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From Idea to Execution: Five Pointers to Getting Things Done in Complex Organizations – Business Operations Performance Management

From Idea to Execution: Five Pointers to Getting Things Done in Complex Organizations – Business Operations Performance Management

by | Nov 8, 2012 | Business, Business Operations, Career, Leadership, Management, Performance, Productivity

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Don’t tell me why this is difficult to do, just go get this done ASAP please. The please is usually an afterthought. This is the kind of challenge that no self-respecting operations person can resist – there is a certain joy in translating an idea into flawless execution cutting through all the challenges and complexities of a large organization. And in my role of running business operations, I have been on the receiving end of this challenge many a times. The corporate/senior management realizes they have a business problem, have a good idea of what the solution could be and there comes a mandate for a directional change that may involve a lot of shake up implementing a new process or changing existing processes to meet the end goal.

In today’s scenario, we no longer have the luxury of time, complete clarity, a free rein and big budgets to get that magic solution – which will solve the big business problem – visualized, planned, experimented, and then implemented. Every solution has to be aligned to growing profits leading to one or both objectives – revenue-maximizing and cost-cutting. Operational agility and operational excellence are all the more important now to turn corporate priorities into focused actions more quickly, effectively, and consistently.

Here are five pointers that I have found useful in getting things done – “more done with less” to achieve the desired results quickly:

Pointer #1: Understand the need behind the want – A clear understanding of the desired outcome is necessary so that you don’t end up with a flurry of misguided activity. For example the stated want maybe “reduce bench costs”. To arrive at a solution, you have to go to the source of the problem to see what the real need is – it maybe that the reported data on bench is inaccurate leading to wrong conclusions, or that there is inaccuracy in forecasting leading to an increased virtual bench size or the demand-supply balancing is inefficient. Not knowing the source here and just taking action on reducing bench by reducing headcount would be dangerously counter – productive. Understanding the outcome needed also allows the defining and implementing of a solution instead of just executing on a task blindly which may not give the expected results. And before you move to the next step, put it in writing – the problem statement, the current state and the desired state when the planned solution is in place. This is very important to not only clarify our own thought process but also help you ascertain the skills and timeline needed to execute.

Pointer #2: Get the right working team on-board – You could do it alone but almost any deliverable in a work setting will get done quicker and better if you involve others with the skills, background and experience in the area. You don’t need a committee (the death by committee danger there 🙂 ) but creating a virtual team gets the work done easier. Pick the brains of subject matter experts, tap into the larger functional teams across the organization, and get volunteers from your teams. Almost everyone would be happy to get involved in learning something new or breaking the routine of their everyday assignments. Being able to work in a matrix structure is quite a useful ability here.

Pointer #3: Get key stake-holders enthusiastic about the solution – Identify the people who stand to benefit the most from the solution and socialize the plan with them. Enlist their support early by showing them the “why” behind the plan and how they stand to gain from it. Create a sense of urgency to build momentum. This will help get their buy-in and reduce any resistance that you may come across when you go ahead with execution. People don’t like being handed with a “done deal” specially if there is any impact on their business as usual activities. Regular, sincere communication is a great lubricant to work through silos and organization hierarchies and boundaries. Just don’t make the mistake of trying to please everyone – just the ones that matter (for the success of your plan in action).

Pointer #4: Go! Don’t wait for all the answers and for the perfect plan – As Seth says, the real question isn’t whether you have all the facts. The real question is, “do I know enough to make a useful decision?” (And no decision is still a decision). If you don’t, then the follow-up question is, “What would I need to know, what fact would I need to see, before I take action?” Speed of decision-making is very important in execution – there is a time for analysis and a time for action. A perfect launch time, a perfect solution or perfect acceptance is unrealistic to expect. The best way to see if your solution is workable is to put it to work. Define phases of implementation if you can’t see the full path yet but begin the moment you are reasonably sure it will work.

