I just got back from a breakfast meeting with the Greater Philadelphia Senior Executive’s Group CEO Subgroup. As a matter of explanation, this is a formal monthly gathering of CEO’s from various companies in the Philadelphia area that interact on relevant topics of the day. The intent is to cross pollinate ideas, and solutions that are applicable to this region's industries.
Today’s discussion developed into one of my favorites as we had a few very interesting CEO’s, from well versed I.T backgrounds, who lead the discussion to the current state of “Cloud Computing”.
First some common ground regarding the buzzword “Cloud’. You may already be pushing your I.T. out into this space i.e. your health insurance vendor, payroll services, Email system, or HR may be “outside your firewall" and accessible as an internet third party application.
Some real thoughts I left with; Is I.T. cloud thinking one example of where all businesses will land after the current down turn in all fixed overhead line items (flexibility and variable overhead)? Some thoughts to ponder when your company lands on the other side:
*When you staff back up, will you bring in full time employees with full benefits, or temporary "best in class" management as 1099’s?
*Will you go full bore on Cap Ex expansion, go back to where you were, or switch to a "new world order" variable model?
*Will you build out your I.T fixed overhead or fly into into the coming “Clouds”?
* When you acquire “Bolt On Acquisitions”, what are the real valued assets you want and which will be kicked to the curb?
*How will lenders or investors score the valuation of your company? Fixed assets may not be what you thought they were in the new age of “outsourcing”. Will you start to build up fixed assets again? How will the bank feel about that? What will an asset (ABL) based loan model look like next year?
* Are you ready for global competition? Are you thinking the word will return to the way it was before this recession? It may not be Kansas anymore!
Great meeting, Great people, great thoughts to reflect on, but soooo many questions now to get ready for the competition next year. You might want to re examine your 5 year plan, I will after listening to some current “best thinkers” in the Philadelphia region today.
Jack:
ReplyDeleteBeing classically trained in marketing, I have now come to the conclusion that five year plans is a discpline of the past. Why? Things are changing too rapidly to look down the road that far (e.g., technology, consumerism, politics, etc.). I will be advising clients moving forward that any long-term plans should be two-years at the most, reviewed in six month increments - what worked, what didn't work, adjust accordingly.
Jim
Jim,
ReplyDeleteYes, a point well taken on the speed of our thinking.
Jack
Jim,
ReplyDeleteWe are currently creating a virtual data center to support a new business. This allows me to flexibly hire staff as I need them and contract for skill sets for ongoing maintenance. The cloud structure works well for our budget and growth needs.
Finding a vendor to partner with is key to the success. This is a strategic alignment and will need to suit the current, mid and long term needs of the business. Cost is one factor but the ability to deliver and having a complementary delivery model that matches the business may even be more crucial.
Goals and objectives should still be set out for a 5 year horizon. Revisit these goals and objectives every six months to ensure that they are still the company objectives and then adjusting the approach and expectations measured against the progress metrics allows for gating and adjusting to the changing business climate.
Two years may be ok for small and medium businesses but larger companies need to have longer sight lines to allow reasonable development of projects that are encumbered by the inherent inertia of the large company. Some of this inertia can be avoided by segmenting portions of the company into independent business entity objects. These business objects need to adopt a clearly defined set of operating guides from the parent but are given the independence to work as entrepreneurial class businesses. (This concept comes from a book on Object Oriented Business.)
The smaller agile units can then adapt and adjust to the shorter timelines.
Jim Schott