Private Equity/Venture Capital Backed
Bob Post joined TRAVELCLICK in 2004 as chief financial officer and was named CEO in 2005, and since then, he’s consistency delivered aggressive growth and profitability for both the company and its hotel customers.
In his five years of leadership, he’s seen both the great times and the worst economic times as hotel revenues dropped by 30 percent in the recent recession.
One of his key strategies has been innovative pricing structures that align the company’s interests with those of its hotel customers. TRAVELCLICK shares the rewards and some of the risk with clients based on revenue performance, and this approach has created customer loyalty and also allowed the company to sell other services to participating properties, which has created organic growth in the business.
On top of capturing market share, Post also looks for strategic acquisitions. He focuses on companies that provide niche products but lack effective market distribution and that can fit within the umbrella of the company’s software-as-a-service platform.
While the downturn has affected the business, Post has stayed true to a key strategy of maintaining focus on the customer and expanding the core business. He’s guided the company to a revenue compounded annual growth rate of 28 percent since joining the company. On top of that, he’s guided the business to an earnings compounded annual growth rate of 45 percent. As a result of this growth, the company now works with more than 15,000 hotel customers in 140 countries. Additionally, the company even managed to grow in 2009 a huge feat to achieve when many businesses bled money and the industry average was a 30 percent revenue drop.
This achievement was clearly a result of the excellent leadership that Post demonstrated in the business.
How to reach: TRAVELCLICK Inc., (847) 585-5000 or www.travelclick.net
We’ve all been in business long enough to know the facts. We’ve heard the stories. We’ve read the biographies about the distinctiveness of entrepreneurs.
Entrepreneurs lead in uncertain economic times, boldly innovating where established companies fear to tread, hiring when others lay off, increasing product development where others cut back. We know this to be true, and we celebrate it again this year by recognizing the incredible talent on display at the Ernst & Young Entrepreneur Of The Year Midwest 2010 Awards.
High-growth companies have as much to lose as established companies, if not more, with far less cushion to fall back on in the event of failure. And yet they persevere, they continue to move forward, with their eyes wide open for the innovative, the new, the unique. They’re hungry, they’re driven, and they’re sharply focused.
But, surely, they must have something else because those qualities can be found in organizations young and old, large and small. After presenting these awards for 24 years and meeting thousands of successful entrepreneurs and hearing their stories, we think we’ve identified their ultimate, sometimes hidden but clearly recognizable driving force. It’s more than starting a business, employing people and succeeding in whatever industry they’ve chosen, despite all the barriers to success and pitfalls along the way. It’s simply this: Entrepreneurs want to change the world.
We at Ernst & Young, along with our sponsors and patrons, are honored to recognize their achievements, and we salute that simple truth: Entrepreneurs want to change the world. We trust they’re going to do it in a positive, innovative, beneficial and long-lasting way. In fact, we’re counting on it.
Let’s congratulate them for their achievement, encourage their perseverance and admire their ingenuity. By supporting them, we can all help to change the world.
Randall L. Tavierne is Ernst & Young’s Entrepreneur Of The Year Midwest Area program director, Midwest Area Strategic Growth Markets Leader and a partner at Ernst & Young LLP. He can be reached at (312) 879-3695 or email@example.com.
Dale Pollak has always understood that the used vehicle operations of a car dealership needed to operate on principles of investment rather than simply the principles of merchandising as was commonly accepted.
He also recognized that the Internet was transforming the used vehicle business from an inefficient market that favored dealers to an efficient market, creating parity between buyers and sellers. Recognizing that efficient markets are driven by the economic principles of supply, demand and price sensitivity, Pollak founded vAuto Inc. and created an innovative technology solution that quantified these key metrics for any vehicle in any market at any time.
Rather than simply making decisions based on a vehicle’s aesthetic appeal, dealers could now make decisions on what to stock, how to value a vehicle and how to price a vehicle with quantified metrics of supply and demand.
To accomplish this new approach, Pollak created technology that harvests the Internet and then quantifies and temporalizes supply and demand data from more than 40,000 Web sites containing used vehicle listings. Drawing from his many years of retail automotive experience, he has been able to inject sophisticated investment disciplines into a relatively unsophisticated user environment.
To bridge the gap of understanding and acceptance, he uses his unique ability to communicate the ideas of sound investment practices to his industry audience. Dealerships across the country that have adopted Pollak’s management system have experienced dramatic performance improvement. He has demonstrated there is no limit to the practical applications of his data. The vAuto system has an aggressive product road map that helps dealerships achieve excellence from what he calls “paint to pixels” meaning that the “paint” is the traditional used car tasks including purchasing, appraising and pricing, and the “pixels” are the virtual merchandising responsibilities: knowing how your vehicles appear online with respect to prices, photos and descriptions.
