New Study: Supply Management Spending To Rise By Almost 14% in 2008

on Friday, February 29, 2008

Maybe because of, or in spite of the troubling economic climate, companies are looking to invest more in supply management equipment and services for 2008. According to a study by AMR Research entitled Supply Management Spending Report 2008, US companies, on average, plan on increasing investment in supply management technology and processes by 13.9%, according to AMR. In Europe, the study says, the figure will be even higher, with planned increases averaging 15.6%.

Supply Chain Digest, summarizing the report, notes that AMR also asked companies to rate the perceived importance of a variety of supply management processes and technologies compared to the company’s current capabilities/performance in that area.

"While the research showed important gaps between importance and performance in areas like supplier connectivity and visibility, the largest gaps were actually in more basic areas, such as contract management and spend analysis. Services procurement was another area that showed a large gap between importance and performance," says SC Digest.

Global warming or climate change doesn't seem to be a hot topic - or anything green for that matter. The study shows that "green procurement" initiatives ranked near the bottom of the priority list, cited as the top priority of only 4% of respondents.

For more information on corporate supply spending trends, contact Source One Inc. at:

Source One Management Services, LLC
724 Fitzwatertown Road
Willow Grove, PA 19090
Phone: (215) 902-0200
Fax: (215) 902-0202
Toll Free: (888) 399-7687
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Dow Chemical Boards Strategic Sourcing Bandwagon

on Wednesday, February 27, 2008

Dow Chemical is embarking on a three-year campaign to improve on its procurement practices.
It's a huge effort and Susan Avery at Purchasing.com does a great job in detailing how the chem giant is going about the shift to strategic sourcing

Writes Avery . . .
"Purchasing is all about relationships—building and maintaining relationships with suppliers and internal customers. While both kinds are important, it is relationships with internal customers that the global purchasing operation at the Dow Chemical Co. in Midland, Mich., is concentrating on right now. It's the next step in the company's major transformation from tactical to strategic purchasing.

Among its internal outreach efforts: internal customer-satisfaction surveys, recruitment of "the best and brightest" to work in purchasing and regular communication of purchasing successes.
Of course, underlying those efforts are the steps Dow has taken to strengthen its relationships with suppliers. And the first of these is centralization.

In keeping with corporate goals and objectives, management centralized purchasing in the mid-1990s. Since then, purchasing has taken on a more global focus, and provides its services to each of the company's businesses located at facilities in 175 countries.

With these pieces in place, global purchasing next turned its sights to sourcing and:

  • Introduced use of a strategic sourcing process called value-based sourcing (VBS).
  • Created a center of excellence that helps keep the company's purchasing pros up to date on the latest tools and techniques.
  • Added a dedicated rep from the company's HR function to help with recruiting and retaining talented, skilled individuals.

Now, the organization, led by Tim King, vice president of global purchasing, is working on forging closer ties with its internal customers, the Dow businesses or partners as the company calls them.

Management tapped King who was working as commercial vice president for North America, to take the top purchasing role in April 2007.

It's the job of this 31-year Dow veteran, who has a strong sales and marketing background, to continue the work of his predecessors and see the transformation of global procurement through to its completion. This means selling the ideas internally.

"We have updated purchasing processes and tools and put the right people in the right jobs to make the best possible decisions for the Dow Chemical Co.," says King. "We've made significant progress in all three areas. In the next two to three years, we will make this transformation a reality. It's all about how we focus our efforts internally with our business partners and externally with our suppliers."


Read the entire article at:

http://www.purchasing.com/article/CA6518763.html?industryid=48392.

Any questions on what Dow is doing and how they're doing it, reach out to Source One at:


Source One Management Services, LLC
724 Fitzwatertown Road
Willow Grove, PA 19090
Phone: (215) 902-0200
Fax: (215) 902-0202
Toll Free: (888) 399-7687

www.sourceoneinc.com

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Manufacturers Need to Weigh Maintenance, Durability as They Weight Costs

on Tuesday, February 26, 2008

It's not an easy time to be a manufacturer. Especially this week, as various economic indexes show that consumer confidence may be in free fall, while wholesale food, energy and medicine costs have soared, pushing inflation up at the fastest pace in a quarter century. The Labor Department reported earlier today that wholesale inflation jumped by one percent in January, more than double the increase that analysts had been expecting.

Perhaps that's one good reason why manufacturers should look to other areas to preserve the bottom line. One such area might be in equipment management - specifically the lifespan of a company's equipment. Why? Because regardless of the product they are manufacturing, equipment declines over time, reducing the quantity of finished products a manufacturer can create. Maintenance must then be performed to return the equipment back to an optimal state.
Anxiety over equipment maintenance only increases when manufacturers make multiple products on deteriorating equipment. In these scenarios, some items produced in the same batch are likely to be defective. Until now, researchers have only considered this deterioration problem with regards to the manufacturing of one product, and focused only on how much to produce in order to offset the amount of products that will be defective.

In reality, however, firms typically make more than one product. Even more importantly, these products often vary in terms of their quality (e.g., high-end vs. low-end). This means that each product has a different impact on the deterioration of the equipment. For example, semi-conductor manufacturers make computer chips that vary in their speed and quality. High-speed (high-end) products contaminate the equipment more than low-speed (low-end) products, thus accelerating the deterioration process.

A potential answer to the problem of equipment maintenance comes from researcher Burak Kazaz, associate professor of Supply Chain Management in the Whitman School of Management at Syracuse University. Kazas asks the simple question, "in each state of equipment deterioration, which product (e.g., high-end computer chips or the low-end) should be produced.’

"We expect a high-end product to earn more revenue than a low-end product. However, a high-end product will also speed up the deterioration and will have fewer yields than a low-end product," says Kazaz. "The manufacturer’s trade-off is to produce a high-end product and earn higher revenue but increase the risk of the machine deteriorating more rapidly. Or produce a low-end product and earn lower revenue and have fewer risks of process deterioration."
Kazaz’ research, recently published in IIE Transactions and co- authored with Thomas W. Sloan of the University of Massachusetts at Lowell, introduces the concept of ‘critical ratio’ of revenues – that is, a comparison of the revenues of each product at various stages in the lifespan of the equipment to determine the best production policy.

"The critical ratios enable a manufacturer to evaluate the ‘reservation price’ of a product," explains Kazaz. "In other words, they allow a manufacturer to determine the minimum revenue it needs to earn to justify the production of one item over another."

Kazaz' work is important because it helps determine what products can be manufactured at various stages of deterioration, and when to switch from one product to another. His findings could shed light on decisions regarding product mix, pricing, and process technology.

And that could help manufacturers save money in a critical economic cycle.

