Whether you’re a Private Equity investor or a C-level executive, every organization is focused on improving EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) for its shareholders. Some of the common methods to increase EBITDA would be to implement lean six sigma principles and continuous improvement initiatives. These disciplines increase operational efficiency and are widely used approaches for achieving process improvements, cost reductions and increased earnings.
Believe it or not, there are similar approaches to drive operational improvement by operationalizing your IT systems. In this case, instead of traditional lean best practices, your focus is how you can better utilize the invested technologies that are aligned with your business processes, thus result in optimizing operational efficiency.
Common systems analyzed include ERP, CRM, and business intelligence systems. Companies spend hundreds of thousands, even millions, to deploy these applications, utilize a portion of the systems in lieu of manual systems such as Microsoft Excel, manual processes and/or workarounds, thus creating significant inefficiencies. Often times, the application supports the manual process, however the company is either not aware or trained on the system feature or culturally has accepted the manual methods. Manual methods are not only inefficient but increase application maintenance and lack scalability for growth.
It’s recommended that you remediate manual methods and take a more holistic view of how you are utilizing your IT applications. Some of the questions to ask yourself first before continuing down this path are:
- “Does the current IT system (e.g. ERP, CRM, etc.) adequately support the company’s current and long-term needs?”
- “Are key systems heavily customized and if so, do they create operational and scalability risks?”
- “What key operational functions use Excel extract or manual processes?”
- “Can management view product specific performance, inventory status and demand, vendor spend?”
If the above questions are relevant, then it’s recommended that you look further into understanding, “how,” your systems are being utilized. We recommend you work closely to understand your, “order to cash,” “procure to pay,” “plan to make,” and, “post to close,” processes and then compare those to the application (eg.ERP, CRM, etc.) functionality. Often times, inefficiencies immediately surface, some are easily remediated and others require business process reengineering.
Some of the questions you may ask yourself include:
- Discuss the use of business systems to support the order to cash lifecycle such as:
- How are orders received?
- What is the volume and % breakdown by channels?
- How is inventory availability checked during order entry?
RSM’s Rapid Assessment® effectively works with you to understand your strategic goals. It helps define your order to cash, procure to pay, plan to make, and post to close processes, map a roadmap to help you operationalize your IT to decrease inefficiencies, increased efficiency that will drive EBITDA across the enterprise. To learn more about how RSM can assist you with your other business needs, contact RSM’s management consulting professionals at 800.274.3978 or email us.