How to reach: vAuto Inc., (630) 590-2000 or www.vauto.com
In 1997, Rick Stern was an independent sales agent in Chicago selling telecommunications products. Sure, it was lucrative and he had the freedom of being his own boss. But the contracts often changed without notice. And he had bigger dreams anyway.
So he ventured out on his own to start Nitel, working 14-hour days as the CEO in a one-man office to endure through the telecom bust of the early 2000s. He teamed up with Ron Grason, who’s now his chief operating officer, and together they changed their business model from agent to reseller so they could own the customer relationship from beginning to end instead of leaving after the sale was complete.
In the role of providing wholesale Internet and connectivity services, Stern isn’t burdened with the immense capital expenditure of building networks or creating new technology. Though he does depend on the technology and service aspects of his carriers, he doesn’t see that as a limitation. He focuses on customers who crave service and attention. By zeroing in on the underserved rural market, he sees unlimited opportunities for growth.
With a competitive tenacity that began as a gutsy kid on the football field, Stern pushes his team to constantly improve. Though Nitel is growing fast, he’s not finished. He has also started a company focused on government staffing in underserved economic business areas and has plans for another that will lease telecom equipment to small- and medium-sized businesses.
Still, Stern will show you pictures of his wife and kids before he’ll hand you a business card. As a father, he has a soft spot in his heart for children in need. He supports Mercy Home for Boys and Girls and the company holds an annual holiday toy drive for kids at Children’s Memorial Hospital.
How to reach: Nitel, (888) 450-2100 or www.nitelusa.com
Imagine an office where employees walk laps during lunch, their pedometers clipped to their waistbands, clicking off each step up and down the stairs and through the halls and around the cubicles. Imagine an office where employees snack on fruits and nuts rather than candy bars, where employees drink water instead of another can of soda, and where employees have managed to kick that pack-a-day habit.
Imagine an office where health and wellness are a priority.
Is this anything like your office? It should be. Perhaps it will be during the months and years to come.
There is little doubt that health and wellness are, if nothing else, a hot topic across the nation. Just turn on the television and watch a reality show about weight loss or any of what seems like a dozen syndicated talk shows where a photogenic doctor fields questions and concerns. Or pick up a magazine and read the features on wellness recently published in Time and The New York Times Sunday Magazine. Or just turn your eyes to Washington, D.C., where President Barack Obama signed the health care reform legislation in late March.
Our parents are overweight. Our children are overweight. We are overweight. And as we work our way through the recession, our days are packed. We tend to eat poorly and not exercise or even move nearly enough. We are in the dregs of a pandemic. All of our poor decisions are costing not only our bodies and our minds but also our health care costs and our office productivity. A wellness program just might help to turn the overwhelming tide of fat and frustration.
“I always tell everybody that wellness is brain surgery,” says Chris Dobbins, executive director, health promotion services, Community Health Network. “Actually, it’s more difficult than brain surgery because there’s no clear definition of what wellness even means. Every person you talk to will give you a different answer about what wellness means to them and, of course, all those answers are correct.”
If you do not have a program up and running, pun intended, at your business, why should you bother to install one now? Or if you do have a program, why should you aim to improve it as we continue to move through 2010? Well, because plenty of research proves that healthier employees are more productive and actually cost you and your business less in total costs. Oh, and there is an impressive return on the investment, especially after a year or two.
But you have to plan and install the program first.Take the first step
Are your employees overweight? Are they obese? Do they smoke? Not long ago, you would have been well within your rights to avoid the answers to any of those questions. If your employees worked hard and produced, who cared about their health? But after years of medical research, those are all important and relevant questions, and if the answer to any is yes, you will want to consider a wellness program.
But why do you want to install a wellness program?
There are no wrong answers, of course, but if there is no why, if there is no vision, the program will flounder.
“Do you want to build benefits (because) it is the right thing to do? Or, as the management team, is your goal to affect claim costs? Is it a combination of the two?” says Sally L. Stephens, founder and president, Spectrum Health Systems. “Senior management, or whoever initiates it, needs to ask what they want to accomplish by putting a wellness program in. Too many people think it’s a solution but don’t think through clearly what their goals are.”
And if you and your executives do not support the program from its first breath, neither will your employees, so take the time to work with a private company for you and your employees to take a health risk assessment and a biometric screening.
HRAs and biometric screenings highlight symptoms and conditions that might develop into larger problems in the future, both among individuals and your employee base as a whole. If you work with an outside company, the information will also be anonymous and in compliance with the Health Insurance Portability and Accountability Act.
“Some employees hesitate to give all their personal information to the insurance company,” Stephens says. “They don’t want the insurance companies to know they smoke or any of these other things. Working with a third-party provider ensures 100 percent confidentiality. They manage all the data, they manage the security, and the employer doesn’t have to worry about the data management.”