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UK Study: Cost-Cutting See DM Initiatives as a Better Bet Than Online Advertising

on Monday, February 25, 2008

Companies that are squeezed on costs in early 2008 still seem determined to roll lots of dough into online advertising, like search engine optimization, Google-AdWords-type paid search software, and online referrals.

According to Information Week, the global online ad market is projected to rise to $50 billion in 2011, up from $25 billion in 2007.

But a new study from the UK-based Fournaise Marketing Group says that most companies, especially smaller ones, still rank direct marketing as the number one medium for marketing effectiveness in 2007 and 2008.

The report – the Global Marketing Effectiveness Report -- says that, among corporate marketing executives, direct marketing DM is considered to be the most effective medium – topping the 2007 marketing Effectiveness Ranking (or EFFER), according to Fournaise.
More specifically, the reports reveals that . . .
  1. DM ranked ahead despite five online media platforms surging into the EFFER’s top 10 (email, paid search advertising, online referrals, online display advertising and online rich media) alongside traditional stalwarts like public relations, newspapers, TV and outdoor;
  2. Movie theater, online endorsements and online sponsorship ranked last and are in danger of being dropped by marketers if they are not able to deliver better results when it comes to engaging with the target audiences marketers are going after – proof that not all traditional and online media platforms are judged to be effective.

“If you listen to the industry hype, it’s all about online advertising (and emerging mobile advertising). If you check where marketing budgets are mostly spent, it’s still all about traditional media such as TV and newspapers. But when it comes down to effectiveness, while it may not be the most glamorous and talked-about medium, marketers are telling us DM is still the best platform for delivering results,” says Jerome Fontaine, CEO and Chief Tracker at Fournaise.

Hey, it's not sexy and it's not glamorous. But even in an economic downturn, where company decision makers are throwing nickels around like manhole covers, direct marketing won't go away.

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No Recession After All? Good News for Businesses

on Thursday, February 21, 2008

The media has been adamant about the U.S. economy tanking into recession, with reporters putting their notebooks and tape recorders down and waving pom-pom's in support of economic strife for millions of Americans.

Why? Who knows? Probably because it's a compelling story line and probably because the media would love to hang a recession around President Bush's neck before he leaves office.

Fortunately for the rest of us, they may never get the chance. On top of some encouraging quarterly performance numbers from the likes of IBM, Wal-Mart and Cisco, now the Conference Board is reporting that, while the economy has indeed lost steam, it won't lose enough to fall into a recession. "While the correction in the financial sector is just beginning, the correction in the housing sector is nearly over," declares Gail D. Fosler, president and chief economist of the Conference Board. Her analysis comes from StraightTalk, a newsletter designed exclusively for members of the Conference Board’s global business network.

The Board reports that while the U.S. economy has weakened, business activity and corporate profits continue to rise. Consumer spending is continuing at a rate of 2 to 2.5 percent a year, and with the exception of the auto industry, the economy is showing gains virtually across the board.

"Exports are booming and imports and import penetration are down," says Fosler. "While there is continuing uncertainty about the economic outlook, economic shocks from the contracting financial sector are not enough to tip the U.S. economy into recession."

Fosler says that it has been a long time since the U.S. economy has experienced the kind of sustained downturn reflected in recent stock market declines. The 2001 recession was short-lived, and despite huge losses in the technology and manufacturing sectors, there was almost an undetectable decline in GDP. The last deep recession in the U.S. economy began in 1990. The economy weathered the 1987 stock market crash and the 1988 savings and loan crisis before being plunged into a recession by the Gulf War.

"Similarities between the current situation and the period leading up to the 1990 recession are striking, but there are also many differences," she adds. "The business sector today is fundamentally stronger than at any time since the 1960s, and booming exports are helping support solid and continued structural productivity gains.

Also, the policy sector is moving to establish a solid floor of tax and interest rate cuts to support the economy."

A big factor in her calculations, Fosler adds, is that the housing market correction is about over/ "Given the lags in the impact of the housing sector on the economy, even at current activity levels, housing will likely subtract about 0.4 percentage points from 2008 growth. Housing affordability is beginning to improve, and with the recent interest rate cuts and home price declines, it should improve further and limit the downside risk. January and February are not big months for housing, but rising affordability bodes well for the spring selling season."

In addition, the rise in households is increasingly outpacing the rise in permits, so the ratio is rising over time and is reaching a point normally associated with recovery in housing activity. The long housing boom of the past 15 years has taken the home ownership rate up from 64 percent to a peak of 69 percent in 2004, reflecting an intrinsic demand for housing. All of this adds up to good structural demand for housing if the credit markets and lending institutions can ease the credit flow.

The Board notes that the business sector, outside of the financial sector, remains strong. U.S. business has engaged in almost constant restructuring, and these ongoing adjustments to changing business conditions have left the nonfinancial business sector generally lean and focused.

The business sector is also benefiting from the export boom and strength in corporate activities outside the U.S. Exports are rising at about a 13 percent annual rate, and the slowdown in imports means that U.S. companies are taking a larger share of U.S. demand. The improvement in the trade sector alone is likely to add about a half percentage point to growth this year – more than offsetting the decline in housing.

The bad news is concentrated in the financial sector. Recent data indicate that financial sector profits decreased dramatically over the second half of 2007. Basic earnings data show that financial services profits collapsed from about $10 per share in the second quarter of 2007 to a loss of almost $2 in the fourth quarter. Not only have these losses been substantial, but they have been concentrated in some of the largest financial institutions, both in terms of assets and market capitalization. Top global financial institutions have disclosed roughly $125 to $150 billion in asset writedowns associated with the recent financial turmoil. But when all the dust settles, even if their profitability is damaged, their balance sheets are likely to be little affected. Because of the mark- to-market rules, the writeoffs associated with structured products, including subprime mortgages, are likely to be revalued over the course of the year as the markets begin to trade those securities.

Americans are clearly pulling back on expenditures, but not to dangerous levels, the Board adds. Although real consumer spending grew at above 4 percent in mid-2005, it has since slowed to the 2-2.5 percent range. On one level, this slowdown in consumer spending is a response to higher gas prices and low demand for automobiles. But there is very little impact evident from the effects of almost two years of housing declines. Income gains continue to be reasonably strong. Total wage and salary growth is running at about a 5 percent annual rate.

"On a broader level, it is important to recognize that the slowdown in consumer spending is part of the rebalancing of the U.S. economy,"concludes Fosler. "Americans have enjoyed over two decades of continuous consumer spending growth, which is one of the causes for the large trade deficits over the past decade. These gains go well beyond the normal term of an economic cycle and diminish as consumer needs are met or even overmet."

So, good news for businesses heading into spring, 2008. Not that the media would notice.

The Associated Press's headline on the very same report? "Business Group Says Economic Growth Will Weaken Further in Coming Months".

