Getting Ready for the Recovery

Oracle CFO Forum Looks at How Companies Are Positioning Themselves Now for Better Times.

by Anne Ozzimo, August 2009
“Optimism is a force multiplier.” Those words of wisdom, attributed to Colin Powell, were among the strategies that Fortune Senior Editor at Large Geoffrey Colvin shared with attendees at the Oracle CFO Forum in Boston, Massachusetts. The CFO Forum brought together luminaries such as Colvin, who discussed the importance of leadership during uncertain times, and finance executives from Staples, Hologic, and the City of Boston with strategies for managing through the downturn and investing in the recovery.

Colvin, author of Fortune’s Value-Driven column and “The World’s Most Admired Companies” series, described the characteristics of best-managed companies that are able to stay on top in good times and bad, from balancing optimism with realism to redefining how they deliver value to customers. “The best companies communicate like crazy with their employees, their investors, and their communities, but you just can’t tell people that everything is great,” explained Colvin. “You need to tell the truth but also remind people of the victories your company is experiencing daily, no matter how small they are. If you can give people a good reason to hope, it is unbelievable how effective they can be.”

Another perspective on leadership was provided by Sonny Singh, senior vice president of Oracle’s Industries Business Unit and the host of the Oracle CFO Forum. Singh reviewed the five high-impact business strategies Oracle is recommending to ensure a competitive position for the recovery (see Smart Strategies to Prepare for the Recovery), from conserving cash and driving down the cost of goods sold to maximizing customer value, managing risk and performance, and optimizing workforce performance.

“Every downturn produces winners and losers, with companies twice as likely to change industry rankings during a recession,” notes Singh. “Our goal at the Oracle CFO Forum was to give customers some high-impact, proven strategies that could make a difference right now in their ability to compete in today’s economy. We also wanted to showcase the role technology can play in helping companies differentiate themselves today and over the long term, whether that’s leveraging supply chain technologies to drive down the costs of the goods or services they produce or adopting new CRM loyalty management tools to interact more intimately and effectively with their customers.”

A Smarter Way to Cut Costs
When funds are tight, the best way companies can afford to keep investing in their core business is to cut costs elsewhere. During times of economic uncertainty, companies tend to focus on cutting large variable costs that can have an immediate impact, such as IT spending, travel, and administrative staff. Research by the Corporate Executive Board, a leading provider of corporate best practices and analysis, shows that nearly 90 percent of companies fail to sustain these types of across-the-board cost reduction efforts for more than a couple of years at best. Cutting general and administrative expenses across the board also can impair a company’s ability to survive a downturn, especially one that is as long-lasting as the current recession.

“Here at Oracle, we believe that a better strategy to achieve long-term cost savings is to focus on reducing costs of goods and services sold by improving supply chain efficiencies and reducing operational complexity,” notes Singh. “Manufacturers, for example, should think about identifying and prioritizing supply chain technology initiatives that can drive quick ROI and have an immediate impact on profitability, cash flow, and risk but can also help companies sustain gross margin expansion over the long term.”

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