HRAs are often free, though if performed in person rather than on the Internet, they can cost between $5 and $25 per employee, depending on the quality and depth of the analysis. Biometric screenings typically cost anywhere between $50 and $150 per employee. You might also need to offer your employees an incentive, like a gift card or cash, for them to give their time to take the tests because anything less than 70 to 80 percent participation leaves the results skewed and of less use for your business.
That cost might seem steep, but the information that is revealed can change your business. Do you want to know the overall health risk for your employees? Their weight and body mass index? Their exercise, nutrition and smoking habits? Even their levels of stress at work and at home? All those figures are available and can help lay the groundwork for what you need to know to start a wellness program.Consider an outside company and your employees
When you have the results of the HRAs and screenings, you’ll want to work with your insurance company to perform an annual claims review. At that point, you’ll be able to plan for the installation of a wellness program.
But you might not want to keep that plan under your own roof.
Because of compliance regulations and the general complexity of HIPAA laws, you might be better off turning to an outside company to ensure that your burgeoning program remains legal. After all, you already work with a law firm to handle your legal matters, an accounting firm to handle your numbers and a bank to keep everything in order, so why not work with professionals when it comes to the literal health of your business?
“If you have enough resources to hire a professional wellness vendor, that would probably provide the most bang for the buck, so to speak,” Dobbins says. “If you don’t have those kinds of resources, I would say a wellness committee could actually be in charge of the wellness program. They’re not going to be as successful because they don’t have the background.”
No matter your choice on that matter, your employees do need to feel a sense of inclusion in and perhaps even some sliver of ownership of the program, so involve them as early as possible. Tell them about the program as you develop it, and if you build a wellness planning committee, make sure you bring in people from as many departments as possible. And when the program is prepared to launch, make sure you pass along that information well in advance.
The key to increased participation is to offer an incentive, especially now as we continue to recover from recession and every little bonus bears the glint of gold. Perhaps your employees would react to paid time off or reduced premium costs. Both are common incentives, according to a panel of more than two dozen industry experts.
“I have worked with employer cultures before that didn’t need cash or even incentives,” Dobbins says. “But typically, you almost always need to offer incentives to drive participation and to introduce those services to employees.”Monitor results and look forward
The fruits of an effective wellness program will take some time to devel op and spread throughout your business. Just remember, when you start to work out or return to the gym, you don’t see a noticeable difference after one day or even after one week or one month. A wellness program is a lot like that trip to gym. Give it a couple of months to notice the first signs of change, a year to really see an improvement and a couple of years to watch as new habits spread from employee to employee.
Those new habits, of course, are part of the return on your investment. There are other intangible returns, too, including employee reports that they feel better and look better and now have a success story to tell their friends and family. But without hard numbers, all of those intangibles are nothing more than what one expert referred to as “warm fuzzies.”
Good thing a wellness program is far more than warm fuzzies. After a couple of months or a year or two, you can measure the collective pounds lost, the drop in body mass index, and the decrease in cholesterol and blood pressure levels. You can also measure the decreased rate of absenteeism because of injury or illness, improved productivity, and perhaps even lower figures for workers’ compensation claims and turnover rate.
“If we prevent eight pre-diabetics from becoming type 2 diabetics and we catch that in the first year, that could mean anywhere from $2,000 to $15,000 in claims for one person, depending on the level of their illness and whether they have kidney dysfunction,” Dobbins says. “But how do you measure that? It’s critical if you can get the medical and the Rx and the HRA and the biometric data in one centralized database, you’re going to get the best bang for your buck in terms of true ROI.”
And there are the dollar figures for the return on your investment. Those are as important as any number on any scale.
Similar to those first trips to the gym and those first months of the program, you should not expect to see any sort of large return during the first year or so. The program might pay for itself during that first year thanks to employees being able to work more hours and to a possible decrease in health care costs but you will likely have to wait until the second year, perhaps even early during the third year to see any real positive return.
“Improvements in health can take a little longer,” Stephens says. “But what we say an employer should expect is stabilization of their health care claims within three to five years meaning their claims will trend below industry average, assuming they don’t have a lot of outliers like cancer or automobile accidents, things that a wellness program isn’t really going to impact.”
When that change starts to filter in, you might be surprised at what you see. Over time, the average wellness program will be worth about $3 toward your bottom line for every $1 you invest. Some experts say you can expect more than that, $5, $6 or even $8 for every $1 you invest. But $3 is a fair figure on which most experts agree.
“A good wellness program takes time, it takes money and it takes a commitment,” Stephens says. “The health of a population takes years to get in its current state. It takes time to reverse that trend; it doesn’t happen just overnight. Be patient.”
What’s in a name? Quite a bit if you ask Daymond John, founder of clothing manufacturer FUBU and star of the hit TV show “Shark Tank.”
