountingweb 25th October 2017 https://www.accountingweb.co.uk/community/blogs/kevin-philips/spreadsheets-victims-of-their-own-success

Tuesday, 17 October 2017

Expense management: Honing the double-edged sword



Ironically, growth and success can be a double-edged sword for small and medium-sized businesses. On the one hand, you're growing and hitting the milestones, which is a massive achievement, especially in today’s tough economy. On the other, quite quickly things that used to be simple and straightforward acquire added levels of complexity. All of a sudden, as the business owner or FD, you simply can’t be as hands-on and omniscient as you used to be.


It’s pretty daunting giving up some of this control, especially when it comes to something such as expenditure. Expense management, especially in the SME world, is really about procurement and “signing off” on expenditure before the money is spent. As your company grows, this becomes impractical. You as the business owner or manager need to focus on new business and growth strategies, rather than being tied to paperwork.


The only way to proceed is to start empowering the rest of the organisation to take ownership of some of these tasks. And to do this, you need to put the tools and processes in place — such as reporting, which, while reactive, will allow you to spot issues in a timely manner. And most importantly, you need to ensure everyone understands and buys into the big picture, and is able to align their goals with this overall strategy.


For instance, you need to make clear the difference between cutting expenses and managing expenses and tie this to overall company strategy.


A mid-level manager tasked with controlling spending might be wildly successful at that specific metric, when taken in isolation. And this might be wildly unsuccessful for your company as a whole when you consider things holistically.


For instance, collectively your mobile phone bill might be right down, which is great. But it’s not that great that customers are disgruntled because they are not being contacted in a timely manner, and so have taken their business elsewhere. On balance, that mobile phone bill saving suddenly doesn't look so rosy anymore, not when compared to the business you have lost.  And your middle manager? Well, they did what you asked them to do, especially if you didn’t provide them with any context.


I’ll admit, this is a pretty simplistic example — although unfortunately still a common enough occurrence. How often, as a customer, have you been inconvenienced to the point of defection through an obvious cost-cutting exercise? But now consider this in the context of the digital disruption the world is going through. Where doing more of the same is no longer going to cut it, and very soon you’ll find you are running to stand still.


It’s a world where, in order to save money and make money in the future, you need to spend money today. Moving to the cloud is the perennial example: without an investment in cloud infrastructure and capabilities today, you won't be able to offer the services and functionality demanded by your customers tomorrow.


In this scenario, being over budget is not necessarily a negative, provided you can explain it in terms of a bigger picture. So expenditure management is not always about minimising costs. Today, more than ever, it is critical to communicate your company strategy, tie it closely to individual goals and targets, and then give your people the tools to enable them to achieve their, and your collective, goals.


As published Accountingweb - 20 September 2017
https://www.accountingweb.co.uk/community/blogs/kevin-philips/expense-management-honing-the-double-edged-sword