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8/2/2019 SAP Closing the Alignment Gap
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Copyright Forbes 2009
STRATEGY AND OPERATIONS IN THE ENTERPRISE:
Closing the Alignment Gap
8/2/2019 SAP Closing the Alignment Gap
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Copyright Forbes 2009
Survival in todays complex business environment
demands eective and decisive action. Using clear,
accurate and accessible information, companies can
develop a stronger competitive position by eectively
adjusting their strategies and processes to respond to
changing market conditions.
But to accomplish this, they need the visibility and
focus to ensure that their strategic priorities are in line with
their operational realities. Does the company have the right
resources in place to manage growth? Is front-line infor-
mation readily available to drive strategic decisions? How
are risks or regulatory challenges being managed?
Despite agreement on the necessity of aligning strategy
and operations, many companies still face signicant barri-
ers that may prevent them from achieving thi s. Executives
on both sides of the strategy/operations aisle express
concern that strategic priorities may be out of sync w
operational realities, in particular in critical areas such
risk management and talent allocation and retention.
Intensifying this split are the sudden shifts compan
have had to make to deal with the impact of the glo
recession and resulting economic volatility. But it is cl
that many executives believe the time to more closely alistrategy and operations is now, to protect the company
the short term and to help it map out the long-term grow
initiatives for the eventual economic recovery.
To identify the specic challenges enterprises face
closing the gap between strategy and operations, Forb
Insights, in association with SAP, surveyed more than 2
C-level and senior executives at global enterprises w
annual revenues exceeding $500 million. An additio
ten on-the-record and o-the-record interviews were c
ducted with senior executives to obtain rst-hand insig
into how companies are managing al ignment issues.
KEY FINDINGS Economic volatility has put companies under greater pressure to align strategy and operations. This alignment could be
more important post-recovery as they ready their plans to capitalize on new market opportunities.
Changing market conditions that affect strategy and operational execution are the number one barrier companies face
in aligning strategy and operations. Other top barriers cited by executives include: added pressure from the current
economy on short-term costs versus longer-term return on investment (ROI); lack of availability of timely, accurate data;
lack of effective communication of strategic goals to operational employees; and operational risks and opportunities that
are not incorporated into overall corporate strategy.
Alignment gaps may also arise due to differences in strategic and operational goals. Asked about short- and long-
term priorities, strategic functions focused on competitive differentiation, while operations is coming under increasing
pressure to boost efficiency and manage costs.
There are concerns that employee recruitment, retention and training are not aligned with strategy, or that resources are
not allocated properly to ensure that the workforce can achieve strategic goals.
Managing regulation and risk is another area of concern. Executives indicated that regulatory compliance issues
frequently impact strategic execution. A failure to incorporate changes to risk models into strategic plans may further
hamper alignment.
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8/2/2019 SAP Closing the Alignment Gap
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Copyright Forbes 2009
CHRISTIAAN RIZY
DIRECTOR
STUART FEIL
EDITORIAL DIRECTOR
BRENNA SNIDERMAN
SURVEY MANAGER
MIKE BARLOW
REPORT WRITER
METHODOLOGY
FIGURE 12. Does your organization use enterprise risk management tools
and/or processes to identify risks and opportunities and assess their potential
impact?
As noted earlier, executives surveyed believe a sig-
nicant barrier to alignment is the fact that risks and
opportunities identied by operations are not incorpo-
rated into strategy. Yet this barrier may be an ongoing
issue for many companies. More than 40% of respondents
did not agree with the idea (were either neutral, disagreed,
or strongly disagreed) that their organizations are incor-
porating changes to their risk models into revised strategic
plans. (Fig. 11)
Moreover, some executives indicated their compa-
nies were not using risk management tools or processes
to identify and manage risks. (Fig. 12) This nding high-
lights potential alignment problems as risk issues may not
be fully considered in current strategic and operational
decisions. As companies manage through the current
economy, and as they prepare for the economic recovery,
the role of managing risk in daily and strategic decision
making is increasingly important to aligning operations
and strategy.
CONCLUSION: ALIGNING STRATEGY AND OPERATIONS
Undoubtedly, dierences exist between strategy and op
ations, and while economic volatility may be maki
alignment more important, its repercussions may also
driving a wedge between the two groups. Gaining a clea
picture of shifting customer demand may relieve some
this stress, while opening up additional lines of comm
nication can ensure greater transparency between strate
priorities and front-line risks and opportunities.
This can also be realized when companies achieve grea
clarity in strategic and operational priorities. In todays en
ronment, divisions can occur when operations teams
focused on containing costs at the same time that strate
priorities center on staying competitive. To capitalize on p
recession growth opportunities, companies may need to br
these groups closer together by giving both strategic and fro
line units a clearer view of changing market dynamics.
Companies must also be aware of other areas wh
gaps can occur that impede ecient decision maki
Regulatory compliance can challenge strategic succ
but when operations teams understand and address r
ulations, they can execute to goals more successfu
Acknowledgement of operational risks as part of strate
planning is important to ensure aligned and realistic ope
tional and strategic goals. Workforce recruitment, retenti
and training can be more closely aligned to operation
realities when transparency exists between strategic a
development priorities.
Successful alignment requires companies to have a cl
view of strategy and operations, the plans and the activit
Only with increased visibility can businesses identify t
barriers to alignment and close the gaps that may be ke
ing them from competing more eectively.