“Having a strong brand, whether corporate or personal, always creates a halo effect,” John says. “A lot of time, that’s the only thing that separates you from everybody else.”
Standing out from the pack was John’s intent when he named his nascent company FUBU, an acronym for “For Us, By Us” that conveyed the business’s original, largely African-American target market.
John has since stretched the FUBU brand to reach a broader market and expanded into entertainment-related products and services. Yet, he has always remained true to serving the company’s core customer.
“It always comes back to the mission statement and the base,” he says. “Like a building, if you have a weak base, the building will crumble. Whatever the identity and the product you’re building, you have to stay true to that first.”
John’s new book, “The Brand Within,” hit bookshelves in April. In it, he explains how branding relationships have become integrated with everything we do from buying products and services to determining which television shows we watch, what music we listen to and the food we eat.
Smart Business caught up to John, the 2003 Ernst & Young Entrepreneur Of The Year Award winner in the retail category of the New York City region, and discussed the importance of personal brands, how to nurture a company’s identity and why you better sum your identity up in three words.Q. How can a company benefit from having a strong brand?
In a tough time like this, when everybody is holding their purses and wallets very close, (what) they will end up spending the money on are the brands they are comfortable with because the brand is portrayed as something that gives them a comfort level.Q. Should CEOs view their brand identity as an asset that can be managed, nourished, invested in and leveraged?
A lot of people or companies try to chase the market. If you chase the market, then you’re behind the market. ... So you always have to stay true to your customer base and what you created, but you have to come up with innovative ways and take those leaps and bounds and chances to improve the brand you have.
I believe that every brand should be able to be spoken about in three words. Whether it’s BMW fine German engineering or any other company, you need to be able to wrap up your whole mission statement and identity in three words.Q. In your book, you detail how people are brands just as much as companies are brands. What does that say about the power of a personal brand?
A personal brand is actually more effective than a corporate brand because everything starts with a person. Think about it. If Steve Jobs gets sick, the brand itself, the stock, goes down 20 percent.
As a personal brand, you’re judged hundreds, thousands and, if you’re on television, millions of times a day. You’re selling every single action you take and every single word you speak. You’re selling yourself, and that is the brand you represent or own. That’s why that’s more important than anything else.Q. Are there warning signs you’re stretching your brand too far?
Yes. Once you put it out there in that space and you have to find creative ways to put it out there these days and people just don’t like it, support it or ... are appalled by it.
The days of focus groups ... are over because you have the Twitters of the world. These people don’t owe you anything. You’re trickling it out there and putting out test balloons and seeing what happens.
You can’t have thin skin. People fall in love with their brands and ideas and don’t want to listen to anyone else and hear that they do have an issue. ... Egos have taken down way too many companies.
How to reach: Daymond John, www.daymondjohn.com
As the regional winners from Ernst & Young’s Entrepreneur Of The Year Awards are announced later this month at awards recognition banquets across the U.S., it’s not too early to be thinking ahead for the CEO invitation-only Ernst & Young Strategic Growth Forum 2010, which will be held Nov. 10-14 in Palm Springs, Calif.
This program convenes more than 1,500 of the nation’s top CEOs, entrepreneurs, advisers, investors and other senior business leaders and is the country’s most prestigious gathering of high-growth, market-leading companies.
The forum delivers leading business advice designed to help entrepreneurs master strategies for company growth, discuss ideas on the transaction market and available capital, learn the critical success factors of mergers, acquisitions and IPOs, hear inspiring stories from game-changing entrepreneurs, and meet potential customers, investors, partners, acquisition targets and buyers.
It concludes with the 24th national Ernst & Young Entrepreneur Of The Year® awards, the largest gathering of entrepreneurs in America, hosted by Jay Leno.
This year’s speaker lineup includes a who’s who of business, such as:
- Muhtar Kent, chairman and CEO, The Coca-Cola Co.
- A.G. Lafley, former chairman of the board, president and CEO, Procter & Gamble
- Deepak Chopra, co-founder, The Chopra Center for Wellbeing
- Tom Adams, CEO, Rosetta Stone
- Arthur Levitt, former chairman of the United States Securities and Exchange Commission
- Jeffrey Joerres, chairman and CEO, Manpower Inc.
- Rob Enslin, president, SAP North America
- Christina Lampe-Onnerud, founder and CEO, Boston-Power Inc.
- Debi Fine, president and CEO, Direct Brands
- Greg Norman, professional golfer and entrepreneur
Learn more at www.ey.com/us/strategicgrowthforum.
Claude Davis has been the president and CEO of First Financial Bancorp since 2004. During his seven years at the helm of the company, Davis has unified all First Financial banks under one name and one brand, allowing the company to move forward through challenging times.