Pointer #5: Don’t drop the ball after execution – Give yourself and the team a pat on the back and celebrate the success. But don’t forget these three important steps. Before you move on to the next challenge, get the process documentation, tracking mechanism and measurement metrics in place.  Create checklists for the activities, documentation of the changed or new process and training sessions as needed. With good processes defined and documented, everyone will always know what has been accomplished and how far have they gone ahead or fallen behind. Set up regular feedback and tracking mechanisms with the right set of metrics to have early warning systems that will help anticipate problems or the need to change the solution.

Summing it up, there is very little that is impossible to get done at work. Getting things done just needs the right mix of enthusiasm, effort, agility and persistence. And isn’t creating order from chaos, a lot of fun?

What are your secrets to getting things done in a complex organization? What have I missed in the pointers above? I would love to hear and learn from you.

photo credit: http://www.flickr.com/photos/31732378@N02/3129967709/ by Jon.B

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Five Keys to set up a Successful Project Management Office – Business Operations Performance Management

Five Keys to set up a Successful Project Management Office – Business Operations Performance Management

by | Oct 22, 2012 | Business, Business Operations, Leadership, Management, Performance, Productivity

[vc_row][vc_column][vc_column_text]Basically, there are two types of animals: animals and animals that have no brains; they are called plants. They don’t need a nervous system because they don’t move actively; they don’t pull up their roots and run in a forest fire! Anything that moves actively requires a nervous system; otherwise it would come to a quick death ~ Rodolfo Llinas, a neuroscientist from New York University School of Medicine.

An established Project Management Office (PMO) within an organization is the Central Nervous System of the organization. The PMO helps to optimize resource utilization across projects and initiatives, improve program execution which rises above organization barriers, enhance visibility and accountability and be better prepared from an information and knowledge perspective to anticipate and react to change. The Project Management Institute (PMI) Program Management Office Community of Practice (CoP) views the PMO as a strategic driver for organizational excellence and seeks to enhance the practices of execution management, organizational governance, and strategic change leadership.

Is establishing such a central nervous system within an organization a challenge? Yes, it is. In absence of crisply defined PMO goals, the risk is that the PMO can just end up increasing the workload for project managers without delivering on any of its stated objectives. As a result, PMO acceptability can get reduced and it can become just a reactive function within the organization, an incomplete nervous system with degraded reflexes and inability to anticipate external events.

So if you are lucky enough to have a senior / executive sponsorship mandating the requirement of a PMO, here are the five key factors to be considered to establish a PMO that truly rocks and becomes a strategic tool in keeping implementers and decision makers moving toward consistent and predictable business focused goals and objectives:

Key Factor #1 Clear Scope and Purpose of PMO – Lack of clear boundaries and objectives associated with the PMO, may result in overloaded PMO team and the disappointed customers. There are almost as many varieties of PMO as there are companies. There are strong PMOs and weak PMOs. Some companies rely on the PMO to be responsible for all areas of project management and project execution. Other companies only want the PMO to provide a consolidated reporting view of all the projects in the organization. Before you can jump in and start up a PMO, you must first gain clarity and agreement on what you are doing and why. Communicate this information to clients, stakeholders and your own staff so that everyone starts off with a common set of expectations. Second, provide a framework for the PMO to guide decision-making in the future. Along with the clear definition of which projects you will support, make sure that there are clear definitions of which services are and are NOT provided for all your customers.

Key Factor #2: Do not use the “One size fits all” approach – Implementing a PMO by exactly what books say without considering the organization in which it operates is not a very wise thing to do. Having a centralized source of information, templates and project management methodologies certainly brings value to the organization. However, forcing these to all types of projects (large, medium, complex, small) in organization may result in poor Project Manager willingness for their usage. A proper framework in place, with respect to project management models which allow tailoring of these templates and methodologies according to specific project/customer’s need, is the key for success here.

