„…despite the general commitment to delivering value beyond the cost, most practitioners are still using analytics primarily as a means of cost control rather than revenue generation.” reads the SSON 2016 report. So, good old known cost-cutting focus seems to still be the in charge. Funny, in the world of invention and innovation driven by the demand built around customer experience, we appear to use Analytics – one of the most powerful technology we have – not to stimulate the market and revenue.
When we look into our corporate strategies they mostly say something about being better, faster, first, biggest, closest, etc… They talk about growth, client experience, convincing offering, effectiveness (not efficiency)… what happens with the go-to-market positive wording when we enter the SSC door? Why don’t we see the potential of the back-office to support the front office?
So often, we do hurt and devaluate LEAN in a similar way. We look at it majorly as a cost cutting model. We invest in Value Stream Mapping and process redesign. We collect tons of information and measurements and we do it with the perspective to eliminate some FTE’s here and there. We seem to forget that LEAN is about the control over the process = the delivery lead time and quality. If they are all good, we then obtain the effectiveness of the process which can be translated into the productivity. Because, LEAN is about our capacity that is freed up to accommodate more demand. So it not about cost cutting but about creating an opportunity to do more for a satisfied customer – satisfied because of the us being capable to deliver on time and on quality.
And if we do more, we see more and we gain the opportunity to analyze and advise on more. So the ultimate objective of LEAN, should be to impact positively the customer. By being able to advise our Business we can support them in meeting the end-customer expectations. This is what I would call Business Value, not back-office efficiency. This is what matches our strategic statements.
There is still hope that the cost perspective is rather a productivity perspective, which is brought to use the available total capacity to serve more business. With this in mind, the „cost-cutting” indeed becomes „cost improvement” and stays on the constructive side of analytics in the lean mode.
Of course, it is not bad to understand and manage costs. It is critical. Yet, the value of the costs is limited to its own figure in total, and in practice to a % of what it is. The value of the revenue is not limited, or may be limited by the competition that can be bitten and the total demand can be stimulated. So where is the larger potential?
Maybe it is about the nature of the place the Analytics sit today. If this is e.g. an SSC for F&A, Procurement or HR, then naturally, CXO’s may think about the costs of this centralized internal service and rightly minimize the overhead G&A burden. These costs are not, by definition, creating direct value to the client. Not TODAY!
Could they? Yes. I dare to propose that they could. Could e.g. F&A Analytics look at the costs outside the centralized F&A process? Could they sit along with Marketing and build a persuading value proposition to the consumers? Could ITO do the same? I believe that they could.
Should that be happening, we would indeed observe a transfer from SSC/BPO cost cutting into value added services, with the same Analytics. Possibly with the same investment. And if played strategically well, with the same capacity of the SSC/BPO/ITO.
Some of the challenge is what we do, some in how we see and call it today, but that would be a Transformation with a big T.