HOW TO COME TO A RIGHT DECISION IN HIGHLY VOLATILE TIMES

Ian Stone, Managing Director UK & Ireland, Anaplan

The first half of 2015 was fertile in macroeconomic events. The European Central Bank (ECB-POLICY-KAZIMIR-00b06d9b-4b99-46ce-a2aa-458d8eb2d993>ECB) finally decided to practice its own version of “quantitative easing”, inspired by the unconventional methods that the US Federal Reserve (FED) had implemented. This strategy involves not only a massive purchase of public debt but also a purchase of corporate bonds held by the commercial banks. The idea is that these actions will stimulate the distribution of new loans by financial institutions.  In theory, this could have a beneficial impact on the whole economy. One can only hope for the success of this scenario.

However, these loose monetary policies have a significant impact on corporate management . During the “quantitative easing” of the Fed in 2014, we witnessed a big swing in currency value. This will certainly continue this year. Excess volatility is here to stay.

And that’s not all. Parallel to these macro-trends, some exogenous events could  disrupt business strategy. In January, the Swiss National Bank decided not to defend the parity of the Swiss franc against the euro, resulting in a substantial increase of its currency by more than 20% – in one day.

There is no doubt that Swiss companies need to review their pricing policy, purchase of raw materials and sales promotions. They are not alone. Besides the ongoing battle against a now global competition, companies must adapt to unpredictable swings in currencies and commodities market. Who would have expected, in spring 2014, that the price of oil would be close to 50 dollars, a year later?

In a time of extreme volatility, UK financial services companies must react quickly and adapt their business planning. Should your purchasing manager execute buying in a less penalising currency? Should you speed up your presence in identified growth markets? Should you twist your marketing campaign to better align your production of goods to the final demand? Yes, we all know that it is better to produce what sells than to try to sell what has already been produced. Well, to get it done, there is a considerable gap to cross.

The challenge is daunting. To respond to a constantly changing world, corporate managers need to work together across marketing, human resources, IT, operations, sales, and finance. They all want to work together for the common good of their company, but they do not have the means. The only common tool at hand is often the Excel spreadsheet. It is a good tool, no doubt about it, but it was not designed to handle large amounts of data, much less to collaborate.

HR data is not the same as that used by finance or by sales. As a matter of fact, no one speaks the same data language inside a company. Achieving a common framework is particularly painful. Sleepless nights and lost weekends are the daily dose of hell for those trying to get a workable Excel spreadsheet. And, when the planning is finally done, it is no longer valid. Things have changed in the market place. In fact, things have changed too fast for the old IT systems to respond.

Is there a better way?

Yes indeed. The solution requires , UK financial services companies to adopt modern tools, designed during the past five years, not twenty years ago or more. These new tools are highly collaborative, fast to deploy and easy to use. They are 100% in the cloud, provided by young, specialised companies. They are built from the ground up to fulfil a promise of true collaboration and rapid planning.

Some , UK companies have understood the need to deal rapidly with the changing economic landscape. They have made a technological bet to obtain a critical advantage over their competition.

This dynamic is far from being unnoticed by the boards of directors of these pioneers. News travels fast. Any executive committees must now be prepared to answer the question of their directors: to deal with excess volatility, what digital strategy have you decided to adopt?  Is your organisation ready? How long will it take you to solve this problem?