Key Factor #3: Define Data Requirements based on “need” and not “want” – Be careful of the data load that you put on the project managers, focus on being an enabler function and not an overhead. In most of the companies with a PMO, the perceptions of employees are more biased to it being an overhead rather than a useful service. One of the reasons for that is too complex requirement for the project managers to produce data which is very rarely used or even useful. The main focus of any project delivery is around Scope, Schedule, Budget & Resources, Quality and Customer satisfaction. A well defined metrics/dashboards for these important parameters can encourage PM to report the project status in correct and timely manner. This also aligns with PM’s usual activities for project tracking in day to day life and does not create additional bandwidth stretch for PMs. Project reporting can be around:  Status (red, yellow, green)—overall, as well as for risks, budget, scope, status trend, planned v s. actual budget, planned vs. actual time, business case forecasts vs. actual results, customer satisfaction survey results. How you further present reports depends on your audience, their needs, and the resulting actions your audience should take. Knowing your audience is very important here because the breadth and level of detail differs by audience. At higher levels, such as an executive board, reports should be broader in nature with less depth and frequency than at the business unit levels, for example. Business unit audiences desire more detailed information specifically focused to that business unit. However, the supporting detail should be available at all levels, especially for projects that may be in trouble, such as those with high budget or time overruns.

Key Factor #4 Metrics reporting – Data accuracy and completeness – If Reporting is a key dimension of the PMO, data accuracy and completeness is in turn a key dimension of reporting. According to Bryan Maizlish and Robert Handler (2005), “Research indicates that 90% of all business decisions are sub-optimal because of data quality. Ironically the biggest data quality complaint does not pertain to the accuracy of the data but the completeness of the data”. Accuracy and completeness is required for both simple and complex reports. For example, one of the most standard, simpler reports in PMO relates to the “health” of the programs in terms of project status (red, yellow, green). If the status of a project has not been updated in a timely manner, then the resulting program health report will be inaccurate leading to dated decisions. A suggestion here is to offer a service only if you have the proper tools to support it. Microsoft Excel is an excellent tool, still, there is only so much that you can offer in terms of analysis and forecasts if your project’s data are collected in an Excel file. Manual reports with embedded macros are good workarounds, but they are very time consuming and subject to mistakes. In addition, budgets and resources are really tough to manage manually in a consolidated and consistent manner, especially when your PMO is working on a global level. Have appropriate Project Management tools established based on your organization needs.

Key Factor # 5 Build a Strong marketing and communication strategy to drive PMO acceptance – Communicate, communicate, and communicate! There is no such thing as over-selling. Selling and re-selling the strategic project management office is necessary to gaining and sustaining the buy-in across all organizational levels. When you are setting up the PMO and do not have accomplishments to talk about yet, focus on building awareness about the PMO – its purpose, impact and benefits. The communication plan should include as audience, not only the executive and steering committee members and the stakeholders, but also the internal and external communities. Create a central repository for PMO documents, inform stakeholders the information is there and make sure that the information is easily accessible. Poor or non-existing marketing and communications revolving around the goal of the office and the services it provides, is one of the reasons for unsuccessful PMO setups.

So, to summarize, setup your PMO with well thought out strategies so that like a central nervous system, it can improve your organizational reflexes and performance. Such PMOs can enable your organization to get better/faster/cheaper and achieve more predictable results for their chosen projects.

What are your experiences with PMO setup in your organizations? What challenges have you faced in PMO establishment? Please share so that we can learn from your experiences.

Today’s guest post is from Kavita Verma, PMP who is the Director – Global Program Office at a leading IT services company. She is a dynamic and outcome-oriented Program Manager with a fulfilling career spanning over 10 years of extensive industry experience in full software life cycle of requirements definition, architecture, design, prototyping, product implementation, integration and testing of Embedded Mobile Application and Platform Middleware.[/vc_column_text][/vc_column][/vc_row]

Five Actions that can make your Sales Forecasts a Hit – Business Operations Performance Management

Five Actions that can make your Sales Forecasts a Hit – Business Operations Performance Management

by | Oct 21, 2012 | Business, Business Operations, Leadership, Management, Performance, Productivity

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A good forecaster is not smarter than everyone else, he merely has his ignorance better organized ~ Anonymous

If you are in business or sales, this time of the year is tough. It is the season for budgets and forecasts.  You are either looking back and thinking what went wrong or taxing your brains on how to get it right for the next year. Or you could be one of the lucky few who raked in more, much much more than you forecasted. Either ways, this is not a good situation to be in. Predictability is key to successful business outcomes. You cannot decide how much to spend and where to spend unless you know with great accuracy how much and where your revenue is going to come from.

