End-to-end visibility key to operational excellence

Sustained growth through
operational excellence

An Economist Intelligence Unit report
sponsored by SAP ®

Sustained growth through operational excellence

Preface

Sustained growth through operational excellence is
an Economist Intelligence Unit report sponsored
by SAP. The Economist Intelligence Unit bears
sole responsibility for this report. The Economist
Intelligence Unit’s editorial team conducted the
interviews and wrote the report. The findings and
views expressed in this report do not necessarily
reflect the views of the sponsor. Ken Waldie was the
author of the report and Dan Armstrong was the
editor. Richard Zoehrer was responsible for layout
and design. Our thanks are due to all of the survey
respondents and interviewees for their time and
insights.

February 2008

© The Economist Intelligence Unit Limited 2008 3


The power of visibility

O perational excellence is a simple
concept with complex implications.
Consistently doing things well across every element
of the value chain is clear enough in principle. But
it is a moving target: To maintain their competitive
While operational transparency is a fundamental
goal of operational excellence, the pay-off is much
6.25
broader. As the connections between strategic
12.5

objectives and day-to-day operations become more50
25
transparent, everyone in the organisation can see
advantage, successful enterprises must constantly
adapt to new situations. Traditional competitors Which of the following do you consider the most important
component of operational excellence?
consolidate just as unfamiliar ones arrive on the
scene. Customers discover new needs as they come to Ability to have end-to-end visibility into financial performance, operational
activities and customer relationships across all business units and geographies
expect better quality and lower prices. New markets 45%
emerge in a shrinking world. These dynamics do not Ability to add value for customers through the entire product lifecycle
40%
alter the fundamentals of operational excellence. Ability to integrate quickly with external systems and partners to facilitate
But they do force companies to be excellent at doing collaboration and exchange
13%
different things. Other
1%
Don’t know

The more experience executives have 1%

with operational excellence strategies,
how his or her efforts contribute to the big picture.
the more benefits they see And if visibility into operations can be translated
into customised role-based dashboards, employ-
ees can be motivated to innovate within their own
space. Moreover, the demonstration of links between
operational performance and strategy encourages
Regardless of where a company focuses its opera- the building of collaborative solutions.
tional excellence strategy, successful execution Transparency also benefits customers and exter-
requires connecting long-term goals with short-term nal partners. Visibility into customer relationships
management control. This means aligning and link- empowers the business to develop a deeper under-
ing performance measures across the organisation standing of customer needs, and to rapidly perceive
and beyond. Ideally, senior executives would be able and act on changing patterns of demand. Another
to monitor financial performance, operational activi- key operational excellence benefit is the ability to
ties and customer relationships in real time, from collaborate more easily with external partners and
one end of the value chain to the other, across all systems (including regulators).
business units and locations. In practice, operational excellence may serve as

4 © The Economist Intelligence Unit Limited 2008


7.5
15
a company’s principal strategy driver, encompass- ness units and geographies” was the top-ranked 60
ing other tools such as total quality management component of operational excellence.
30

and Six Sigma. Or it may be part of an even broader
game plan. For example, Arjan Kaaks, CFO of the
Dutch brewing company Grolsch, says that his com- Most important component of an operational strategy
(by stage of development)
pany includes various aspects of excellence in its
End-to-end visibility
business strategy and planning processes. “In par- 52%
ticular” he says, “we use the balanced scorecard to 40%
45%

ensure that we consider every aspect of excellence Customer value-added
in our operations including both financial and non- 38%
40%
financial elements. The balanced scorecard provides 44%

the framework to implement operational excellence Rapid external integration
10%
principles.” 13%
16%
Regardless of how operational excellence is
Implemented operational excellence strategy
implemented, visibility into operations is its most Recognise operational excellence principles
fundamental contribution to business results. In Developing operational excellence strategy

a survey of 946 executives in mid-sized companies
around the world conducted by the Economist
Intelligence Unit, the “ability to have end-to-end
visibility into financial performance, operational
activities and customer relationships across all busi-