Q. Communication is important, but how else can a business develop a strong relationship with its bank?
Bank selection is critical. I would suggest that a business owner selects a bank that not only says it’s committed to relationships but that is also willing to commit its resources and time to developing a relationship with the business owner and understanding the business. Second, I think it’s important in this environment for a business owner to gain an understanding of what’s important to a bank, so that they structure their credit requests and their needs from the bank and so that they are consistent and aligned with the bank as with any supplier. Third, always err on the side of overcommunicating and more important than communication, being transparent about both the opportunities and the challenges, so that the bank understands that you’re realistic in how you run your business.
Q. What have the challenges of the last couple of years taught those on both sides of banking relationships?
I think this crisis has taught us that we all need to be much better risk managers, evaluating everything in our business and what could go wrong and how to manage through that, so that one small event doesn’t threaten your business.
Just going through the process with your management team and with your bank, if you have a good relationship, will help of looking at every aspect of your business and where there might be the possibility of an issue or a problem. Whatever the area may be to cause you harm, how are you evaluating it? How are you managing it? You just have to have good and thoughtful evaluation of every aspect of your company and the risks associated with it. We’ve all learned that whatever we thought couldn’t happen, can happen, and we need to prepare for it.
The concept of health coaching is evolving and becoming more and more a part of mainstream health care. While health coaching once may have been viewed as something designed to help individuals address specific health risk behaviors quitting smoking or losing weight, for example it is now seen as an effective method to manage wellness concerns across the full spectrum of health care, from prevention to managing chronic conditions such as diabetes or asthma.
Not only will your employees benefit from improved health, but employers can benefit from health coaching, as well, says Sally Stephens, president of Spectrum Health Systems.
“Studies show that individual coaching may be the key to implementing successful worksite health promotion programs,” Stephens says, which can help improve the health of your employees, reduce absenteeism and boost productivity.
Smart Business spoke with Stephens about the role health coaching plays in health risk management, and how your company can find its own health coach.
What is health coaching, and why should companies include it in their health risk management programs?
It is much easier to prevent most diseases than to cure them. Today, more and more employers are discovering that if they can help their employees better manage their own health, they can save on future medical expenses.
Health coaching is becoming recognized as a new way to help individuals manage their lifestyles, as well as manage any chronic conditions they may have. In fact, researchers from the Centers for Disease Control indicate that ‘individual coaching may be the critical component for effective worksite health promotion programs.’
What do health coaches do?
As with traditional coaching, health coaches utilize goal-setting, identification of obstacles and use of personal support systems. Health coaches work with participants, evaluate their personal health risks and help them develop a personalized health plan, with direct involvement in reaching their goals.
Dedicated health coaches also develop a relationship of trust with the individual employee to help them work through issues that are often very personal.
How does working with a health coach benefit employees?
Most people desire optimal health but may have multiple barriers for effectively managing their chronic conditions or maintaining healthy behaviors. These barriers can include finances, family, work and issues with children. In the coach/participant relationship, the reason for health behavior change comes from the participant, which increases the likelihood that any ambivalence toward making a change will be replaced with a readiness for change.
The coaching process provides motivation, encouragement and health education in an atmosphere where full attention is given to the participant and where the way to self-discovery is paved.
What are the different ways to work with a health coach?
The most traditional way to work with a coach is face to face. But telephonic coaching has increased in popularity, as well, as it is often prohibitive to physically meet in person. Often, telephonic coaching is ideal, as participants might be more willing to share honestly when they are not face to face with the coach. Other avenues include e-mail and Web-based coaching. Ideally, the participant is able to choose the method that works best for that individual.
Whatever the method, it is critical that the coach can guide participants to talk about what is most troubling to them about their conditions, what they most want to change, what support they have to foster change and what obstacles or difficulties must be removed or minimized to promote healthy behaviors. Health coaching focuses on the special issues and concerns unique to each individual that fit into the context of his or her life.
What qualifications are needed to become a health coach?
Health coaches often come from health care or health-related fields. Typically, individuals who value people and who enjoy healing and relationships make excellent health coaches. Health educators, health practitioners, fitness instructors, massage and body work practitioners, yoga and movement teachers, nurses and doctors can become health coaches.
An ideal coach is someone who is seeking to learn how to listen, connect with his or her intuition, help people change and master their emotional wellness. People seeking a high level of wellness for themselves and others, who enjoy self-development, who are proactive planners and evaluators in the service of others also make excellent health coaches.
A health coach:
- Is a facilitator for physical, mental, emotional and spiritual growth
- Helps guide the individual to achieve a balance between doing and being
- Is an aide in encouraging aspects of the person that are filled with wisdom
- Is a resource for learning about self-care and natural health practices
- Listens for choice-making and truth-seeking
- Is a teacher who promotes higher energy and improved success in the coaching relationship
The health coach helps participants develop a plan for change and provides the support and resources to move toward a more vital, purposeful, enjoyable and satisfying life.
