Dwight Eisenhower once said, “Plans are nothing, but planning is everything.” As a former CFO of a Fortune 25 sized enterprise, I have experienced this first-hand, time, and time again. Plans are static, but circumstances constantly change the path to our goals. Customer expectations evolve. Competitors challenge our product and go-to-market strategies. Technology disrupts the way employees perform their jobs. These, coupled with marketplace dynamics, impact Wall Street’s view of a firm’s value.
So how do we take this reality and create a process that provides better visibility to risks and highlights a path to ensure corporate financial goals are still achieved? The answer is Operational Analytics.
Operational analytics is a discipline that provides continuous data-driven insights to those planning assumptions – enabling proactive decision-making based on shifts in the business landscape caused by customers, competitors, or technology.
Operational Analytics – A Case in Point
As the CFO of an enterprise providing products and services to global customers, it was my responsibility to understand the operational forces that impacted financial performance. A CFO cannot simply set financial targets, mandating a business head to increase revenue, decrease costs, and improve profitability. Instead, the job requires an understanding of the operational levers behind those targets and collaboration with business partners to demonstrate a path to achievement.
Operational analytics is an effective method that leverages data from multiple front-line operational sources to create revenue and cost-driver metrics — changes in volumes, trends in unit costs, variability by geography, or differences among supply chain sources. Insights about customer buying patterns, ordering errors, provisioning or fulfillment fallout, and billing inaccuracies create a roadmap of concrete, actionable steps to influence financial outcomes.
Understanding work drivers enables what-if scenarios based on reducing volumes, shortening cycle time, and improving unit costs. The specific scenarios that demonstrate optimal outcomes can then be implemented to improve workplace efficiencies, enhance the use of technology, and thereby reduce operational costs.
There’s never one silver bullet to achieving financial targets. But operational analytics shines a spotlight on those levers that can most directly impact revenue, cost, and profits. And operational analytics is a means of delivering continuous updates so that changing conditions and shifts in customer behavior can more quickly be identified and the requisite changes to the business response can be more effectively implemented.
Operational analytics creates data transparency. It gets at the heart of understanding customer preferences, employee performance, and the drivers of increased shareholder value – a triple win for any enterprise.
Customers expect their service providers to be responsive, adaptable, and innovative. But if you don’t have a pulse on their needs and you can’t differentiate service based on their various profiles, then you’ll never meet their expectations.
Operational analytics gives you that pulse on your customers and creates visibility to issues before they become large-scale problems. It allows you to understand patterns and customer preferences for their buying and servicing needs. Customers win when their ordering, fulfillment, and billing processes are easy and error-free. Effective and efficient internal processes enable a superior customer experience.
Employees want to serve their customers well. Most find job satisfaction when they are performing effectively and efficiently. But often there are upstream process issues or technology shortcomings that cause excessive hand-offs, error fallout, rework, and manual intervention. These are all costly and create customer dissatisfaction.
Analytics performed on a variety of operational data generate fact-based information to diagnose process issues and provide a baseline from which to assess impacts of performance improvements.
Operational analytics creates transparency to front-line employees in providing the metrics that define what “good” looks like. It also provides a quantifiable ROI-model to support technology investment and new, innovative approaches. All of which creates a win for employees in terms of improved job satisfaction.
Happy, motivated employees provide improved customer service, which in turn creates happy, loyal customers. The resulting lower costs, increased revenues, and improved margins contribute to a winning formula for enhancing shareholder value.
The powerful outcomes of Operational Analytics result in wins for Customers, Employees, and Shareholders.
The Northridge Group understands the need to provide best in class quality solutions. Contact The Northridge Group to learn more about Operational Analytics.