What is operational excellence?
In its simplest terms, operational excel- intimacy. Doing things well across the lence is simple enough, execution is another
lence means consistently doing things well organisation is fundamental, but most suc- matter. A drive for efficiency is implicit, but
across the value chain as a way of gain- cessful companies do one thing exceedingly this must be achieved in a coordinated way
ing competitive advantage. In its broadest well and identifying and reinforcing core by building links across the organisation so
terms, it is a discipline that drives corporate competitive strengths is part of operational that all functions share a harmonised set
strategy. In their book The Discipline of excellence. of performance metrics. The ultimate goal
Market Leadership, Michael Treacy and Fred The definition in this paper has three is a “single source of truth” where senior
Wiersema suggest that operational excel- elements: executives have shared visibility into all
lence is one of three “value disciplines” that l superior performance and visibility parts of the organisation, enabling manage-
a successful organisation must choose from across the value chain ment by facts. The ideal result is a high-level
as its underlying operational model. l value-added delivered to customers dashboard for senior executives with the
In practice, operational excellence is a l effective integration with external ability to drill down into different business
means to achieving the other value disci- partners. functions, including operations, finance, IT,
plines: product leadership and customer While the concept of operational excel- and sales and marketing. n



Experience matters

O perational excellence strategies are
delivering competitive advantage
for a growing number of mid-sized companies around
the world. Nearly 90% of survey respondents say
their companies recognise operational excellence as
This is not to suggest that experience with opera-
tional excellence diverts focus from customer value.
On the contrary, it indicates that within an estab-
lished operational excellence strategy, customer
value is likely to be addressed by improving visibility
a strategy and planning tool. More than half say they into customer relationships, as part of a broad and
have implemented a formal operational excellence systematic effort to achieve excellence across the
strategy or are in the process of developing one. entire value chain.
Another third say they have integrated the principles The more experience executives have with opera-
of operational excellence into other strategy and tional excellence strategies, the more benefits they
planning instruments. see. Over three-quarters of survey respondents
These different levels of experience with opera- with operational excellence experience cited lower
tional excellence shape executive opinions about its costs or improved efficiency as among the top three
most important components and benefits. The more benefits, and half of them cited increased revenues.
operational excellence experience they have, the About 22% of companies with formal operational
more likely respondents are to rate end-to-end vis- excellence strategies had both reduced costs and
ibility as its most important element. Respondents improved customer service, compared with 20% of
with less experience tend to give the top ranking to companies that had recognised operational excel-
the ability to add value for customers. lence principles and only 16% of those still the proc-
ess of developing an operational excellence strategy.
Agility is another important operational excel-
About the survey lence benefit. About one-third of respondents
Between November 2007 and January 2008, the Economist Intel- with operational excellence experience said that
ligence Unit conducted a large survey of operational, financial, their companies were able to respond faster to cus-
sales and marketing, and IT executives throughout the world. The tomer demands, competitor actions or both. Other
survey yielded 946 responses from senior executives of mid-sized agility-related benefits included improved customer
companies with annual global revenues between $20 million insights to facilitate development of new products
and $500 million, with 81% over $50 million. (Sub -$50 million and services and improved ability to expand into new
companies were permitted in some countries where smaller firm markets.
sizes are the norm.) Nearly one-third of respondents were based
in Asia-Pacific, followed by about 28% in Western Europe and 26%
in North America. The rest were situated in the Middle East/Africa,
Eastern Europe and Latin America.



The challenge of execution

E very executive wants his or her com-
pany to do things well. Systematically
achieving this in every corner of the organisation
is another matter, and few executives claim to have
Senior executives generally agree that
they are aiming for real-time end-to-end
visibility into operations across the entire
reached this goal. Responses to the EIU 2007 opera-
tional excellence survey and in-depth interviews value chain. But this is rarely achieved.
with business leaders provided insights about the
tools companies are using to implement operational
excellence strategies.
needs and satisfaction of the client is much more
Visibility in the real world difficult. “We can’t be surveying our patients and
Senior executives generally agree that they are aim- our residents every day,” MacLellan points out, add-
ing for real-time end-to-end visibility into opera- ing that “also, for those metrics to be credible, they
tions across the entire value chain. But this is often need to be third-party sourced.” While this makes
infeasible and is rarely achieved. Innovations like real-time end-to-end visibility impractical, it doesn’t
7.5
RFID chips and wireless technology would appear to stop Morrison from keeping a sharp focus on the cus-
15

