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The insideEdge (SAPinsider Vol. 11, Iss. 2)

by Lori Mitchell-Keller | SAPinsider

April 7, 2010

Managing in a recession is easy: Focus only on cutting costs and eliminating expenses. But managing in a recovery is much more complex. Find out why, and uncover the role your technology partners can play in helping you balance cost containment and growth.

Lori Mitchell-Keller
Senior Vice President
Suite Solution Management

If you think a recession is hard, try a recovery. Managing a company in a recession is relatively straightforward. Economic conditions dictate your marching orders: Take cost out of the business, and delay (or eliminate) all but critical expenses.

But today, as the economic tide turns toward recovery, the challenges are much more complex. During the downturn, you looked to your trading partner relationships as places to slash costs, but now you need them to help you differentiate your business from your competition. Customers last year eschewed brand loyalty for price points, but in a recovery, you need to win that customer brand loyalty back with improved service or more innovative products.

In 2009, we shifted from a mode of continuous improvement to one of cost containment. That’s a much easier situation than the one we find ourselves in today: moving from cost containment mode to growth mode. The biggest challenge? You now have to spend money to make money. You have to invest in order to re-establish revenue growth. But where do you make those investments?

In the coming months, you will be making some of the hardest decisions of your career. How do you invest to create more innovative products or become more collaborative with your partners? What business processes do you implement to become leaner, more agile, and more sustainable? What tools can you employ to improve transparency in your own systems and become better networked, both within your organization and outside of it? And always, always, always, what can you do to make your business more customer-driven?

What’s not going away is the tremendous pressure we all continue to feel to contain costs. But in a recovery, this rubs directly against pressure for revenue growth. Therefore, you are looking to the marketplace to provide solutions that you can implement quickly and that provide instant value in the short term, while also providing strong, long-term ROI.

The role of your technology partners — the role of SAP — is to provide you with new functionality and features that you can install from a service pack or an enhancement package, not just from full-blown installations or upgrades. You need standalone solutions that can be implemented in weeks rather than months. You already have enough challenges in this recovering economy; implementing technology should not be one of them.

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