Sally Stephens is president of Spectrum Health Systems. Reach her at (317) 573-7600 or firstname.lastname@example.org.
This is a short story about a wonderful return on investment. Everyone loves a return on investment, especially if that investment costs hundreds of thousands of dollars.
There is a small manufacturing company in Arkansas that installed and implemented an enterprise resource planning system last year. The industry in which the company works is not particularly important. Neither is its geographic location. But the fact that the company, call it Company A for the purposes of this story, decided to move forward and install an ERP system is particularly important. It will change the fortunes of Company A in rather short order.
Prior to the installation and implementation of its ERP system, Company A shipped about $200,000 in inventory per week and it stored about five weeks worth of inventory in its warehouses. But executives at Company A figured there was a more efficient way to run the warehouses and, in turn, the business of the entire company.
So after months of research and planning, after working with a top technology firm, after moving forward to install that ERP system and, in particular, a handheld wireless scanning system to better handle its inventory management Company A did find a more efficient way. It was able to decrease its amount of stored inventory to about three weeks worth of items. That allowed Company A to free up about $400,000 in working capital, more than the total cost of investment in the ERP system. And that allowed Company A to restructure a large swath of the way it now does business.
What is ERP? You might know, but even if you have a grip on the technology, it has certainly changed since its introduction to the business world in 1990, and it has changed even more during the last couple of years. Now might be the time to consider installing and implementing your own ERP system, or if you have one in place, adding newer software, like the type of warehouse management system that changed Company A.
“By integrating a solution that runs on the same platform as your ERP, you’re able to recognize the benefits of tying together applications and sharing data without having to buy or learn to manage new hardware,” says Paula Susemichel, senior consultant, DPS Inc. “That’s a particularly attractive reason to look at added solutions.”Plan, then plan some more
ERP is an integrated system that is used to manage the resources and automate the processes of a company. It can be used to automate and improve just about any process that deals with manufacturing, with supply chain management, with human resources, and with financials and data. It has been referred to as “the present of computing,” “the future of computing” and “an invaluable part of business” by a panel of experts and software developers and designers across the nation. There is a longer definition filled with more technical details, but if that doesn’t provide a sense of what ERP can do for your business, well, just read the simple success story of Company A one more time. Then take a long look at the processes in your own business.
“There has been a maturation process that businesses have gone through,” says Prasad Akella, vice president of SME Solution Marketing, SAP. “ERP is a commodity now, and businesses recognize that they need it and that they need to invest in it.”
The installation and implementation of an ERP system is neither an inexpensive nor a short project. The cost can vary depending on the number of your employees and the revenue size of your business, the depth and scope of the system you want to install, and the amount of training you want during the process. A simple system for a small business might cost less than $10,000. An average system might cost somewhere between $50,000 and $100,000. A much larger system for a corporation that has thousands of users and stretches around the world might cost millions of dollars. But an average cost, especially for small and medium businesses, is somewhere between $3,000 and $5,000 per end user, including the implementation, from the day you start installation to the day you are running live in production.
Similarly, the installation time varies based on multiple factors. For smaller systems, plan for at least three months, including end training. For larger systems, plan for at least six months to one year.
And the training is important. Consider it an insurance policy, of sorts, to make certain that your employees endorse the system and want to use it. If they reject it, you have not only wasted your money, but you have also taken a step backward toward different departments in your business speaking different technological languages and a possible loss of productivity that could affect all aspects of your business.
“In today’s environment, there are a lot more compliance and documentation requirements,” Susemichel says. “Those are tremendous challenges to meet. Without the benefit of an integrated infrastructure solution, where you’ve got the ERP talking to the warehouse management talking to a document system, it’s tough to stay up with that.”Close your doors
Perhaps your largest concern with the decision to either install or upgrade your ERP system other than the considerable investment of money and time is security. Your data will not likely be susceptible to external hackers, even if you opt for cloud computing and store your data on a server outside of your offices, but there is always the concern that your own employees might attempt to tamper with the system.
“If you have an on-premise solution that you keep within the walls of your business, your security concerns are more internal in terms of access for your employees,” Akella says. “You don’t want the guy running your supply system to be able to cross over to your HR system.”
In other words, assign each user a unique access name and password, much as you or your IT staff would for any office system of considerable size and importance, and allow each user access to only the parts of the system that he or she needs to use for his or her assignments. There are always concerns, but if you set up the security in advance, you will better protect your data and your business.
The other concern, especially after hearing the relatively sudden successes of Company A, is when you will earn back the money you put into the system. Depending on the speed of the installation and how quickly you and your employees implement the full range of process automation, you could see a full return within two years, and perhaps even just one year. But the consensus is that ERP and related systems have evolved so much during the last couple of decades that they are a sound investment.