What usually happens in the forecasting process is that the senior management asks their sales leaders for a forecast, the sales leaders check with their reps for a “gut feel” number. The sales reps come up with a number (maybe 10%-20% lower than their gut feel number, to play it safe). The numbers roll up to the senior management. At this stage, the management takes a look at the numbers and checks it with the number they have in their minds (the number that will satisfy the investors/owners), then either discards the sales numbers completely and make up their own numbers or if you are lucky, the numbers get approved. This is quite a hellish process as you can see with lots of stress and heart burn at every stage but no guarantees that the end result is the most accurate version of forecast.

Accurate forecasting is an art – there is no foolproof method or formula to get it right but there are a few steps or actions that business/sales people can keep in mind that can improve the accuracy of the forecast and make the process easier:

Action #1 – Understand what Forecasting Is and Is Not – A forecast is not an aspirational goal, nor a “quota” or a “crowd-pleaser” number, nor an administration activity nor a computer program output. It is rather a Projection of ACHIEVABLE sales revenue, based on historical sales data, analysis of market surveys and trends, and salesperson’s estimates. Many people at this stage confuse a sales plan with a sales forecast – this is disastrous as it affects the entire chain of the business cycle which depends on the achievable number to do its planning to delivery on the forecast.

Action #2 – Collaborate to Win: To make forecasts more effective, there must be a free-flow of information between all the functions to prevent duplicacy or contradictory data. There has to be respect for different point of views. Each function has its own insights – delivery timelines, ramp-up plans from engineering, capacity constraints from operations, campaign or events plan from marketing, customer satisfaction scores from customer support– all of these could have an impact on the end revenue results. Hence, it is important to have a strong mechanism in place to efficiently bring together different organizational functions to contribute their inputs in a spirit of collaboration.

Action #3 – Joining the Dots: A good forecast is never stand-alone. It takes into account trends from the past too like the previous year(s) sales in the same time period to account for the impact of seasonal buying patterns, a similar state of the economy, currency exchange rate fluctuations, availability of resources, marketing campaigns, etc. As Eugene O’Neill famously said – There is no present or future, only the past, happening over and over again, now. Given that a forecast has to predict the future, it makes good sense to base it on what is known – the past.

Action #4 – Reward Accuracy: Like in other management areas, what gets rewarded gets done. Sales people often have the mindset that their job is to sell and not forecast. This mindset is disastrous for the company bottom-line. Accurate forecasts have a huge impact on the company margins so why not put some of it back to reward the source of accuracy. It is important to put in place policies and practices particularly in the job performance evaluation criteria to reinforce the fact that forecasting is important for business success.

Action #5 Track and Improve: At best, a sales forecast is an educated guesstimate built on the basis of certain assumptions. And the basis for assumptions as well as the assumptions themselves change rapidly in the business world. Hence it is critical to review the forecast on a regular basis (fortnightly at the very least) to check if the assumptions still hold good. Measure your forecast accuracy, develop mechanisms and metrics to identify and eliminate the sources of error and plough the learning back into your sales forecasting process. This will ultimately help build confidence in the forecasting process and improve the accuracy so that the entire organization can benefit from better planning.

“Business, more than any other occupation, is a continual dealing with the future; it is a continual calculation, an instinctive exercise in foresight.”

Henry R. Luce (1898–1967), US publisher

What process or mechanism do you use to generate accurate forecasts? What other steps do you take to improve the predictability of your business? I would love to know.

