A global pandemic, wild bush fires, a stock market crash, a presidential impeachment, and presidential elections – 2020 has been a year like no other and the impact on some businesses has been devastating. 2020 has highlighted how vulnerable many businesses are, and what they need to improve to survive and thrive – a topic that I recently wrote about. The key focus for businesses moving into 2020 will be on how they recoup their losses from 2020 and set themselves up for success. With that I mind, here are my 5 predictions on what 2021 will bring for businesses and what they need to be thinking about as we head into a New Year.
Continued Business Disruption – There are some serious global headwinds that businesses are set to face next year. Many countries are likely to go in and out of lockdowns, which will impact on local and global supply chains, consumer, and business spending, as well as overall business confidence. There is also the unknown of how the results of the US Presidential election and final transition of the UK out of the EU will impact global trade relations. Recent talk of a vaccine to stem the COVID-19 pandemic may provide some reprieve, but we predict continued business disruption heading into 2021.
So, how can your business prepare for disruption? Business resiliency is key. Namely your business ability to rapidly adapt and respond to business disruptions. 2020 taught us that finance and procurement operations are key to driving business resiliency. Getting a view and a grip on where your business is spending its money? What can be consolidated and what can be reduced? Having full control and visibility over your finance and procurement operations are key.
Cost Efficiency Should be at the Top of Everyone’s Agenda – If 2020 has shown us anything, it is that we need to have greater control over our cost base. Not least because sales are, largely, harder to come by than ever before. Every organisation should be looking at the return that they are getting for every dollar invested – a simple equation of your total spend divided by your total revenue will give you a high-level overview. The focus for businesses will be on how to improve this ratio. For example, for every dollar spent enables $1.60 in revenue – increasing that number can have a huge impact on your overall profitability.
You can take a few approaches to getting this right: There is the 1% improvement approach – how can you make each process 1% more efficient and reap the benefits of the cumulative impact of those 1% gains. The alternative is to assess a specific process in more detail. Take your procure to pay process as an example. Map out your current process, identify the pain points that take the most time, and build out a business case to drive greater efficiencies in that process. It is a process we have undertaken with several businesses to deliver real bottom line value.
Konica Minolta Business Solutions Asia recently outlined the results of their procure to pay digital transformation project which “helped us to reduce costs, identify risks and improve value delivery across the business; while providing the visibility and insights my team and I require improving risk mitigation, due diligence processes and governance.”
Public Sector Spending Spree – Most national and state governments have announced large economic stimulus packages to get their economies going again. This will likely continue heading into 2021, with many tenders and grants being made available. Businesses wanting to take advantage of this spending spree need to be mindful of the likely compliance requirements for public sector contracts and grants. To qualify for many public sector contracts or grants, businesses may need to prove they comply with regulations around supply chain sustainability, modern slavery, buy local and national initiatives, diversity, and inclusion, for example.
In order to prove you qualify it helps to have systems and processes in place that can make supply chain mapping and transparency much easier giving you clear visibility over your entire supply chain. This enables you to know exactly where your goods are coming from in your supply chain, from who whilst being able to capture important information relating to compliance around sustainability, modern slavery etc.
Data, Data and even more data – As businesses seek to ensure their business resiliency, the demand and need for more accurate and timely data across business processes will greatly increase. Businesses that can track efficiency at a process level are going to become more cost efficient and future-proof their business. Equally, as business disruption continues, the demand for business agility can only be fulfilled through executives having access to accurate and timely data, which will put more pressure on teams to supply that data.
An effective combination of people, processes and technology can provide hugely valuable and actionable data insights. Considering the source to pay process, having access to data insights, such as invoice processing times, percentage of purchase orders and invoices sent and received electronically, and percentage of managed spend (e.g. spend going through contracts, preferred agreements etc) can reveal some real opportunities to drive efficiencies in your process.
Technology being the answer, rather than the enabler – It is only when the right processes and people are combined together with technology that real transformation can occur. Too often businesses look to technology as an answer to a problem, rather than an enabler to help solve the problem. Picking the technology before truly understanding the process that they are trying to transform has led to many failed and ineffective technology projects over the last 20 years. As businesses find themselves under more and more pressure heading into 2021, businesses will likely continue to make pressured transformation decisions based on fancy, shiny technology, rather than a clear understanding of the outcomes that they are hoping to achieve. Creating unnecessary and avoidable risk into their transformation activities.
Instead, why not conduct an in-depth analysis of your current business requirements through key stakeholder interviews and current process reviews? This can help to deliver valuable insights and resources such as:
- Key insights into the current processes
- Identification of key pain points
- Identification of key levers to drive user adoption
- Identification of key areas and drivers for financial return on investment
- Identification of quick wins and longer-term development areas
- Current state technology landscape map across your processes
This article was originally written for and published through our friends at Global Banking and Finance Review, view the full article here.