by Elizabeth Hines | Aug 7, 2013 | Blog
In NBC’s comedy Outsourced,Todd Dempsy (Ben Rappaport) moves to India to manage the company’s newly outsourced call center. When he meets the team he will be managing he discovers that they have little to no understanding of the product-line and how to engage with customers in a culturally appropriate manner. The show is a great illustration of the need to give serious thought to: 1) Should I outsource?; and 2) To/with whom?
While outsourcing is fast becoming the successful business battle cry, it is not the panacea. You need to determine your company’s core competencies and how you can deliver the best value to your customers. Are there services at which your company does not excel, or non-critical services which could be carried out more efficiently/effectively if the service were outsourced? If so, you may want to think about outsourcing.
Look before you leap
However, before making the decision to outsource, consider the hidden and long-term costs which can potentially be expensive. Additionally, it is important to weigh the risks of losing customers or market share.
Acquisition?
If, through evaluation and analysis of your core competencies and value proposition, you believe you have the capability but not the technology, you may want to consider acquisition. Explore the competencies of small and/or niche companies in the technology, logistics, and supply chain industries. There are many such companies that have unique capabilities in terms of technology, talent, and/or customer depth or growth. Would acquisition make more sense than outsourcing? How would this impact your company? Your customers?
If you do decide to outsource, think carefully about what company you want to partner with. I’ve previously written about what to consider when choosing a partner.
by Elizabeth Hines | Jul 31, 2013 | Blog
Earlier this month I wrote a post for EBN about how to manage your company and clients when the classic 80/20 rule applies. That is, when a small number clients generate 80 percent (or more) of your revenue. In the post, I made the recommendation to manage clients who are not a good fit with your model out of your portfolio. Several people responded to the post asking how to go about doing this. Here’s how.
Once you have determined that a client is not a good fit with your model, manage them out. Managing a client out of your portfolio is tough, tricky, and essential for you and for your client. If your client isn’t the right fit with your model, then you will not be able to provide your client with the best service. This is the crux of the issue. You, as a company, need to do the best job possible for your client. If the client doesn’t fit your model, you are not doing a good service by keeping the client in your portfolio.
Saying good-bye
Begin by doing a thorough audit of your relationship with the client. Identify why the client doesn’t fit your company’s model. That is, pin-point the disconnect between your client’s needs and what your company offers. As you do this exercise, look at the relationship with your client over time. Have you grown apart as your businesses have changes/grown? Has the relationship never been a good fit? It is important to drill down and truly assess the relationship. Document everything.
Next, set up a meeting or a call with the client – breaking up over text or email is unacceptable. Begin the conversation with honesty and tell the client that you believe they could receive better service and better value if they worked with a company that better fit their model. If possible, provide the client with names of companies that would be a better fit.
Talk with the client about putting together a transition plan. Let the client know that the relationship isn’t over immediately and that the lines of communication will always be open. Alleviate fears that the transition will be difficult.
It is vital that when you talk with the client, you talk about your client’s needs and focus on these. For example, look at the difference between these two approaches:
#1: You tell your client: “Your business is a niche company not only in terms of product offering but also in terms of location. I have really enjoyed working with you and watching your company grow. Because I value you as a client, I believe you would be better served by a company that is well-positioned in the Atlanta metro area and really knows the model car industry. We just aren’t that company, and I feel we are holding you back.”
#2: You tell your client: “Your business isn’t right for my company. We don’t have the time or people to devote to your needs. Our model and yours doesn’t match, we need to recognize this and move on.”
Approach #1 shows your client you understand their needs and that you value the relationship.
Breaking up is hard to do, but if you do it right you will likely receive a call down the road from the client thanking you for breaking up with them.
by Elizabeth Hines | Jul 25, 2013 | Blog
EBN is an incredible resource for those within the supply chain industry. EBN’s stated goal is “to help answer timeless questions of how the electronics industry should organize manage, manage its supply chain, and navigate its boom-and-bust cycles.” One of the ways EBN achieves this goal is by inviting individuals from both within and outside of the industry to provide their input on both navigating and succeeding in the every changing global supply chain world. Or, as EBN puts it: “We are involving voices throughout the industry who live and breathe supply chain. We are assembling luminaries from within and outside the electronics market to offer guidance on the best ways for companies and individuals to leverage their strength and identify both opportunities and potential pitfalls.”
I am honored to be one of those invited to contribute to the EBN community. I invite you to go to the EBN website and take advantage of the knowledge, community, and resources available. And while you are there – check out my recent contributions:
Managing When Your Eggs are (Almost) All in One Basket
5 Potential Pitfalls in International Reverse Logistics
Find Your Perfect Outsource Mate
by Elizabeth Hines | Mar 14, 2013 | Blog
I read an article in the New York Times Dealbook section by Stephen Davidoff titled, “For Private Equity, Fewer Deals in Leaner Times.” The article has a lot of interesting information on the changing times in the private equity markets. The author lists the primary forces driving this turbulence.