Just not the market for pom-pom's.
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Company Pension Plans: Get Creative or Get Out

on Wednesday, February 20, 2008

There is little doubt that company pension plans are going the way of the horse-and-buggy or the duck-billed platypus. In recent years, companies have only been to happy to shift the retirement planning responsibilities to its workforce, mostly in the form of defined contribution plans like 401k's.

But with 77 million baby boomers nearing retirement, the corporate pension plans that still exist will be increasingly subjected to analysis and change. Specifically, the decline in defined benefit plans and the rise in defined contribution plans – combined with increasing longevity – is creating growing risk among employees regarding their retirement benefits.
That's the conclusion of a major study on corporate retirement benefits trends from the Conference Board.

Says the report: "The changing definition of retirement raises controversial questions, especially from a societal point of view. "What is the responsibility of the corporation to provide a safe and secure retirement for its employees? The evolving social contract between employees and employers has resulted in many issues that plan sponsors, policymakers and academics need to resolve. We are asking employees – who should be seen as consumers, not investors – to take on significant risks that they haven’t a clue on how to manage."

The Board report says that company decision makers face a dilemma over retirement benefits, and risk losing good employees if they fail to take action. Legislation, including the Pension Protection Act of 2006, liberalized requirements for defined contribution plans. The Conference Board says that any experts disagree over whether the new rules for defined benefit plans will help stabilize the system or encourage more companies to curtail their plans. Executives told report researchers that as more companies discontinue their defined benefit plans, they’ll need to change their overall retirement programs so they work more effectively for employees.

The risk, the report adds, is twofold. The first concern: employees will outlive their retirement income and will experience a significant decline in their standard of living as they move from the accumulation phase. This is entirely possible, as many people are underestimating their life expectancy and overestimating how much money they can draw from savings. Employees are facing new responsibilities for managing retirement assets, distribution options and the payout period, and many are unable to manage the process effectively.

The other danger is that employees are investing more than they should in equities, due in part to the limited options for their defined contribution monies, inflation and market volatility. Even though many employers are using target fund dates, some experts believe that these funds – which have been endorsed by the Department of Labor and the Employee Benefits Security Administration for default investment options – are generally too risky for the average employee.

The report also notes that today's workforce is the healthiest and most energetic ever. And they want to hang around for a while. When surveyed, 7 out of 10 people in the report that they want to continue working in retirement, according to Anna Rappaport, senior fellow on pensions and retirement for The Conference Board, and an author of the report. Given these new parameters, new definitions and innovative employment options must be created for this phase of life.
Rappaport calls it the "third age," which is the period between full- time work and total retirement. "Policymakers, employers and individuals need to rethink how retirement fits into the way people live their lives," says Rappaport.

One option, Rappaport adds, is phased retirement, when an employee moves from full-time to part-time employment before retiring. She points out that phased retirement has gotten a great deal of traction, with 48 percent of current retirees transitioning into retirement through part-time work, but mostly on their own. More people are expected to incorporate this work style in the future. In a poll taken during a recent Conference Board webcast, 59 of 69 respondents said they are likely to have a phased retirement program within three years.

Another option to make retirement more secure is to create solutions that provide lifetime income, such as inexpensive and flexible annuities. Offering employees in-plan opportunities to purchase income annuities with their defined contribution assets can also provide lifetime income. Programs that allow a rollover into IRAs with institutional annuity rate purchases are another way to accomplish this.

While annuities are not chosen by most individuals, the report highlights the importance of lifetime income. Questions remain, however, about what policy options should be considered and whether there should be legal requirements for the employee or the employer to purchase a lifetime income benefit. Right now, "it’s unrealistic to require a mandated annuity beyond Social Security," notes the report.

"Automatic enrollment should be included in new retirement plan designs so that defined contribution plans can work without active employee participation," says Toddi Gutner, co-author of the report.

Participation rates jump from 53 percent to 81 percent with automatic enrollment. "Employers need to change their plans so they work better for employees who don’t take action. It is imperative that employees embrace the financial education that companies offer so they can learn how to fully use their benefits. But perhaps just as important is to determine how much savings is enough and to save that amount."

Employees, aging and retirement planning are problems that won't be going away soon for corporate America. As the Conference Board points out, corporate responsibility for employees and their retirement savings is high - and the stakes for the companies themselves even higher.
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Should Shareholders Have More Say Over Executive Pay?

on Tuesday, February 19, 2008

It's not exactly a great time for CEO's and other boardroom types to be squawking over executive pay - especially over the prickly topic of who decides how much cash & compensation corporate managers should take home with them.

But even in a tough economic climate where shareholders are understandably skittish about corporate spending and company profits, senior executives don't want any so-called outsiders having too much of a say in their take-home pay.
That's the takeaway from a new survey by BDO Seidman, LLP, a New York- based accounting and consulting organizations, which says that an underwhelming thirty-one percent of chief financial officers at leading U.S. technology businesses indicate that their company allows shareholders to vote on their executive compensation plans, compared to more than two-thirds (69%) that do not. Perhaps hypocritically, the same survey says that shareholders should have "some say" about who gets what on the executive pay front.

To that end, a solid majority (61%) of the CFOs personally feel shareholders should have a say on executive compensation plans, compared to over one-third (39%) who do not.

CFO's are also in a sour mood about regulatory changes from Congress that many say has inhibited corporate financial performance. Over, two-thirds (67%) of the CFOs say their company’s compensation plans have been impacted by regulatory changes focused on improved disclosure but another solid majority (65%) of these financial leaders believe that Section 404 of Sarbanes-Oxley has led to improved processes. About the same number say the price of complying with government business regulations should abate in 2008.

"At a time when regulatory organizations are pushing for more executive compensation disclosure, it is reassuring that CFOs at technology businesses are supportive of shareholders having a greater voice in approving executive compensation levels," notes Andy Gibson, a partner in the technology practice at BDO Seidman. "In addition, relatively few CFOs indicated that executive compensation disclosure changes, such as 409A and FAS 123R, are having significant impact upon their company’s abilities to attract and retain talent."

"Although technology companies were hesitant to adopt Section 404 of Sarbanes-Oxley, the majority have realized improved processes due to their compliance efforts and do not believe 404 has adversely impacted their level of risk-taking," says Hank Galligan, a partner in BDO Seidman’s technology practice. "The CFOs at these technology companies are also very optimistic that 404 costs will stabilize this year."

Here's a run-down of the findings from the study:

Executive Compensation Disclosure. Two-thirds (67%) of CFOs at technology businesses indicate that their company’s compensation plans have been impacted by legislative and regulatory changes, such as 409A and FAS 123R, focused on improved disclosure. Of those impacted, over one-quarter (27%) described the impact as high, thirty- seven percent described the impact as moderate and thirty-six percent said low.