“In terms of IT spending, it will require a pretty quick ROI before a lot of people will be interested at all,” says Dan Barrow, president, DPS Inc. “We don’t see a lot of people going out and changing their ERP systems. They try to maximize the investment they’ve already made.”
And even the system you have can, after all, help you improve the processes and efficiencies of your business. It can even change the way you do business.
Vicki Perry was stepping onto a sinking ship. She was brought in by Sagamore Health Network Inc. to save its health maintenance organization and if she couldn’t do it, the failing health plan would be left to die.
“The business owners had poured millions into it and it had been unprofitable since day one,” Perry says. “What I had to do was take a failing product and a handful of teams and create an energetic, market-responsive health plan in a very short period of time, a time when provider-owned health plans weren’t doing well and nobody else was starting new ones.”
If Perry was to succeed in rescuing this failing organization, which would eventually become ADVANTAGE Health Solutions Inc., she needed a team of people who could manage a project and accept that the line from Point A to Point B was not always a straight and smooth one.
“The first thing you have to do is look to your leadership team, and if you don’t have a defined leadership team, figure out within the organization who has the sphere of influence,” says Perry, the founder, president and CEO of ADVANTAGE. “You have to address the issue with that individual or team and get a consensus. Once there is that consensus, you have to make sure it is pushed from the top throughout the organization and that you are constantly recognizing when the plan needs to be executed differently or needs to be changed.”
It’s that ability to accept change and to be ready to make a right turn when you had planned to turn left that has confounded many business leaders.
“One of the biggest dangers when you are going through challenges is to say, ‘This is what we’ve decided, and we’re going to stick to it,’” Perry says.
“You stick to it instead of being more fluid and flexible and having those metrics and milestones to meld into your change plan so you can figure out when you need to adapt.”
Perry’s flexibility has paid off. She has helped ADVANTAGE reach many of its goals, the biggest one being the fact that it still exists. Perry says the key to turning success into failure is realizing that even as the leader, you’re just one piece in the process. An important piece, but just one piece nonetheless.
Her company is now a successful and independent health plan that has no debt and reached $375 million in 2009 revenue. It has been accredited by the National Committee for Quality Assurance and is now preparing to deal with new health care reforms in the coming years.
Here are some of the other lessons she learned while taking ADVANTAGE from dying to thriving.
Flesh out the challenge
When attacking a challenge, you and your people need to be clear about what it is you are trying to accomplish. At ADVANTAGE, Perry felt the best way to begin turning things around was to identify the company’s best practices and get everyone intently focused on them.
“As a small regional health plan, we don’t have a lot of what I call ‘reserve power,’” Perry says. “We don’t have the mass wealth that our competitors have. We don’t have a huge staff that we can draw on. So we just have had to turn to doing what we know best and work at doing it as best we can.”
When you identify the challenge that you’re trying to conquer, you need to present it as clearly as possible to your team.
“The challenge or the plan of attack needs to have clarity or purpose and it needs to be defined by organizational goals and then goals and milestones,” Perry says. “Give the management team the tools to drive the right activities within their functional areas to support and contribute to those goals. Once people on the team understand the importance of their own contribution, they are more apt to do the right activity the majority of the time to reach those goals. It’s all about execution to a point.”
It’s that point that you need to make sure everybody is clear on so that your company has the best shot to meets its objective. But before you get too far in your efforts, take the time to make sure you’re assessing the scope of the problem accurately.
“We look at a couple of things,” Perry says. “Is it a management problem or is it a systemic problem? If it’s a management problem, it’s a very different approach. If it’s a systemic problem or external threat, then it requires the full attention of the organizational leadership and that’s when we put it through the process.”
In working with project managers over the years, Perry has learned that there are key questions you need to ask yourself in regard to a potential project.
“Do you have the appetite to do it today?” Perry says. “Are there so many things on the plate right now that this becomes less of a priority than a more critical issue? Do we know when we have achieved some measure of success?”
If the answer to these questions is yes, Perry prefers to get away from the office with her team, hunker down and develop a plan of attack.
“We actually go through and we have a lot of mini strategic planning sessions,” Perry says. “We identify that there is a significant challenge that has broad organizational impact potentially. We define it as a team. We define the worst-case scenario, and we define what we think the goal should be.”
Perry brings the manager of whatever department the problem is centered in and gets in depth as to what is happening.
“They address the problem,” Perry says. “Maybe the problem is sales not outpacing expenses. From their perspective, define the problem for me. Why is this a problem? What can you do, if anything, to effect a change? Once they start to think about it from their perspective, they have to own it differently. We write those things down. We may have two walls on a four-wall room that have the problem from a lot of different perspectives. Then we take that and vet that into one or two problems that we all, with purpose, can communicate.”
