Business transformation in a downturn

As we enter 2009 there will be a multitude of business transformation programmes underway as companies attempt to reduce business costs and rationalise to save money. For example, only recently we've heard that household retail brand Marks & Spencer is to shed up to 1,200 jobs across nationwide stores.

The business mantra for 2009 will be 'How can we do more with less?' However, be warned, rationalisation programmes introduced to downsize, cut overheads and reduce staff costs to prudent levels need careful management to ensure that you are still delivering what both your business and your customers need.

The challenge therefore is: How do you implement effectiveness and efficiency, whilst simultaneously reducing operating costs? How can you reduce your CAPEX and OPEX budgets without risking the business strategically drifting? Now, more than ever, companies need to make sure that they get these business transformation programmes right. The dilemma you are faced with when embarking on such a delicate strategic initiative is how do you know where to start? Take out too much now and you could end up with a diminishing customer base, a significantly lower profile and a dwindling business. In time, when we have ridden out the storm, will your competitors come out ahead because they continued to invest in their businesses, when you didn't? Doing nothing isn't necessarily the right option either.

There is recent evidence to suggest that the vast majority of organisations have sensibly trimmed their businesses. As the global financial crisis gathered pace towards the end of 2008, any fat in most companies had almost certainly been taken out. Now, companies are contemplating large-scale changes, which once undertaken will introduce economies of scale as never seen before and transform the business so dramatically that the end product will be a very different type of organisation: nimbler, perhaps with certain parts of the business outsourced, new business processes and working practices in place, while functioning from a smaller operating base.

Outsourcing has, in recent years, been a favoured route for rationalisation. Most companies decided to outsource in order to move from a fixed variable to fixed invariable cost structure. Crucially, for an outsourcing programme to realise the benefits, time must be taken at the beginning of the programme to knowledgably understand the business drivers, what is in scope and the critical success factors. Most outsourcing programmes show signs of difficulty after approximately twelve months when it becomes clear that what's actually transpired isn't quite what was anticipated. By giving any change programme the strategic thought it deserves up front (by instigating scenario thinking and planning), you will be able to anticipate and hopefully minimise a whole range of potential problems before they occur.

However, the harsh reality is that most large-scale business transformation programmes, particularly if they involve technology, have an unfortunate reputation for failure. Statistically 80 percent of IT projects fail because they are either over budget, overdue, lack project delivery quality and/or fall short of the anticipated RoI. In today's volatile economic climate this type of programme failure could have dramatic consequences for your company's health. Getting it right is not simply a platitude, it's a must have.

Delivering business transformation success is about being sensible and realistic. It's about asking the right questions to protect your investment, manage your risk, reduce your costs and leverage your RoI to realise expected benefits. And if you don't have the skills in-house, then independent expert support will pay dividends in the long run.

If you are facing large-scale business change, it is crucial to have someone on your side of the table with both the requisite levels of skill and, most importantly, previous experience who can take responsibility for managing the delivery of all your programme workstreams. And that's where DAV comes in. We have helped many organisations plan, manage and deliver complex, business-critical, technology-based change programmes. DAV's senior consultants have a long track record in the IT project and programme management arena and over the years, they have gained a unique insight into the most common causes of programme failure. They've witnessed previous recessions in the 80s and 90s and have gained the experience and know-how to guide companies through the transformation challenge.

We are living in extraordinary times that require bullet-proof thinking and commensurate expert planning and delivery expertise. Change can be invigorating and will almost certainly help you leap-frog the competition, get and remain ahead - provided you get it right first time!

For more information about how DAV can help your business manage and deliver change in today's business environment, please call 01189 74 0100, or if you are interested to find out more, download our business papers on outsourcing: A Stitch in Time or delivering programme success entitled: Right First time.