Too few “good” merger and acquisition opportunities are being seen. “Deals” are greatly overpriced. There are fewer sellers in the market, and the ones that are making themselves available are being snatched up by strategic buyers (those from the industry, and not financial buyers), who can drive offer prices higher, leaving them with little or no margin. But what swung my head around the most was that the private equity industry’s biggest problem is having too much money to invest.
You read that correctly — too much money to invest. To be clear, Davidoff does an excellent job of articulating the state of private equity and the hurdles that are changing that industry. Nevertheless, when I read the phrase “too much money to invest,” it got me thinking about the high-tech aftermarket services industry and how underserved it has been from a private equity standpoint.
Having worked for a private equity-owned high-tech aftermarket services business and now as an adviser to that space, I see plenty of really good platform companies (ones that can be built upon) with strong footholds in service or geographic niches that truly make them unique (read: “valuable”). What they lack are the funds and guidance that a responsible and possibly patient private equity firm can offer. The recent historic activity would make you think it is an active marketplace, but aside from a few high-profile transactions and the most recent Blue Raven deal with Leading Ridge Capital Partners, LLC, the activity is spotty at best.
Not only do these platform companies in the high-tech aftermarket services space make for attractive investments, but it seems to me that the financials in these “niche companies” are there to support private equity interest, as well. These businesses typically have gross margins in the 35-40 percent range and net margins that are really attractive when compared with the overall high-tech space.
Combining or rolling up companies with expertise in adjacent service and/or geographic areas into a “newco” with broader reach and a deeper service offering will surely deliver financial results that private equity would consider better than not investing. That said, I know I am taking some liberties in describing the process and its complexity, but I do so to make a point. The high-tech aftermarket services space is a fractionalized marketplace with accomplished participants, quality customers, and better than traditional financials when compared with the overall industry averages. To this, I say, “Hey, private equity guys, look over here.”
by Elizabeth Hines | Mar 4, 2013 | Blog
The bring-your-own-device (BYOD) revolution in the workplace has thrown a curve ball to those responsible for safeguarding your company’s data. Your colleagues are now accessing corporate data from their own computer, a tablet, even their mobile phone. Although the corporate finance groups are singing the praises of the trend, due to its inherent reduction in costs, it’s not all rosy in the BYOD world. It’s crucial to format a corporate strategy policy that will be inline with your goals.
Here’s why: With so many of us bringing more and more smart devices inside our office environments and hooking them to our corporate networks, the potential for data leakage grows exponentially. Combine that with the tablet revolution and the mobile/remote employee trends, and it adds up to a potentially dangerous data-leak train wreck. Technology is now mobile.
In a study conducted by the University of Glasgow, 63 percent of used smart devices purchased through eBay, other online marketplaces, and in second-hand stores, still had data on them. This data included personal information as well as sensitive business information. We can only imagine the increase in sensitive data leaks when you include the road-warrior’s best and newest smart device as they trade in for the next best thing.
The problem is there’s no chain of custody in the BYOD world. Think about it. When the corporations owned your cellphone and your PC or laptop, they controlled its issue to you, how you used it, what software you put on it, and when and how it was turned in and destroyed. A solid internal tracking of electronic assets coupled with a solid electronic asset disposal solution provider meant that, for the most part, the corporate crown jewels were safe.
In the BYOD world, the corporation does not own the IT equipment. Personal smart devices are being hooked up to corporate IT environments. This mating of personal and professional equipment and data is happening everywhere. Your corporate data is being commingled with secure and non-secure access points to the Web, cloud, etc. Not to mention the fact that those devices metaphorically walk in and out of your office every day, and you have no control.
Unfortunately, there is no easy answer to this problem. I have seen it addressed via software solutions at the enterprise level (think Blancco or BlackBerry enterprise), at the device level (think solutions like Apple Find My Device, etc.), and at the human resources and legal levels with policies and procedures that prohibit users’ use of corporate information. But the truth is, without a chain of custody model incorporated with these other solutions, once the corporate data is accessed or downloaded, it’s already gone — you just don’t know it yet.
The reality is that it’s going to take some time for the corporate world to catch up with what I like to call the “semi-private information revolution” like the cloud, Facebook, or social media. Secure file sharing, essential for an organization’s BYOD guidelines, is one of your best options. Services are now available to help with cloud encryption and it’s changing the way we share and monitor files. Encrypting data is crucial and minimizes the risk of sharing sensitive data and having it tampered with. And rely on your electronic asset disposal provider to help develop a strategy and process that is aligned with your corporate information sharing guidelines. Right now, your corporate data is only as safe as the process that you create.