make real-time product tracking and record entry tomer experience. “We visit our patients every day,60
30
effortless. However, it is often difficult to extend the
reach of corporate IT systems to end users, especially
where personalised services are involved. While this Has your company invested in the following technologies to
achieve its operational excellence goals? (Select all that apply)
limits the scope of real-time performance monitor- % adopting
% rating most important
ing, it does not preclude it. Integrated ERP systems (Finance & HR)
52%
Morrison Healthcare Food Services, for example, 34%
provides meals to thousands of hospital patients Inventory management systems
44%
and residents of seniors’ homes across the US every 11%
day, and it also operates retail dining facilities in Customer Relationship Management (CRM) systems
43%
many of those institutions. CEO Scott MacLellan 20%
says the first step in the journey towards real-time Business intelligence or analytics systems
39%
visibility was to standardise point-of-sale systems. 18%
“That is giving us literally real time information,” Production planning systems
33%
he says. “We’re seeing what’s selling, what it’s sell- 9%

ing for, what’s not selling, and so on. We can spot Demand planning systems
26%
trends as they happen.” 5%

But he goes on to say that understanding the



and in that respect we’re getting real time informa- investing in four or more of them, compared with
tion,” MacLellan says. “Every single person in our 20% of those with some operational excellence
10
company, me included, is required to visit patients or experience and less than 10% of those with no oper-
20
residents when they go into one of our units. So I will ational excellence experience. 80
40
go up and say, ‘how’s your food? Is there anything Moreover, substantial majorities said that their
we can get you?’ And we get immediate feedback: ‘it
was great; it was not great; I need this; I need that’. What is your company doing to improve efficiency?
(Select all that apply)
And we’ll fix that on the spot.” % adopting
% rating most important
Evaluating and improving overall business processes

Companies with a formal operational (HR, Finance, Operations and IT)

32%
71%

excellence strategy are the heaviest Improving internal systems/processes so that employees
can be more efficient in their daily activities

investors in all of these technologies. 18%
65%

More effective alignment of people skills with emerging business needs
53%
14%
Transforming raw data into useful information
48%
10%
The survey revealed that companies are advancing Improving systems to make it easier for customers to work with us
the quest for visibility into operations by investing 44%
4%
in a variety of information technologies. At the top Improving agility to adapt to business cycles, shifting customer demand
of the list is integrated enterprise resource planning and the actions of competitors
43%
(ERP) systems. More than half of respondents said 13%
Improving systems to make it easier for external partners to work with us
their companies had invested in this technology, and 35%
one-third rated it as most important. 4%

Other companies have focused on smaller-scale
systems that provide visibility into segments of the top-priority technology had been successful or very
value chain or that provide integrated business successful in promoting revenue growth, wider mar-
analytics. The most important investments are those gins, improved customer satisfaction and greater
designed to increase visibility into customer rela- customer retention. Success in new product develop-
tionships. Although slightly more companies have ment was not as robust, with a majority reporting
invested in inventory management systems than in success only for investments in demand planning
customer relationship management (CRM) systems, systems.
the latter was rated as most important by nearly More than 75% of respondents who reported
twice as many respondents. More than one-quarter demand planning, production planning and business
of respondents’ companies have also invested in pro- intelligence or analytic systems as their most impor-
duction planning and demand planning systems. tant investment said the investment had promoted
Companies with a formal operational excellence revenue growth. CRM was the most effective in
strategy are the heaviest investors in all of these promoting consumer satisfaction and in increasing
technologies. More than 30% of companies with customer retention, while inventory management
a formal operational excellence strategy reported systems were rated best for increasing margins.