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Business Operations Performance Metrics: Gross Margin – Five Steps to Improve your Margin

Business Operations Performance Metrics: Gross Margin – Five Steps to Improve your Margin

by | May 6, 2012 | Business, Business Operations, Management, Performance, Productivity

~~The success combination in business is: Do what you do better and do more of what you do. David Joseph Schwartz ~~

Margin improvement – this phrase usually conjures up images of budget cuts and lay-offs – and strikes fear in the hearts of the toughest managers.   But it really does not have to involve any of these things – costs reductions though important should not be used as the only lever in any margin improvement strategy as you soon run out of cost reduction options.    Gross Margin (as I wrote in my earlier post on key performance metrics) is the mother of all metrics and the quickest way to determine if your business in on track or not   and acts as an early warning system to put in place margin improvement initiatives. So, a quick definition of gross margin:

Gross Margin (%) = (Net Sales – Cost Of Goods Sold)/Net Sales

The gross margin represents the   percent of sales that the company keeps after incurring the direct costs associated with producing the goods and services sold by a company. The levels of gross margin may vary dramatically based on the nature of business (products or services, manufacturing or retail, etc.) but the principles and strategies behind improving margins boils down to two things – increasing your sales and increasing your operational efficiency to   bring down the cost of goods sold.

Thinking through some such initiatives that I have been involved in and noting what worked and what didn’t, these are the five steps that I came up with that I believe are critical to the success of any margin improvement initiative:

Margin Improvement Step #1: Customer profiling or Knowing your best customers – It all starts with the right data that gives you the information that you need, in this case a profile of your customers (or customer segments) that gives you a view of where your profits are coming from. Pareto’s principle applies here too; around 80% of your profits would come from 20% of your customers (or segments). Now you have identified where to focus your energies on – sell more in high profits areas and less in the low profit ones. This will also help in reducing the cost of sales that arise from keeping alive or going after customers where you are consistently not making any margins.

Margin Improvement Step #2: Order to Cash process or Leaving no money on the table – Take a close look at all your internal business processes and systems that are in place to book orders, bill them and collect the cash. Where are the revenue leakages – do you have a method to track unbilled and deferred revenues and plug these?  Are invoices being raised in time or are customers being essentially financed by you? Do you have policies to regulate and control warranties, refunds, credit notes, etc.? Little things add up to a big dent into your margins over a period of time.

Margin Improvement Step #3: Pricing Policies or Enabling your Sales force Effectiveness – The quickest way to increase the gross margin is to increase prices. Even a 2-3% increase in prices brings in a big jump in margins and the people who can do this are the sales team. So are the sales people in the company aware about the linkages in pricing and margins? Is there clear communication and transparencies in how pricing is done within the organization and how it translates into bottom line for the company? Are there tools that can help sales make better decisions by giving them access to real-time data on profitability?   Making key stakeholders aware of the tools at their disposal and how their actions impact the outcomes is a big step forward in any improvement initiative.

Margin Improvement Step #4: Operational Excellence or Reducing inefficiencies – This is all about doing more with less and driving performance improvement through the smart use of metrics. Look at all areas of waste and inefficiencies  – space that is not being used, people that are not being utilized, advertising that is not working, projects that are out of control, inventory that is gathering dust, supply chain expenses, travel costs, etc. Translate this into a plan with measurable outcomes and deadlines and assign clear ownerships.

Margin Improvement Step #5: Rewards and Celebrations Or Creating a Customer-focused Culture – Tie the incentives, awards and rewards that you give to your employees clearly with the margin goals. Tie Sales bonuses with the levels of margin that each sale brings in and not just the revenue. Celebrate early wins to reinforce the importance of the margin improvement initiative. Positive reinforcement works best here.   Research shows that companies with a customer-focused culture that consistently deliver value beyond customer expectations grow at rates that exceed industry averages. Customer Focus is a profit strategy and the way to achieve long term profitability is to build and sustain the culture of customer focus within the organization

What steps have I missed ? What business operation metric do you use to measure margins?   What has worked for you in improving margins? I would love to learn from you.

