DO YOU KNOW HOW YOU MAKE MONEY?

If you have had the good fortune to live through a major system deployment, you know the complexities and pitfalls associated with each phase. So many things can go wrong – and so many things have to go right – that it is almost inevitable that you will lose some sleep on the journey. But one of the most critical steps occurs almost before the initiative is launched, and it sets the stage for all that comes after. 

Defined, clearly-articulated representations of the economic business model form a framework against which all design and configuration decisions can be vetted. They represent pieces of a puzzle, each capturing an element of the revenue streams (outward facing, customer focus) and the cost drivers (inward facing, operational focus). Defining the individual pieces is fairly easy because within the individual borders there is some room for error. But the challenge is faced in honing the contours so that each piece forms a natural fit within the broader landscape. 

For example, a market research business may offer both syndicated products and custom research. But to what degree are they independent streams, versus one representing an extension of the other? And how are the operational groups organised to service both streams? A shared pool of resources or distinct silos? Where are the P&L accountabilities, and how deep into the cost structure do they run? Does it raise issues of internal transfer pricing? Similar questions can be raised around an IT solution provider that sells hardware, software and professional services. At the core, is it a product-based company? A development shop? A project-based ProServ business? 

Answers to these questions matter as they set the orientation, and construct for evaluating needs and assessing the degree to which a system’s feature-functionality set meets those needs. Be reflective, challenging and precise. Identify the unifying thread that runs through the landscape. Define the critical touchpoints between components. Ensure that you form your view with a system-agnostic approach BEFORE you speak to specific vendors, as they will inherently contort your model toward their architecture.

 

Register for FSN's 'Future of the Finance Function' Conference by 30th June using earlybird20 and you will get a 20% discount for you and your team. 

  • 2015-06-01 16:56:00
  • John Fanuko
  • System Design