The drive for efficiency on page 10. This compares with about one-quarter of
Companies with a formal operational excellence firms with some operational excellence experience
strategy are distinguished by their broad-based and only 8% of companies with no experience.
approaches to efficiency improvements. Of course, By far, the top-ranked approach is to carry out
firms that fail to adopt an operational excellence systematic efficiency evaluations and improvements
strategy want to improve efficiency as well. But they at the business process level, encompassing func-
tend to take less systematic approach. More than tions such as finance, IT, operations and marketing/
40% of survey respondents whose companies had sales. More than two thirds of respondents said that
formal operational excellence strategies reported all seven efficiency-improving strategies had proved
that they had adopted at least five of the seven successful.
efficiency-improving strategies shown in the chart

Economic downturns as an opportunity

C ompanies with formal operational
excellence strategies are more likely
than other businesses to confront economic slow-
downs with by simultaneously controlling costs and
gaining market share. Operational excellence helps
where a majority reported innovating to create new
products or services during downturns.
The degree of experience with operational excel-
lence also correlates strongly with the probability
that a company includes five or more of the seven
them build the agility that is crucial for success in strategies shown in the chart on page 10 in its game
both areas. But in practice operational excellence plan for managing periods of slow economic growth.
tends to be more powerful for leveraging strengths This broadly-based approach also applies to cost
than for controlling costs. Companies that recognise reduction. More than three-quarters of respondents
this are often able to seize market share from com- from companies with formal operational excellence
petitors who are pre-occupied with cost-cutting dur- strategies reported that their downturn management
ing periods of slow growth. plans included overall aggressive cost control, and
Respondents who said their firms are pursuing a 38% said this included reducing staff while retaining
formal operational excellence strategy were more core competencies. Companies with no operational
likely than others to report downturn strategies that excellence experience, on the other hand, were
included increasing customer share of wallet and almost as likely to say they would reduce staff (35%
aggressive pursuit of market share from competitors. of those respondents), while they were significantly
Moreover, companies that had or were developing an less likely to engage in aggressive cost control (just
operational excellence strategy were the only groups 54% of those respondents).



10
20
80
40

What strategies has your company established to maintain Respondents were asked to rate the success of
profitability during periods of slow economic growth?
(Select all that apply) their most important strategy for managing eco-
% adopting
% rating most important nomic downturns. Overall, initiatives that leverage
Overall aggressive cost control competitive advantage are considered more effective
68%
36% than those focused on cost control. Aggressive pur-
Innovating to create new products or services
46%
suit of market share from competitors received the
18% highest overall success ranking (91%) for increasing
Expanding into different market areas
40% revenue. Close behind was innovating to create new
14% products or services, which outperformed all of the
Aggressive pursuit of market share from competitors
36% other strategies for successfully widening margins
9%
(74%), increasing product launches (84%) and
Reducing staff while retaining core competencies
34% improving customer satisfaction (75%).
6%
Cost-focused strategies were much less success-
Increasing customer share of wallet, up-/cross selling to existing customers
33% ful. Overall aggressive cost control was rated highly
10%
(72%) only for increasing margins, which was also
Implementing scalable production processes
32% the only category where a bare majority reported
7%
success from cutting staff.

The growth imperative

O perational excellence has tra-
ditionally been associated most
strongly with efficiency and competitive advantage.
Increasingly, however, agility and visibility into
operations have also been recognised as drivers of
Another 8% planned to grow through M&A alone.
Another 8% —a minority which tended to have little
interest in operational excellence—said that growth
was not a priority for their company.
Senior executives with operational excellence expe-
sustained growth. In particular, end-to-end visibility rience strongly agree that it can support both organic
is a critical tool for recognising core competitive and acquisition-led growth. The obstacles to growth—
strengths and aligning all business functions to as well as the solutions provided by an operational
strengthen them. excellence strategy—differ depending on whether the
The survey shows clearly that mid-sized compa- growth is organic or comes from acquisitions.
nies see growth as imperative. More than half of
respondents said their firms planned to grow organi- Organic growth
cally, and more than 29% planned to grow both Companies pursuing organic growth say the most
organically and through mergers and acquisitions. important obstacle is the inability to move suffi-



