Are You Spending Too Much? Maybe Not?
While acting as the interim CEO for a client, one of our partners was reviewing the company’s financial statements with company management and the company’s accounting firm. The client, a manufacturing firm, was experiencing profitability, growth and customer problems. The accounting firm focused on several cost categories which had increased over the years. Specifically, they said that the company was spending too much in the area of technology. We had a different perspective. Our view was that the firm was not overspending for technology; rather, they were not effectively managing their investment in technology. Using our integrated financial and strategic planning approach, we implemented a disciplined technology improvement plan and budget to help them better manage their investment. Technology investments would now be made based on expected returns on investment and impact on customer satisfaction. Projects would be managed based on requirements and specifications and measured using key performance measurements.
With a disciplined process and plan in place, technology investments were made to improve product design efficiency and to reduce rework and waste. Not only did margins increase, but backlog decreased, capacity increased, on-time delivery and customer satisfaction improved resulting in higher revenue and profits for the company.