Business Operations Performance Metrics: Cash Flow – Five Steps to Improve your DSO

Business Operations Performance Metrics: Cash Flow – Five Steps to Improve your DSO

by | Apr 21, 2012 | Business, Business Operations, Management, Performance, Productivity

Happiness is a positive cash flow ~ (Fred Adler – Venture capitalist) ~

Most of us in business or in sales have heard this – Revenue is vanity, Margin is sanity and …Cash is king. I have written about the importance of tracking cash flow related metrics in one of my earlier posts and now want to capture some of the “hows” behind the “whats”. A commonly known and accepted metric for measuring and tracking the cash flow situation in a company is the DSO* or Days Sales Outstanding. DSO is used to determine the effectiveness of the order to cash process of the organization as it depicts the average number of days it takes to collect an order and turn it into cash after a sale has been made. The lower the DSO number, the less time it takes to collect receivables and the better you are able to manage your short and long-term business needs.

While technology plays an important role to make your collections process as efficiently managed as possible, it is my firm belief that no technology can provide benefits the way it is meant to unless there is a clearly defined process and enough checkpoints in the system. Every stakeholder needs to know his/her role in the process and have access to the information necessary to focus on functioning in the most efficient way possible given that this process involves multiple functions (sales, billing, treasury, collections) or in the case of small businesses the same person wearing multiple hats.

Here are five simple steps that have worked for me in streamlining the order to cash process and improving the DSO metric:

Step # 1 – Start at the beginning: Before you make that sale, have you checked what payment terms are you agreeing to and what conditions need to be fulfilled to trigger the payment from the customer? This is where sales plays an important role.  When and how the payment will be received is as important as how much; and will save a lot of time for people downstream if sales negotiations take these too into consideration. For services contracts, payment milestones should be structured in a way that your spend is aligned and not more than the cash inflow at any point of time. Negotiate the best terms possible and make sure that the terms are clear to both you and the customer and are recorded.

Step # 2 – Update your records: Once the sale is made, whether you do it manually (through a simple Excel) or through a tool like SAP, record the important information in a tracker and set reminders. The minimum information should include the date when the invoice has to be raised, the date that it falls due, the supporting documents that are needed to get the customer approval on the invoice, who and where the invoice needs to be sent to, and the mode of payment. Review this information periodically and ensure that it is up to date.

Step # 3 – Communicate: Make sure that every stakeholder knows what is expected of him/her in advance so that people are not scrambling around after the invoice is due. For example, this could mean the delivery team knowing that there is a requirement for signed acceptance certificates for a product or time-sheets for a service, the treasury team knowing that a performance bond is needed for payments, the invoicing team to raise the invoice on the exact date that it can be raised and not waiting for the end of the month or the sales team knowing that a system record is required at the customer end. The idea is to be prepared so that you don’t lose days in processing time in raising the invoice and after the invoice has become due.

Step #4 – Follow-up, Follow-up and Follow-up: Ok, so if you have done the three steps above, the invoice will most likely be raised on time and  now comes the painful part which involves customer relationship management and possibly a little bit of tact and diplomacy (collections-speak for not being a pain in the you-know-what) and lots of perseverance. If you know who the person is, in the customer organization, who is responsible for the processing of your invoice, I have found it helps to touch base twice before the invoice becomes due so that you are paid on time without the need for umpteen delays and follow ups internally and to the customer. Once, before the invoice is raised, call the customer contact and confirm the process requirements at the customer end so that you raise the right invoice in the right way. And then, a second time after you have raised the invoice and before it is due, confirm that the invoice has been received and it is cleared for processing. This helps eliminate surprises and the need for follow-up after the payment is due.

Step #5 – Continuous Improvement: Metrics, Dashboards, Regular reviews and Continuous Improvements go hand in hand – I am a great believer of this. You may know what to measure and how to improve the metric but unless you include the mechanisms to maintain a sustained focus, things just slip eventually. So, maintain a dashboard that can track all of the items above and the connected metrics (Accounts Receivable buckets, Unbilled revenue, etc.), map that against the DSO trend, set up regular reviews to discuss what is working and what is not, celebrate the wins and work on what part of the process needs improvement. Keep the extended teams informed on the changes and their impact and make them a part of the success too to demonstrate the importance of cash flow management to the overall business.

What have I missed? What processes do you follow to manage DSO? How important do you think this metric is? I would love to learn from you.

 *DSO: The most common calculation: (Ending Total receivables/Revenue (or Billing) for the Period Analyzed) X Number of Days in period