ciently quickly to exploit market opportunities and sitions into existing operations is seen the biggest
to challenge competitors. Many see operational obstacle. Key solutions are identifying gaps that can
excellence as an effective strategy for overcoming be filled by acquisitions and more efficient processes
this challenge, because it provides the visibility of integrating acquired companies, both of which
into operations needed to become more agile. In can be achieved through operational excellence
particular, operational excellence supports the two strategies.
most important organic growth strategies named by “If you’re looking at organic growth, you’re
working off of a plat-
form,” says Marsulex
Function Corporate Focus Departmental Focus CEO Laurie Tugman.
Operations Improving visibility into customer Increasing operational flexibility “You’ve established
demand, including what, where and agility a standard within the
and why company, and you’re
levering off of that.
IT Supporting other functions Enhancing end user support
and overall business You can sometimes do
that with acquisitions,
Finance Better integration of financial Tighter control of financial assets, especially if they’re
planning with all departmental liabilities and cash flow
and control systems
‘tuck ins’,” he adds,
“but in the end you’re
Marketing Enhancing CRM systems Stronger collaboration with acquiring a group of
and Sales customers and partners employees with a dif-
ferent culture.” He
respondents: anticipating customer needs as they goes on to say that while there’s no question that an
emerge and identifying core people assets that con- operational excellence strategy will help in this set-
tribute to competitive advantage. ting, it is more difficult than organic growth: “You’ve
Senior executives stress that keeping existing still got to make sure that the people understand and
customers satisfied can also be a growth driver. Scott believe why it is that we’re going to approach things
MacLellan, CEO of Morrison Healthcare Food Services differently and with an operational excellence point
sees this in terms of differentiation: “Operational of view.”
excellence helps us to differentiate ourselves from
our competition. We need to make our existing clients Aligning business functions to support growth
thrilled with us, to the point where we have a refer- Different functions drive growth in different ways.
ence list that can’t be matched in the industry. We can Each brings its own expertise to bear in a shared
also refer happy customers to associated companies effort that spans every part of the business. How
for some of their other needs. As a result, operational they do so is the subject of a series of forthcom-
excellence becomes a primary driver of growth.” ing short papers focussed on four functional areas:
operations, IT, finance, and marketing and sales. The
Growth through acquisitions most common actions they take to support growth
When it comes to growing through mergers and are briefly summarised in an accompanying table.
acquisitions, an inability to quickly integrate acqui-



Good is the enemy of great

I mplementing an effective operational
excellence strategy requires strong senior
management support combined with the right
resources and tools at every level. Few companies
claim to have achieved complete success. Real-time
The single most important obstacle is the lack
of people skills in critical operational roles and
across the enterprise. While many companies have
succeeded in establishing operational excellence as
a guiding force in parts of their organisations, close
end-to-end visibility across the value chain is widely to one-third of survey respondents cited inadequate
seen as the ultimate goal. Yet most respondents say linkages among internal departmental systems as a
this goal remains elusive. principal hurdle.

12.5
Operational excellence and shareholder value 25
100
50
Does the pursuit of operational excel- return on equity and divided into quartiles. For companies in the middle quartiles
lence improve financial performance? Both Then the companies in each quartile were in terms of equity returns, and who fall be-
interviewees and survey respondents associ- grouped by their progress in implementing tween the two extremes of embracing and
ated operational improvements with a range operational excellence strategies. ignoring operational excellence, the picture
of financial benefits, from wider operating The results, while not
One-year total equity return and operational excellence progress
margins to faster revenue growth. But a definitive, suggest that there
better test may be what investors think: is a link between operational First quartile
36% 26% 36% 2%
As independent third parties putting their excellence and stock price Second quartile
24% 29% 37% 10%
money on the line, equity investors have a returns, at least in the short
Third quartile
big incentive to scrutinize companies care- term. The companies with the 24% 37% 29% 10%
Fourth quartile
fully in order to pick those that will yield highest stock price returns— 22% 38% 31% 9%
higher-than-average returns. those in the first quartile— Key Have implemented In the process of developing
To find out whether a focus on op- are also most likely to have Recognise the concept Do not make use of the concept

erational excellence leads investors to implemented an operational
evaluate firms more favorably, we looked at excellence program. About 36% of the first is less clear. Perhaps equity investors are
the one-year total return on equity among quartile companies have already implement- only willing to invest in companies that have
public companies in the survey. Because ed an operational excellence strategy, versus already implemented a program, rather than
the survey focused on small- to medium- 24% of second and third quartile companies simply expressing their intent to do so. If so,
sized firms—no companies with more and only 22% of fourth quartile firms. Mean- companies in the process of developing an
than US$500m in revenues were accepted while, only 2% of first quartile companies operational excellence program may offer
—most were privately held. The 170 public say that they do not recognise the concept, investors an opportunity to buy before the
companies in the sample were ranked by versus 9% of fourth-quartile firms. market recognises their value. n