Little Impact on Recruitment. Despite the impact on compensation plans, the vast majority (81%) of the companies indicate these disclosure changes have had little impact on their ability to attract and retain talent. When asked which financial tool is most effective in recruiting, retaining and motivating executives in the technology industry, forty-two percent cited restricted stock and thirty-eight percent cited stock option grants. Grants of profit interest (11%) and stock appreciation rights (9%) were also cited by a number of the CFOs.

Reporting Challenges. When asked which financial reporting requirement poses the greatest challenge, in terms of compliance, a large percentage of CFOs identified both Section 404 (49%) and FIN 48 (36%). Only 12% cited 409A and three percent said it was other requirements.

Section 404 Benefits. Although there has been much criticism of the difficulties involved in complying with Section 404 of Sarbanes- Oxley, almost two-thirds (65%) of the CFOs of tech businesses feel that 404 has led to improved processes, compared to just over a third (35%) who feel 404 has curtailed innovation at their businesses.

Risk? While thirty-nine percent of these financial executives believe Section 404 has curtailed corporate risk-taking at their companies, a majority (59%) feel risk taking has not been impacted.

Costs Stabilizing. A majority (53%) of the CFOs believe their 404 compliance costs will stabilize this year, compared to twenty-two percent who anticipate costs to climb and twenty-four percent that expect a decline.

Inhouse, Outsource or Co-source. Over half (54%) of technology companies manage their Section 404 compliance functions in-house versus only eleven percent that outsource the function to an external provider. Just over one-third (35%) of the CFOs indicated they manage their 404 compliance through a co-sourcing relationship (a combination of in-house and outsourcing) with an external provider.

-----------------------

Hey, it's no secret that CFO's are card-carrying members of the glass- half-empty crowd. But wanting shareholders to have more say in executive pay but nixing any up-or-down veto power over pay, and then complaining about regulatory requirements that most say actually work...
-- well, let's just say it's weirdly entertaining to watch corporate financial executives talk out of both sides of their mouths.
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Small Business IT Trends Point to Flexibility, Adaptability, For the Rest of 2008

on Friday, February 15, 2008

With cost-cutting on everyone's mind - okay, the lousy weather blanketing much of the Upper U.S. this week, too -- some new economic numbers are in that suggest corporate cost-cutting initiatives should continue in the coming months.

For starters, consumer sentiment fell sharply in early February to levels associated with previous recessions, dragged down by concerns a bleak economic outlook would raise the unemployment rate, a survey showed on Friday. The Reuters/University of Michigan Surveys of Consumers index of consumer sentiment dropped to 69.6 -- well below analysts' median forecast for a preliminary reading of 76.3 -- from 78.4 at the end of January. The February reading was the lowest since February 1992.

A key manufacturing number was down, too. The New York Federal Reserve's Empire State Manufacturing Survey indicated that conditions deteriorated this month, to the first negative reading since May, 2005.

Apparently, the economy -- despite what Ben Bernanke is telling us -- could get worse before it gets better. And the sentiment from the business sector is that companies are going to be more nimble and prudent this spring and summer, at least. One indicator of that is a report on the top IT trends for small global businesses for the remainder of 2008, issued today by New York-based Access Markets International (AMI) Partners, Inc., a big-time consulting firm in IT, Internet, telecom & business services market intelligence.

Among the top trends . . .

Emerging Markets Maintain Double-Digit IT Investment Growth Despite Recessionary Concerns

Given the strong growth rates expected of regional economies in 2008, bullish demand for IT products and services is continuing to be voiced by emerging markets. In fact, in countries such as China and India, IT spending will continue to rise rapidly as companies increasingly look to IT to spur effectiveness in their operations and compete more aggressively. Emerging market IT investments are forecast to grow at an annual rate of nearly 12%, outpacing the forecasted investment growth in mature markets of about 6%. Demand in newly industrialized markets such as Singapore and South Korea is also expected to rise nearly 9%.

SMBs Become ‘Value-Buyers’ vs. ‘Price-Shoppers’

Analysis of historical trends in purchasing decision drivers reveals that technology investments are increasingly being tied to top-of- mind business objectives/strategies, signaling the rise of a less price-sensitive, and yet more sophisticated, business consumer. The total cost of operations (TCO) of technology procurement already has heavier impact than price itself across SMBs globally. This could mean additional ripple effects in the way technology is valued and applied in the marketplace. For instance, cost savings arguments in favor of hosted services become increasingly weak and ultimately businesses will begin to develop more comprehensive models for assessing the ROI benefits for such technology purchases. It should be noted though that Asia-Pacific SMBs tend to remain somewhat more price conscious than their Western counterparts, though similar trends in developing consumer sophistication can be noted in these regions as well.

Remote Managed Services Become a ‘Must-Have’ Channel Partner Offering

The growing supply-side trend to offer remote services decreases channel partner risk cost while increasing their ability to serve more clients in IT services, where margins are the highest. Over 52% of channel partners in the United States already currently offer managed IT services, up from last year, with an average profit margin of 44% or roughly double that of margins made off product-based reselling. Year-over-year trending signals that these remote managed services will further drive IT service offering adoption among channel partners, pushing expected penetration for such offerings to over 60% of partners—driven by increased interest in remote managed services customers. Dell acquired managed services platform vendor Silverback Technologies to become a significant player in this segment and attract the attention of the large channel partnerships that Silverback had developed. Interest and opportunity in managed online backup services for the SMB market also saw some very high- profile acquisitions—EMC of Berkeley Data Systems and IBM of Arsenal Digital Solutions.

Telcos, Cable Companies and ISPs Look to Leverage Software-as-a- Service (SaaS) to Escape Low Margin ‘Profitless Prosperity’

The SMBs lack the IT resources and expertise of large enterprises but are facing similar global competitive challenges. They cannot deal with 5-6 different vendors/service providers to meet their technology and communications needs – they prefer 1 or 2 vendors that they can hold responsible to all their technology needs – their Virtual CIO.
SaaS enabled business and infrastructure solutions present an opportunity to these companies that have: tremendous brand awareness, existing SMB reach, long-standing customer relationships. These companies are facing steady decline in their traditional services to this segment in a converged IP environment. An easy to deploy, web- delivered infrastructure, business and communications service based on a service-oriented platform will provide significant opportunities to the SP-Cos to differentiate themselves and generate incremental revenue—especially in the 6 million small businesses (1-100 employee) in the US. A key to rolling out this strategy will be quick and efficient implementation based on establishing partnerships with technology vendors and channel partners to bring these solutions to market.

