Executive Briefings

Out of Chaos … Comes Innovation

If ever there was a year for financial and revenue management to come to the fore, then 2009 is that year. It's a year which will witness a vacillating, near schizophrenic, model of cost containment and revenue growth, driven by tentativeness, innovation and acquisition.

If someone in your business tells you that times are getting harder and you need to pull in your belt, they're clearly not in receipt of all the facts. It's much worse than that. The current collapse of the economy as we know it can push companies in one of two directions, or possibly a combination of both. They either hunker down and retract to their core operating model (a reaction very recognizable in the U.S.) or they see an opportunity to capture market share and grow. The middle way is to grow either by acquisition or innovation while leaning out operating processes.

With adversity comes opportunity and this is a great time to grow. The now world famous Danish children's toy manufacturer Lego began life in 1932, the last time the world economic market was so depleted. It innovated its way to stardom.

Out of chaos is new innovation and opportunity. As times get harder through 2009 the move to outsource core financials will increase because of potential process cost savings, but this will likely be balanced by the need for more intrusive finance management, permeating every corner of the business. AMR Research expects the latter to win out in 2009 because companies will be less likely to risk outsourcing when scrutiny is so high and money so tight.

In fact, AMR Research believes that 2009 will be the year of pre-packaged financial analytics, by industry.

Opportunity Response Optimization

In July 2008, AMR Research highlighted the failure of many companies to respond accurately to new business opportunities in a report titled Opportunity Response Optimization: Making Money by Design Rather Than by Accident. We cited that up to 40 percent of the data submitted within a selling response is merely guesswork because company systems and processes do not enable greater accuracy. In a recession, where fewer new opportunities are likely to arise, it's even more critical to capitalize on those that do. The answer is to structure your costing and processes to look at each business engagement as a project, analyzing the costs and profit margins at every step of its completion (activity-based costing) in order to better structure your next opportunity response. For many industries such as consumer goods, retail and high-tech, 2009 will see much more alignment to project-based, demand-driven principles, and adoption of solutions such as enterprise performance management, product lifecycle management  and customer management to enable this move.

In a show of hands at the recent AMR Research Business Technology conference, three quarters of the business leaders present expected the U.S. recovery to begin by the end of 2009. In Europe, people are reluctant to show their hand at all. The reality is, chaos will be here for awhile, bringing with it opportunity. And regardless of when the economic recovery begins, financial management and revenue management will top the list of focus areas in the coming year.

The Outlook

Through 2009, the pressure to outsource core financials will increase based on potential process cost savings. But AMR Research expects some impediment because companies will be less likely to risk outsourcing when scrutiny is so high and money so tight. The financial applications market will mirror this fluctuation with some growth in outsourcing services and greater focus on visibility and analysis solutions, such business intelligence/enterprise performance management and others.

Revenue management will focus on opportunity response optimization, reducing current inaccuracies (up to 40 percent guesswork) within data submitted as part of a bid response.

If someone in your business tells you that times are getting harder and you need to pull in your belt, they're clearly not in receipt of all the facts. It's much worse than that. The current collapse of the economy as we know it can push companies in one of two directions, or possibly a combination of both. They either hunker down and retract to their core operating model (a reaction very recognizable in the U.S.) or they see an opportunity to capture market share and grow. The middle way is to grow either by acquisition or innovation while leaning out operating processes.

With adversity comes opportunity and this is a great time to grow. The now world famous Danish children's toy manufacturer Lego began life in 1932, the last time the world economic market was so depleted. It innovated its way to stardom.

Out of chaos is new innovation and opportunity. As times get harder through 2009 the move to outsource core financials will increase because of potential process cost savings, but this will likely be balanced by the need for more intrusive finance management, permeating every corner of the business. AMR Research expects the latter to win out in 2009 because companies will be less likely to risk outsourcing when scrutiny is so high and money so tight.

In fact, AMR Research believes that 2009 will be the year of pre-packaged financial analytics, by industry.

Opportunity Response Optimization

In July 2008, AMR Research highlighted the failure of many companies to respond accurately to new business opportunities in a report titled Opportunity Response Optimization: Making Money by Design Rather Than by Accident. We cited that up to 40 percent of the data submitted within a selling response is merely guesswork because company systems and processes do not enable greater accuracy. In a recession, where fewer new opportunities are likely to arise, it's even more critical to capitalize on those that do. The answer is to structure your costing and processes to look at each business engagement as a project, analyzing the costs and profit margins at every step of its completion (activity-based costing) in order to better structure your next opportunity response. For many industries such as consumer goods, retail and high-tech, 2009 will see much more alignment to project-based, demand-driven principles, and adoption of solutions such as enterprise performance management, product lifecycle management  and customer management to enable this move.

In a show of hands at the recent AMR Research Business Technology conference, three quarters of the business leaders present expected the U.S. recovery to begin by the end of 2009. In Europe, people are reluctant to show their hand at all. The reality is, chaos will be here for awhile, bringing with it opportunity. And regardless of when the economic recovery begins, financial management and revenue management will top the list of focus areas in the coming year.

The Outlook

Through 2009, the pressure to outsource core financials will increase based on potential process cost savings. But AMR Research expects some impediment because companies will be less likely to risk outsourcing when scrutiny is so high and money so tight. The financial applications market will mirror this fluctuation with some growth in outsourcing services and greater focus on visibility and analysis solutions, such business intelligence/enterprise performance management and others.

Revenue management will focus on opportunity response optimization, reducing current inaccuracies (up to 40 percent guesswork) within data submitted as part of a bid response.