Earlier this year Oxford Economics completed a survey, sponsored by SAP Concur solutions, of companies that have expanded within the last 12 months. The purpose of the survey was to find out how expansions are addressed by companies around the world: operational and management changes, processes and planning that support expansion, and why the companies chose to expand. Recently, I joined Joan Warner, managing editor and finance practice lead at Oxford Economics, for a Webinar called, “Managing Scale: Lessons From Growing Enterprises in the US,” to discuss the results. We analyzed findings from the study and what they could mean for enterprises looking to expand in the near future.
The survey reached 500 executives worldwide, 350 from enterprises with more than 1,000 employees. One of the biggest takeaways from the survey was that successful expansions rest on prudent cost control. While relatively few survey respondents reported exceeding budget during expansion, a group of enterprises where spending and cash were at the forefront of planning emerged – we refer to these companies as “cost-conscious enterprises.” I found it interesting that cost-conscious approaches to expansion directly correlate with more-flexible operations, better spending transparency, and good communication between business units.
Conversely, the companies that didn’t prioritize cash flow and spending during decision-making prior to an expansion were more likely to run into problems post-expansion. These problems affected not only the cost-related areas you would expect, such as travel and expense reports and supplier invoices, but corporate culture and employee satisfaction as well. Since most surveyed enterprises, regardless of expansion type, said they needed to grow to meet rising competition, capture new customers, and improve efficiency, the need to be a cost-conscious enterprise at the inception of expansion becomes clear.
So what are the best strategies to utilize when you’re moving forward with expansion as a cost-conscious enterprise?
Nearly 40% of U.S. respondents reported their expansion happened by merger or acquisition. In that type of expansion, make sure that your growth strategy and processes are in place in advance of the expansion and that your companies can integrate quickly. This approach should be a repeatable, scalable process that adapts and improves with each new growth spurt and should be reviewed after each growth event a part of a continuous improvement mind-set.
Maintain spend visibility
Multiple sources of data knitted together from multiple source systems can make even the most involved executive lack trust in the data. Add to that outdated legacy technology and processes used to analyze ever-growing amounts of data, and true visibility into numbers can be difficult. As a company preparing to expand, you need a comprehensive total spend management strategy. Using whatever technology you have available to you, consolidate into a single source of data (a single source of the truth) to get a more expansive understanding of where your spend is happening and how much cash flow you really have available to you.
Sustain employee satisfaction
Employee satisfaction and retention is critical when it comes to growth. For many companies I work with, employee satisfaction is often linked to the technology they are provided with in order to do their jobs. And while the bridge between employee satisfaction and expense might not seem obvious, for many employees, the biggest interaction they have with the back end is with your T&E tools and processes. The easier you can make it for your employees to do their job, with more access and visibility into spending, the happier your employees will be.
Collaborate throughout your organization
We tend to think about cost avoidance and control as a pure finance issue. But the reality is every department plays a critical role in cost avoidance strategy – when you’re speaking about using tools and creating policies and processes, make sure that everybody who has a vested interest is part of that conversation. Besides your finance and AP teams, talk to your tax team about tax strategy, your security team about compliance and business continuity, and so on. Engage in conversation with your internal customers to find out what they need to run their portion of the business. If you aren’t talking to managers about what reports they need, you’re just guessing at what they want. Collaboration is critical to success.
This is only a snapshot of the larger conversation we had on the Webinar – you can now watch the full recap of the Webinar, including a lively question-and-answer session, and read the Oxford Economics study, “Managing an Expansion Keys to Successful Business Growth.”