Savvy Vendors Zero in on 137M Global Home-Based Businesses as a New Growth Engine

Though often overlooked, home-based businesses (who already have a quarter the technology purchasing power of all SMBs combined) are becoming an important revenue stream, providing much needed buying lift during weaker business purchasing seasons. And with recession forecasts looming over the US economy, which has many direct effects globally, it is the home-based businesses that look to gain the most in per-firm, and IT spending market share as businesses unload the cost burden of employees who then make great candidates for new home business starts. This coupled with the increasing ease with which a home business can be started and operated, using relatively little startup capital, strengthens the likelihood of a recession-driven home-based business boom. Several vendors have already begun responding to this trend, such as Intuit who started JumpUp.com to help new businesses and business owners get up and running, and connect with other business owners. The site features a community especially for home-based business owners. Intuit is also offering QuickBooks Simple Start free to new business owners. Further, IT adoption among HBB will become increasingly important with the pervasiveness of Wi-Fi hotspots, ease of wireless LAN configuration, and cost affordability of Internet connectivity. Also with competitive computing hardware prices, HBBs would adopt IT more readily.

Vendors Blur the Line Between ‘Business Software’ and ‘Business Services’

The distinctions between software solutions and business process outsourcing will increasingly blur as software vendors—particularly in the SaaS realm—and business process outsourcing vendors focus more on delivering integrated applications, business process and managed services to SMB customers. For example, ADP is using recent acquisition of SaaS vendors Employease and Virtual Edge to automate and extend its business services footprint; Intuit’s acquisition of Digital Insights will enable its banking partners to provide a seamless and extended set of financial solutions to customers; Bank of America private labels and resells PayCycle’s on demand payroll services as part of its Integrated Small Business Online Banking Offerings; and numerous banks, publishers and direct marketers, including Amway, integrate their own business services with Smart Online’s OneBiz platform and business solutions to give their customers more comprehensive, turnkey solutions. This trend promises to give SMBs more complete solutions—and the best of both worlds. In contrast to a traditional BPO approach, customers retain solution visibility and control. At the same time, customers benefit from an ongoing, services-centric relationship with vendors.

Vendors Stay in the Black by Marketing ‘Green’, Finding Traction in ‘Server and Desktop Virtualization’ Amid Rising SMB Demand

With businesses globally looking to boost both their public image and profit margins in the face of rising market competition, cost-based expense management will become the pre-eminent business response.
This plays well for the cost reducing implications of several green technologies hitting the market, and highlights a larger market trend for increased energy efficiency in addition to added functionality.
Virtualization’s appeal as a ‘green’ technology lies in its ability to dramatically improve SMBs’ computing resource utilization and performance, reduce infrastructure costs, consolidate physical space, provide an easier and more flexible application deployment mechanism, speed server and application provisioning times, and enhance reliability and uptime by providing organizations with inherent business continuity and disaster recovery functionality. New virtualization solutions from companies like VMware, Microsoft, and Citrix will allow companies of all sizes to take advantage of server and desktop virtualization.

Manufacturer/Vendor Financing Programs Defrost SMB Tech Budgets

As traditional lenders seek to tighten their balance sheets in 2008, an opportunity is rapidly emerging for cash-heavy technology manufacturers and vendors to inject fresh liquidity into IT lending markets by removing lending middlemen and directly offering competitive financing terms on products and services. Such strategies could be applied globally to incubate mature markets, and provide much needed purchasing liquidity to emerging markets as they continue to rapidly expand their IT footprint. Note that Asia-Pacific banks are increasingly being motivated to provide IT financing for SMBs, proving to be a useful means to reach out to the lower tier cities given the banks’ reach. In terms of forecasted demand for such financing from the borrower perspective, this trend is supported with increasing demand for such manufacturer/vendor supplied financing as seen with roughly 16% of SMBs in mature markets, and an even higher percentage in emerging markets, stating that they ‘often’ look for such financing options when making their IT investments.

SaaS will Become a Mainstream SMB Alternative

SaaS isn’t quite a staple for SMBs, but adoption is ramping up. For instance, in 2004, 10% of U.S. small businesses, and 15% of medium businesses used SaaS; in 2007, use jumped to 21% of small and 30% of medium businesses. Pivotal shifts underway will further propel SaaS into the SMB mainstream. First, the growing reality of the "always- on" network helps even small companies that lack servers to take advantage of business solutions. Second, vendors such as ADP and Taleo are combining the benefits of SaaS solutions with business- process services to give SMBs more complete solutions. Third, large, established vendors such as Microsoft, SAP, Google are now in the game, underscoring SaaS viability, and developing ecosystems that will streamline and integrate the SaaS shopping, buying and use experience. As broader adoption of SaaS models become a reality, SaaS vendors will kick partnerships with VARs, retailers, and telcos, as well as financial institutions, direct marketers, business service outsourcers, and other non-traditional IT channels into high gear. In 2008, many of these channel partners will adopt platforms and partner with vendors that enable them to dispense a portfolio of services that SMBs can mix, match and integrate. Although SaaS adoption will accelerate much more rapidly in mature technology markets with pervasive high-speed connectivity, telcos that can assure quality of service and persistent connectivity will provide an on-ramp in emerging markets.

It seems that small businesses are teeing up creative strategies for the long term that can help them . . . well . . . survive the short term.
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Analyst Pegs SM Growth at 10% in 2008

on Tuesday, February 12, 2008

Spend management -- software that provides greatly improved visibility to what a company actually spends, where, and with what vendors -- remains on track to grow by 10% this year, despite the downbeat economy. That's a good indicator of the overall procurement market, which is bracing for a rough year in 2008.

Analyst firm Forrester says the market for ePurchasing software, also known as Spend Management, was expected to grow at a rate of 10% in 2008. But the analytical firm made that call last year, before the credit crunch and the slowing economy.

That doesn't mean there won't be some changes in the procurement market this year. Over at the invaluable Spend Matters blog, author Jason Busch lists five changes the market can expect to see this year.

  1. Reinvigorated efforts around sourcing (and re-sourcing)
  2. Greater consideration of moving from fixed to variable cost structures (which will also, in theory, help companies scale up and down procurement efforts more quickly)
  3. A newfound mandate to focus on overall supply chain risk
  4. Ongoing and increased efforts to cut services procurement and non- production related expenditures
  5. A greater embrace of the words in Lord Byron's famous quip: "Cash is virtue"


Writes Busch: "In declining price markets, it's not only a great time to re-source -- or invoke de-escalation clauses -- because commodity prices are falling. It's also a good time to source because there's a chance that a new set of suppliers will be more interesting in filling capacity just to stay busy and will accept a margin hit on new business. This also holds true in services and indirect categories as well, considering that rising inventories and newly available capacity will create greater competition in competitive sourcing environments where previously, constrained capacity might have led to reduced savings opportunities. So as we gear up for a downturn, get your sourcing pipeline ready for 2008. And don't be afraid to revisit categories that you recently sourced. There might be savings in them there recessionary hills!"

