There are interesting debates these days. Cut cost or invest in growth? Outsource vs. keep in-house?Where does scalability fit into this discussion?
I saw this in Ignites last week:
"Market volatility … causes us just to look at our entire business, all the business processes, all the business lines, and rationalize everything…. " said CFO Ken Lewis on an earnings conference call earlier this month. See the article in Ignites.
So the story goes when times are good high fixed cost get hidden, but when margins are under pressure, everything is under watch. But wait aren’t we dealing with:
- Product expansion
- Geographic expansion
- Growing compliance burdens
So what gives? You don’t just want me to do the same with less but more with less? How can it be done?
I attended a meeting last week with a potential client that was looking at FundHive for prospectus, report and fact sheet work. This meeting was a 4-hour workshop with the business users to get their feedback.
When they had left the room he turned and asked us two questions:
- How much production savings will be realized?
- How much will this cost?
We gave him the answer to both (by the way, the answer to the first question was around 50%). He then turned and said ok let’s go.
Then he went to explain from a strategic standpoint this was not about cost savings, they, in fact, were very happy with their teams, the culture they had built and the quality of their work. This investment was about growth and scale. That they wanted to double the size of their business over the next several years but keep staffing levels the same. This project was about SCALE, and they knew they needed technology and automation to do that.
Scalability defined as a characteristic of a system, model or function that describes its capability to cope and perform under an increased or expanding workload. A system that scales well will be able to maintain or even increase its level of performance or efficiency when tested by larger operational demands.
I have to honest that was so refreshing to hear. I get market conditions are tough, and there are financial pressures everywhere, but firms must be preparing for growth. Whether it is coming from:
Growth is coming. How that growth is managed will determine whether margins stay the same, go down or go up. Don't let managing growth and scalability get lost in the conversation.
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