Daily Archives: September 28, 2011

Is Good Corporate Citizenship At An All Time Low?

In yesterday’s post we noted that working capital has bounced back in Europe and that Europe’s biggest companies have seen the most significant revenue growth in five years. We also noted that, at the same time, these same companies are hoarding their cash and, in many cases, borrowing to do so, while smaller companies remain starved for capital and unemployment remains near 10% in the EU. And SI stated that this is, in its view, disgusting. A lack of jobs is resulting in significantly reduced spending across the board because the people out of work can’t spend while the rest of the people are fearing that they are next on the chopping block given that it’s been all bad news in the job market for a few years now. This reduced spending has significantly contributed to the global economic decline which has brought entire countries to the brink of defaulting on their (sovereign) debt.

Now, as per this recent article over on BNet on how bad corporate management is killing the economy, we find out, from a recent study by CFO Magazine and REL (a division of The Hackett Group), the thousand largest companies in the US are sitting on cash reserves of 853 Billion. Given the relative equality between the power, and cash position, of US and European multinationals these days, it’s probably a safe bet to say that the Global 2000 is probably sitting on 1.5 Trillion in cash reserves. Now, while it may be true that this is likely not enough to solve the economic crises of the world, given that the US National Debt is almost 15 Trillion, we have to remember that there are only 11 countries in the world with a GDP greater than 1.5 Trillion. We also have to remember that the national average wage in the US is slightly under 41 K, and that this means that these companies could collectively employ another 36.5M people for one year without going into debt. To put this in perspective, at the current published unemployment rates, there are only 27.9 M unemployed people in the US and 46.8 M unemployed people in the EU. That means half of the unemployed people could be working at the top 2,000 corporations in the US and the EU. This would give effective unemployment rates of 4.5 and 4.8 in the US and the EU. The last time the unemployment rate dropped below 4.6 in the US was back in 2000, and the economy was booming.

So while it’s not an absolute that corporations can fix the economy, it should be pretty clear that the author is right and that big corporations are killing the economy when they could be the economic saviours. Instead of hoarding cash, they should be focussed on innovation and hiring bodies to propel that innovation forward. That’s how you print money in a knowledge economy, and with the current state of affairs in most public sectors and banks around the world, they are the only organization left with a license to print cash. But they have to be willing to use it.

High Definition Adoption Measurement Part III

Today’s guest post is from John Shaw (Senior Director, Adoption Services) of BravoSolution, a leading provider of spend analysis, (e-)sourcing, supplier performance management (SPM) and healthcare sourcing solutions and a sponsor of Sourcing Innovation (SI). It is the third of an eight (8) part series, which, when complete, will form a white-paper that BravoSolution will be releasing to the general populace next Wednesday.

Yesterday’s post (Part II) introduced us to High Definition Adoption Measurement (HDAM) and framed the solution in the context of e-Sourcing, which presents a common complex adoption challenge.

Today’s post addresses the typical view from 30,000 feet and how it leaves something to be desired.

Adoption from 30,000 Feet:

The report below highlights what appears to be a very successful Go-Live followed by a year of continual growth of system usage. This is the 30,000-foot view and it should answer some very fundamental questions like:

  • Have we trained everyone?
  • How many of our Souring Events are going through the system?
  • Is usage increasing according to plan?

A view of adoption from 30,000 feet.

These 30,000-foot views are useful. The report could apply to any of our three (3) companies and might be presented at an executive level as evidence of a successful first year of rollout. In this example, it seems our companies are generally moving in the right direction. If we saw problems at this level, we could easily identify the low hanging adoption fruit to pursue.

But if we reflect back upon the business case of each of our example companies, this view does not really tell us much on how any of them are progressing in increasing supplier value, maintaining transparency or increasing efficiency.

Take the following “unknown issues” common in e-Sourcing organizations. Each issue is counter-productive to the organization’s goals, but is not evident on the report:

What you don't see at 30,000 feet.

These examples are the tip of the iceberg. They illustrate how users can appear at a 30,000-foot level to be using a system correctly but also how that 30,000-foot view can be deceptive. When this occurs to your organization, the results are simple. Your organization isn’t realizing the full ROI that you set out to achieve and the Adoption Team doesn’t have visibility into the problems they need to fix.

Part IV will provide an example case study that describes some of the adoption challenges at a global manufacturer.