Use a small team of people, including people that have a stake in the problem, but keep the group from getting too unwieldy.
“You’re never going to get consensus if your team is too large,” Perry says. “The other important point is that you have to be confident that you have the problem identified and that you have the right tools to execute the plan that you have developed. If you lack that confidence, you’re not going to be successful.”
As the plan begins to take shape, start to put together some metrics that will be used to guide the process.
“We vet that with the management team and they develop and draw upon our vision and develop their action plan,” Perry says. “That’s what they manage by. It becomes a very inclusive process, but what’s key is really getting clarity around the challenge and clarity around the plan.”
Track your progress
Project managers bring credibility to an effort, especially when the person in that role reports to you. Perry wanted to get everyone focused on best practices and she felt a project manager would help her stay tuned in to the progress that was being made toward putting her company back on the right path.
“When you have an individual who reports to an executive owner on a project on a regular basis, they tend to have more legitimac
y and more credential,” Perry says. “They can move through the organization laterally much more easily than someone who just reports to a manager or is just another day-to-day person.”
Find someone with the skill set of a leader who you can have confidence in to keep the process moving without your constant involvement.
“[It should be] someone who is very goal-oriented, very passionate and very high energy,” Perry says. “They have to have excellent communication skills and very good people skills because they are influencing change through the efforts of other people.”
Your appraisal of a project may include regular meetings with your project manager. But you shouldn’t feel the need to get a constant score of the game, as it were, for your team’s efforts.
“More important for me than to know precisely where we are on track or off track is to feel the pulse of the organization,” Perry says. “The more open door, the more accessible a CEO or any C-level individual is as a person, the more credibility and confidence your team is going to have toward you. At the end of the day, being a good leader means that you have the ability to get things done through other people.”
Focus on being a good listener when you speak with people and be sure not to just be thinking about what you want to say when the other person is done speaking.
“Slow down and speak in smaller sentences,” Perry says. “If you take the time to breathe, you’re going to learn how to pause. And if you pause, that allows someone else to interject. That creates a two-way dynamic instead of just communication. That’s really important. I try to slow down and spend lots of time listening and give lots of pause.”
One-on-one meetings with various people involved in a project can be very effective at getting a good read on how things are going. Perry keeps specific notebooks on the people who she talks with regularly.
“They have their own notebook and I just keep a running list of challenges and opportunities and I review that before I meet with them again,” Perry says. “Then you know what was said or what were the burning issues or successes that [the] individual is experiencing at the moment.”
Everybody likes to be a winner, and it’s no different in the business world. By taking the time to celebrate victories along the way, Perry kept everyone at ADVANTAGE focused on positive results.
“I don’t care how big or little they are,” Perry says. “Sometimes little successes can drive a lot of momentum and get you over that hump to really get back on track. Departments will celebrate successes. On a larger scale, we may have team competitions to drive some type of action. It’s really celebration and competitiveness. We found that competition is a very strong motivator for driving forward on an initiative or a goal so we create fun opportunities to drive change.”
One thing to keep in mind when instilling competition into the workplace is to always keep it simple.
“If it’s a competition merely to drive change, it’s probably going to fail,” Perry says. “If it’s simple and fun and part of the organizational culture, it is going to be successful. But it truly has to be simple.”
Perry used a game to help her employees get more familiar with HIPAA, the Health Insurance Portability and Accountability Act that spelled out privacy standards for patients in the medical industry.
“My compliance team made a game of it,” Perry says. “It was a cartoon. They had a theme, and each aspect of learning, they would have a contest and throw that contest out on the Internet. The first five people that got all five answers right would get some type of reward. You can make it fun like that to drive change, education or compliance. You get people’s attention, and it makes it kind of fun, and you recognize them, and it’s a way to keep them motivated.”
Motivation becomes very important when you begin to look at accomplishment and how close you came to meeting your goal. Even if things didn’t go exactly according to plan, you often can still find victories to celebrate.
“Every initiative can be declared a failure or success, even initiatives that may not have hit the end goal you thought it would 12 months ago,” Perry says. “If you declare it a success because these five things occurred, maybe it was nothing real glitzy, but you identified three other specific issues that by changing those three things you’re going to have a higher degree of success, that’s a success. You have to be flexible.
“Being CEO or a president of a company doesn’t automatically give you the right to be respected or trusted and confident about what you can or can’t achieve,” Perry says. “The ability to adapt communication style and to be more effective when dealing with people who may have a different style of listening or learning, that is so critical to a successful outcome. That flexibility and the ability to interpret other perspectives is what really drives influence. If you can influence the team, you’re going to have a higher level of success.”
How to reach: ADVANTAGE Health Solutions Inc., (877) 901-2237 or www.advantageplan.com