Forrester had said that more mature sectors like eProcurement and eSourcing, will grow in the single digits annually. Larger enterprises are still much more likely to have acquired ePurchasing solutions, but adoption is starting to occur among small and medium- size businesses (SMBs) and is not complete even among the largest firms, with more than 25% of the Global 2000 not using eProcurement or eSourcing, Forrester says.

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Recession a Self-Fulfilling Prophecy?

on Saturday, February 9, 2008

Even as U.S. Treasury Secretary Henry Paulson reassured us on Friday that the economy "would not go into recession" in 2008", some people, especially consumers, aren't buying it.

This is exactly what I'm talking about when I vent over the power of perception and the media's glee in talking down the economy by highlighting the negative and shielding the positive.

People are scared and I know why. No, it's not because they know someone who's going to lose their house to foreclosure - foreclosures represent less than half of one-percent of U.S. homeowners. And now banks, realizing they could be left holding the bag if a homeowner is foreclosed, are doing more to work with owners and try to keep them in their homes.

No, people are scared because the media has told them to be scared. It's a self-fulfilling prophecy and one that, despite the best efforts of the alarmist media, won't come true in a technical sense. As Paulson points out, GDP growth remains in positive territory, albeit at a slower growth rate. "And everyone knows you can't have a recession with positive growth, right,?" Paulsen told reporters yesterday.

But in a fundamental, emotional way, the media just about has its cherished recession. Consumers are snapping their wallets shut and businesses are holding off on expenditures.

U.S. businesses are feeling my pain. Just ask John Chambers, chairman and CEO of Cisco Systems. In a wide-ranging phone discussion with analysts and reporters, Chambers says the media is largely to blame for the lackluster spending environment facing the tech industry.

"I think we are actually talking ourselves into this [economic] slowdown," Chambers told analysts during a conference call held to discuss the company's fiscal 2008 second quarter results on Wednesday. "Over the last three or four months, I felt pretty good about business until I got on the treadmill--and then I quit early because of the pessimism that exists in the market."

Chambers says that analysts, commentators and network news presenters are literally pounding the global economy into the ground by overstressing negative business developments and not emphasizing enough the obvious signs of strength that corporate executives are seeing in their operations, according to the executives.

His tech brethren agree with that assessment. "I have the same caution that I think everybody in America who watches CNBC has today," said Paul Otellini, president and CEO of Intel Corp. last Jan. 15 while presenting Intel's fourth quarter results to investors. "You hear all of the pundits saying that the world is going to go to a trash basket and you worry," Otellini said. "It may be a self-fulfilling prophecy."

Like Chambers, Intel's Otellini hasn't seen "anything on the horizon" that would justify such pessimism. In fact, "our customers don't see anything on the horizon," he said.

Both Intel and Cisco have seen their stock prices drop in recent weeks, as bad news from the retail sector sours company sales.

Cisco's incoming CFO says the company's revenue growth would slow in the current quarter to 10 percent, down from the traditional 12 to 17 percent rate. A big problem now is business spending, where the word "caution" crops like crabgrass in June.

"It's probably as cautious as I've seen CEOs in the United States and Europe in many years, and it isn't that they've changed budgets dramatically," Chambers said. "Our customers in many of the emerging countries, especially in India, China and the Middle East, remain optimistic about their business momentum."

Sure, because the media in Asia and the Middle East aren't moronic enough to close their eyes, tap their toes, and wish that we're not in a bullish economy any more.

Wish I could say the same for the U.S.
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The Small Business Owner's Recession Survival Guide

on Thursday, February 7, 2008

If you asked a fellow business owner the largest threat to his business, he might say a recession. A sustained economic downturn, he might add, will cause companies to close the money spigot, layoff employees, and hunker down until the financial clouds parted on the economy and things were sunny again.

Maybe, but more likely, maybe not. First of all, it’s important to note that we’re not in a recession, so worrying about it is a waste of time. In early February, economic indicators showed the economy has slowed (to a growth rate of .09%), but not stalled, in its most recent quarter. In the opinion of most economic observers, a recession is defined as negative growth rates in two consecutive quarters, and that hasn’t happened yet and probably won’t, if most economists are to be believed. That’s because the impact of the Federal Reserve Board’s series of interest rate cuts will finally hit the economy, along with tax rebates of up to $1,500 per American taxpayer from President Bush’s recently proposed economic stimulus bill, and an up-tick in corporate spending for the first time in a year.

For small businesses the best strategy for staving off tough economic times is to be prepared. At the top of that list is beefing up their cash reserve accounts to help weather economic storms. That means budgeting and cutting back, but that’s a small price to pay to maintain your business’s good financial health. It also means negotiating lower costs for equipment, supplies and services. For some business owners, building a cash reserve may come at the expense of swifter business expansion. But the alternatives-- taking out a loan, dipping into personal net worth, or shutting the shop's doors-- are far less palatable.

If you’re in the retail end of the small business world, another good idea is to streamline your business operations to get a better gauge of how you’re business is doing. One way to do that is equip your computer armed with point-of-sale (POS) software that can provide you with a whole new set of management tools. A good sales software package can help you swiftly determine which are your best-selling products, how quickly inventory is turning over, how much of each item to is needed for future demands, and how to divide shelf space most efficiently. POS software also you avoid locking up cash in slow- moving goods, an extremely important goal during a recession.

One mistake some small businesses make in tough economic times is to cut prices. That sounds good in theory, but your customers will still value a job well done than they do a lower price. Besides, giving yourself a pay cut in an economic slowdown hurts you the most.

Instead of cutting prices, increase your value and reward good customers. Take a course and learn more about your customer’s business. Then put your new-found knowledge to work. For your best customers, start sending thank you notes or buying them lunch more often. People still appreciate the human touch, especially when they’re a bit nervous about hanging on to their own jobs.

Remember, your best selling point as a small business owner is you.
By cranking up the customer service dial, and by stashing some money away until the tough times are over, any small business owner worth his or her salt should easily survive a soft economy.
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May Day: Americans May Hold On To Those Tax Rebates

on Wednesday, February 6, 2008

It was supposed to be Christmas in May, with business executives harboring visions of wallet-waving consumers dancing in their heads.

The reason? The proposed tax rebates coming from Washington that would put up to $1,500 in many Americans back pocket, and hopefully send them out to buy things like Buicks, basement carpets, and Blu-Ray DVD systems.

Every politician from the President on down said the economic stimulus package would spark a spending surge that would keep the Americans economy out of recession and on the road to a strong recovery.

Not so fast.