Yes No
Dont know
74%
21%
5%
The information in this report is based on the results of a survey conducted in
June and July 2009 by Forbes Insights in association with SAP. Forbes Insights
received responses from 206 executives and decision makers at leading global
enterprises in the Americas (36%), Europe/Middle East/Africa (32%), and Asia/
Pacific (32%). In addition, one-on-one interviews were conducted with another
ten executives at companies of this size.
Nearly three-quarters of respondents (74%) held C-level titles, including C
COO, CFO, and CIO. Their areas of responsibility included corporate managem
corporate strategy, business operations, R&D, finance, purchasing, sales and m
keting, human resources, and information technology.
8/2/2019 SAP Closing the Alignment Gap
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Copyright Forbes 2009
Demographics
COMPANY SIZE (by revenue)
FUNCTIONJOB TITLE
LOCATION
0% 25% 50%
0% 25% 50%
CEO/president/managing director
COO/head of operations
CFO/treasurer/comptroller
CIO/technology director
CMO/head of marketing
Other c-level executive
SVP
VP/director
Head of business unit
Head of department
Manager
Other
Business operations
Finance
Corporate management
Corporate strategy
Sales and marketing
Information technology
Purchasing/procurement
Human resources
Other
$500 million$999 million
$1 billion$4.9 billion $5 billion$9.9 billion
$10 billion$19.9 billion
$20 billion+
Americas Europe/Middle East/Africa
Asia/Pacific
12%
1%
24%
3%
1%
4%
1%
10%
2%
12%
13%
17%
9%
4%
42%
3%
1%
2%
24%
14%
1%
28%
28%
15%
14%
15%
36%
32%
32%
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Copyright Forbes 2009
ResultsWhat strategic priorities are most crucial to your organization today?
0% 30% 60%
What strategic priorities will be most crucial to your organization 12 months
from now?
0% 30% 60%
Staying competitive in a challenging market Staying competitive in a challenging market
Increasing efficiency and performance Increasing efficiency and performance
Managing and/or reducing costs Managing and/or reducing costs
Re- evaluating produc ts /ser vices to increase competi tivenes s Improving f inanc ial per formance
Improving financial performance Re-evaluating products/services to increase competitiveness
Analyzing and managing risk across the enterprise Fostering innovation
Maximizing allocation of human resources Finding/serving/retaining customers
Finding/serving/retaining customers Analyzing and managing risk across the enterprise
Fostering innovation Identifying merger/acquisition opportunities
Identifying merger/acquisition opportunities
Promoting collaboration within company and across business partnerships Maximizing allocation of human resources
Driving globalization
Driving globalization
Addressing regulatory challenges
Encouraging sustainability/corporate social responsibilityEncouraging sustainability/corporate social responsibility
Promoting collaboration within company and across business partnerships
Other
Addressing regulatory challenges
18%
8%
44%
13%
13%
54%
14%
4%
1%
14%
3%
44%
11%
30%
11%
22%
12%
42%
14%
45%
14%
19%
5%
16%
3%
31%
13%
31%
12%
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Copyright Forbes 2009
What operational priorit ies are most crucial to your organization today? What operational priorit ies will be most crucial to your organization 12 mont
from now?
0% 30% 60% 0% 30% 60%
Cost containment Improving overall efficiency and/or performance
Improving overall efficiency and/or performance Cost containment
Maximizing profitability New product development
Identif ying and addres sing shif ts in the competitive lands cape Maximizing prof itabilit y
New product development Identifying and addressing shifts in the competitive landscape
Research & development Research & development
Improving customer experience through sales, marketing, and customer service Improving customer experience through sales, marketing, and customer servic
Executing merger/acquisition opportunities Internal collaboration opportunities and business partnerships
Expanding into global markets Recruiting/retaining/training employees
Incorporating r isk eva luat ion and management into operations Incorporating r isk eva luat ion and management into operations
Internal co llaborat ion oppo rtuni ti es and bus iness par tnerships Exe cu ting merge r/acqu is it ion oppor tuni ti es
Recruiting/retaining/training employees Expanding into global markets
Achie ving sus tainab il it y/corpo rate soc ial respons ibil it y resul ts Comp ly ing w ith app li cable laws and regulat ions
Complying with applicable laws and regulations Achieving sustainability/corporate social responsibility results
Other Other
19%
11%
46%
12%
47%
17%
18%
8%
1%
17%
4%
29%
12%
23%
11%
23%
11%
37%
16%
39%
16%
18%
6%
1%
17%
5%
29%
14%
29%
13%
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Copyright Forbes 2009
What are the primary barriers that need to be overcome to align strategy and
operations within your organization?
Who is primarily responsible for resolving alignment issues between operatio
and strategy at your organization?
0% 30% 60%
0% 30% 60%
CEO
COO
Changing market conditions that affect strategy and operational execution
CFO
Current economy has put added pressure on short-term costs vs. ROI
CIO
Timely, accurate data is not available
Other
Operational employees do not understand strategic goals
No one
Lack of clear distinction between short- and long-term goals
Risks/opportunities identified by operations not incorporated into strategy
Dont knowLack of communication between front-line operations and strategy
Reporting structure is not aligned
Risks/opportunities identified by strategy not incorporated into operations
Communication gaps in the supply chain
Budgets cannot support operational goals
Corporate and business unit goals are not aligned
Regulatory issues restrict ability to align
Outsourced business processes not aligned with st rategy and/or operations
Operational incentives are not aligned with strategic goals
Other
4%
25%
49%
1%
1%
11%
9%
19%
9%
29%
16%
46%
17%
19%
9%
7%
17%
7%
1%
22%
11%
21%
10%
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