A new survey of average consumers concludes that Americans may not be as all-consuming as politicians are hoping for when it comes to jump-starting the economy through a broad-based tax rebate. The survey, from the tax-specialist firm CCH CompleteTax survey, canvassed 2,200 Americans and found that politicians may have exaggerated a bit on what Americans would with their tax rebates.

I know, I'm shocked too!

The reality is, according to the CCH study, is that Americans have different priorities than politicians -- shocking, once again. “While it may be in the overall economy’s best interest for individuals to go out and buy more, when you ask the average person what they would do, they’re more focused on their financial well-being than on the health of the economy,” says David Bergstein, CPA, a tax analyst for CCH CompleteTax.

Plain and simple, that means paying down debt or banking the money for a rainy day - and not going shopping.

Here's how the survey broke down. When asked what they would do with their rebates, survey respondents said:

  • Pay down debt: 47 percent
  • Save it: 32 percent
  • Spend it: 21 percent

Keep in mind that no final stimulus package has passed Congress yet. While it’s expected that rebate checks will start arriving sometime mid-year, lawmakers still need to iron out the details. The House of Representatives has passed a package that would provide tax rebate checks of up to $600 for individuals, up to $1,200 for couples filing jointly and an additional $300 per child. It also would provide a minimum of $300 to individuals with at least $3,000 in earned income. The House package would phase out rebates for individual taxpayers with adjusted gross incomes of more than $75,000 and couples with more than $150,000. Meanwhile, the Senate plan still under debate would provide tax rebates of $500 per individual, $1,000 per couple and $300 per child, and extend benefits to low-income individuals living on Social Security benefits as well as veterans depending on government benefits as their primary source of income.

I see a lot of studies on the economy, but this one really has some meat to it. It really offers a pervasive look at Americans' attitudes about "free" money, across all economic and demographic stripes.

Across all income levels, paying down debt was the most common response. Those with household incomes of less than $75,000 before taxes were the most likely to say they would use the rebate to pay off debt, with 52 percent of those with household incomes less than $35,000, 57 percent of those in the $35,000 to less than $50,000 household income level and 50 percent of those with household incomes of $50,000 to less than $75,000 indicating this, according to the CCH CompleteTax survey. Even among households with income of $75,000 or more, 44 percent said they would use a rebate to pay down debt.


In terms of employment status, more than one-half (54 percent) of individuals working full-time or self-employed would use a tax rebate to pay down debt, while 29 percent would save it and 17 percent spend it. Individuals who are unemployed or retired are more likely to indicate they plan to spend a rebate, with 29 percent and 32 percent of these individuals, respectively, saying they’re most likely to spend any tax rebate.


Individuals living with children are more likely to use their rebate to pay down debt and less likely to spend it than those without children in the household, according to the survey findings. Only 16 percent of households with children said they would spend their rebate, while 59 percent said they planned to use the rebate primarily to pay down debt and 25 percent will save it, compared to households with no children where 22 percent said they would spend a rebate, 42 percent would pay down debt and 35 percent would save it.


All in all, not great news for businesses looking for a shot in the arm from consumers. If the CCH study is right, and it's one of the more thorough ones on the subject of Americans and money I've seen in a while, it's more like a shot across the chin.

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Are technology companies getting a raw deal over a new international accounting rule?

on Tuesday, February 5, 2008

Plenty of tech company CFO's seem to think so. In a survey released this week by
BDO Seidman, LLP, an accounting and consulting group, about half - 49% - of all chief financial officers at U.S. technology businesses surveyed feel they are at a competitive disadvantage to their foreign counterparts.

The problem? A new accounting rule that allows foreign competitors to report their financial results under International Financial Reporting Standards (IFRS), without reconciling the figures to U.S. Generally Accepted Accounting Principles (GAAP). If that seems to be a bit wonkish for you, it all comes down to U.S. versus international accounting rules.

And U.S. tech company financial types prefer the U.S. accounting method - by a long shot. When asked which financial reporting standards provide better revenue recognition rules for technology businesses, by a ratio of over three-to-one, sixty-nine percent of CFOs cited U.S. GAAP compared to only a fifth - 21% - for IFRS. Given the opportunity, over a third of these CFOs would switch to IFRS in order to level the playing field with their international competitors.

All complaining aside, the all-important tech sector looks pretty rosy for 2008, if you ask a CFO. I find that strange, given the recessionary sentiment we face from the media and many Wall Street analysts every day. But the BDO Seidman survey says different: roughly three quarters - 73% - of CFOs at leading U.S. technology businesses expect to post increased sales revenue in 2008 over 2007, while fifteen percent are forecasting flat sales and only six percent believe they will experience a sales decline in the coming year. Of those predicting an increase, CFOs are forecasting ten percent growth in 2008 as compared to 2007, while CFOs in technology companies based in Silicon Valley predict fifteen percent growth in sales revenue, the survey reports.

It's not like the survey was conducted last autumn, or even around the holidays, when the economic outlook wasn't so bleak. The survey was taken in mid-January, 2008, right smack in the middle of the recessionary headwinds. BDO Seidman says they included 100 tech company CFO's from tech companies which had revenues ranging from more than $100 million to $15 billion.

Cue the obligatory survey leader quote . . . . “We created the survey to provide a highly-accurate barometer for measuring the opinions of financial executives at the premier technology firms in the U.S. This inaugural survey reveals broad-based optimism among these CFOs for revenue growth and continued merger and acquisition activity in 2008,” says Jay Howell, a Partner in BDO Seidman’s Technology Practice. “However, the survey also revealed concerns among the CFOs about a new accounting rule they believe places U.S. technology businesses at a competitive disadvantage to their foreign counterparts. The new rule, while well intentioned, has unintended consequences for U.S. technology businesses in the area of revenue recognition.”

Some other significant results from the study . . .

Growth Drivers. Over a third of the CFOs cited consumer demand for innovative personal technology as the greatest driver of growth in the industry in 2008, closely followed by a third who indicated that international expansion would be the main driver. Seventeen percent cited increasing IT budgets as the greatest driver of growth in the industry.

Challenges. The ability to recruit and retain talent - 38% - is seen as the greatest challenge for the coming year, with risk management - 23% - finishing second, followed by access to capital at 15%, financial reporting and corporate governance issues at 14%, and foreign competition at 9%. Businesses based in Silicon Valley, Calif., a technology stronghold, strongly believe that recruiting and retaining talent - 55% - will be the greatest challenge for the coming year as well, but they were only one third as likely as companies not based in Silicon Valley to see risk management as the greatest challenge for the coming year (only 9% vs. 27% outside the Silicon Valley).

Limited Pursuit of Capital. Only twenty-seven percent of the CFOs expect their businesses to seek additional capital in the coming year. In fact, most Silicon Valley CFOs - 86%- do not anticipate seeking additional capital in the coming year.

Overall, a good look by BDO Seidman at the financial state of the technology union here in the
U.S. Aside from potentially unfair accounting rules, maybe 2008 won't be such a bad year for tech companies after all.
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Top Tips for Recession-Proofing Your Business

on Monday, February 4, 2008

We may not be in a recession yet, or maybe not at all this year, but why take a chance and be unprepared when a recession hits your business?

That's why, in the Sorceror's ongoing review of business trends, having a plan in place before tough economic times hits home. Such a plan today comes from Business Week, where columnist Karen Klein has a list of tips for businesses to survive and maybe even thrive in a recession.

1. Don't be caught off guard if the slowdown hits your company, says Gregg Landers, director of growth management consulting at CBIZ Accounting Tax & Advisory Services, San Diego. "Prepare a worst-case, 12-month cash flow scenario. Assume a 10% to 20% drop in revenues and identify what changes you would make and when," he says. If you need to, improve your management reporting so you can identify leading indicators for your firm. You don't want to react late after you notice a drop in your monthly financials.

To keep your company lean, you should set and measure inventory targets and keep in daily or weekly communication with your sales and operations staffs, Landers says. You may also want to weed out unprofitable customers. "Every company has customers that cost more than they add to the bottom line. Identify them, evaluate how to make them profitable customers, and if that's not possible, politely hand them to your competition," he says.

2. To keep from losing business, keep in close touch with your customers. "Show that you care. Understand how their business is being affected and look for ways you can help. Lasting relationships are built in hard times." And look for new market opportunities, recognizing that when the business climate changes, customer needs will change as well. That may mean new markets will open up for you, he says.

Jay Siff, chief executive officer and founder of direct marketing firm Moving Targets and Loyal Rewards, based in Perkasie, Pa., says his mom-and-pop retail clients have been struggling for nearly two years. "I can draw a line from the day Hurricane Katrina hit, through the spike in oil prices that followed. I instantly started hearing from my customers that their business was slowing down and their expenses were going up. Each month, their margins got thinner and thinner," he recalls.

3. Develop strategies to land more customers. Siff has counseled his clients that if they want to make their companies grow they will have to steal customers from their competitors, period. "The pie is shrinking. For the auto repair shops, cars are more reliable and need less frequent service. In the restaurant world there's been overbuilding and the average number of meals eaten out has declined for the first time in a number of years," he says. "The successful small business is going to have to win a bigger share of that shrinking pie."

The way to do that, particularly for retailers, is to create a positive experience. "Make sure you give every customer the best experience you can. That means clean restrooms, courteous staff, eye contact, handshakes. You've got to do this better than the other people out there," Siff says. Another good option for local businesses is community involvement. "Join the Rotary Club or the Chamber of Commerce. Sponsor a Little League team. Let the Girl Scouts do a car wash in your parking lot. This is part of bonding with your community and becoming an established part of it."

He also believes small companies need to reach out to the new residents in their communities. "They're going to choose someplace to buy their pizza and their shoes. You want to have an active campaign to greet them and bond with them," which is what his company and other direct-marketers do.

4. Spend on hiring. Tom Gimbel, CEO of Chicago staffing and executive search firm The LaSalle Network, says business owners should hire—not fire—during a recession. "Most of the time, economic downturns are short-lived," he notes, a powerful incentive to keep the bigger picture of long-term growth in sight. "It's easier to invest training time for new hires during slower growth periods. Employees that are fired during a recession will have to be re-hired—which costs companies a lot more money in the long run," he says.

Another strategy is to look around for people who have been laid off from other companies and pick up some available talent. "This is a great time to find top performers who will help bring your company to the next level," he says.

5. Continue to get the word out about your business. Dan Feder is co- chief executive officer of San Diego-based Five Point Capital, an equipment leasing firm whose clients include many small businesses.

He counsels those clients to continue marketing and advertising, rather than dropping those expenditures and decreasing cash flow.

"The first instinct of many businesses is to kill the marketing expense. What they don't realize is that could make things worse," he says. If you can't afford a full-blown marketing program, choose cheaper alternatives such as e-mail marketing, blogs, public relations, and online newsletters.

He also recommends staying positive. "Think of ways to bring in new types of customers, maybe partnership opportunities, or new products and services. Many businesses stop doing things that will help them grow in fear of the recession, and then do just that—stop growing."

Above all, entrepreneurs must keep their personal credit ratings high, since business borrowing often depends on personal credit, especially in the small business universe. "Curb your spending and don't give the bank a reason to charge you more money by being late on payments, says Ken Kamen, president of Mercadien Asset Management.
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Business Owners: Don't Expect Much on Monday Morning

on Friday, February 1, 2008

I hope you didn't schedule any big business meetings on Monday. A new study shows that on the day after Super Bowl Sunday, the only move many employees make is to to the telephone to call in sick.

According to a study entitled The "Super Bowl Fever Sidelines Employees on Monday Morning" sponsored by the Workforce Institute in conjunction with Harris Interactive, over 1.5 million U.S. workers will call in sick on Monday, no matter what the Patriots or Giants do.

Tardiness is an issue, too. The survey shows that another three percent of respondents, or an estimated 4.4 million employees, may arrive late to work the Monday after the Super Bowl. This number is in-line with the three percent of respondents who admit to, in the past, having arrived late to work the Monday after the Super Bowl.

Interestingly enough, three percent also say that they have previously called in sick to work the Monday after the Super Bowl, indicating that the number of employees who actually do call in sick may be significantly higher than the number who say they might.

The younger the employee, the more likely the "I've got a flu" phone call to work. Super Bowl-related absences could be particularly striking for organizations with a high population of Gen X and Gen Y employees, as the majority of the employed adults who say they may call in sick the day after the Super Bowl are males and females between the ages of 18-34 years (4 percent and 3 percent, respectively).

Unscheduled absences, including those that organizations will experience after the Super Bowl, cost U.S. employers billions of dollars each year in lost productivity, impact production and customer service, and create employee satisfaction problems. Until recently, few organizations were conscience of this hidden cost or were simply not focused on controlling it.

"Today, best practice organizations are using automated solutions to manage and apply attendance policies fairly and consistently throughout their organizations," says Joyce Maroney, director of the Workforce Institute at Kronos Incorporated, which helped sponsor the study. "Managers benefit from the timely information, which enables them to quickly adjust to unscheduled absences without impacting production or employee satisfaction. Employees are empowered with self-service tools, which provide access to vacation and personal leave time balance information, encouraging them to plan appropriately for time away from work. This supports a healthy work/ life balance and reduces unscheduled absences."

That may be true, whatever it is she meant. But until Congress just says "screw it" and make Super Bowl Monday a national holiday, the most successful companies on the day after the big game are the ones that make aspirin, pillows, coffee, and those little black masks you see people use to fall asleep on airplanes.
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