Corporate culture also plays an important role. the enemy of great. We have done a very good job
Marsulex CEO Laurie Tugman puts it this way: “It’s for a long time. So to get people to go from what has
always easier to strive for operational excellence already been successful to challenge and in some
when people can see the immediate benefit and cases to completely deconstruct and rebuild some of
need—because the customer values it or it’s our standards and our systems has been difficult for
essential to getting the next contract.” It’s more all of us. Because if you’ve got a formula that works,
difficult, he says, in situations where “you’ve got an it’s hard to break it and rebuild it. That cultural
operation that has been moving along and by their success has been the obstacle of getting ourselves to
definition they’ve been successful, but they aren’t the next level.”
necessarily excellent in their operations.” Those
people, he says, are inclined to ask “’why do we need
to become world class’, and I think resistance to
change is often the biggest factor.”
Morrison CEO Scott MacLellan agrees: “Good is

Conclusion: Putting operational excellence in action

E mbarking on an operational excellence
strategy should not be undertaken
lightly. As with most fundamental, organisation-wide
initiatives, success requires planning, commitment,
to become truly outstanding and build market-dis-
rupting strengths.

l How can barriers to execution be overcome?
measurement and continuous follow-up. The key Execution requires the systematic function-by-func-
questions to ask are: tion assessment of visibility, efficiency, competitive
strengths, and the contribution of every corporate
l Do we really need to be great? An operational component towards creating customer value. There
excellence strategy begins with a commitment to must be a relentless effort to link strategic objectives
excellence and continuous improvement across the with day-to-day operational decisions.
organisation. This thinking must be embedded in the
corporate culture. In many cases this requires break- l How should results be measured? Above all,
ing with past thinking—especially if performance is operational excellence must be focussed on achieving
already good. measurable results. This means harmonising perform-
ance metrics across the organisation, and integrating
l What do we need to excel at doing? Vision from operational excellence with other business strategy
the top is required to identify areas of core competi- and planning instruments either as an umbrella strat-
tive strength where the organisation has the potential egy or a component of a broader game plan.


Appendix: survey results

Appendix: Survey results 1.25
2.5
Between November 2007 and January 2008, the Economist Intelligence Unit conducted a global online survey10
of 946 senior executives from various industries. Please note that not all answers 5 up to 100% because of
add
rounding or because respondents were able to provide multiple answers to some questions.

In which region are you personally based? What is your primary industry?

Financial services
10%
Asia-Pacific 32%
IT and technology
8%
Europe 31% Transportation and travel
6%

North America 26% Construction, engineering, operations
6%
Consumer products (non-durables)
Middle East and Africa 8% 5%
Consumer products (durables)
5%
Latin America 3%
Energy (oil and gas)
4%
Automotive
4%
Logistics service providers
4%
Government/public sector
What is your title? 4%
Pharmaceuticals
4%
Board/C-level 30% Wholesale distribution
4%
Apparel and footwear
SVP/VP/director 14% 4%
Industrial machinery and components
Manager 35% 4%
Mill products (including fabricated metals, packaging, paper)
4%
Head of business unit 7%
Retail
3%
Department head 10% Chemicals
3%

Other 4% Manufacturing
3%
Professional services
3%
Other
3%
Healthcare
3%
Education
2%
Entertainment, media and publishing
2%
Telecoms
2%
Agriculture and agribusiness
1%
Energy/natural resources (non-oil and gas)
1%



1. What is your principal functional role in your organisation? 2. What are your company's annual global revenues in US dollars?

Finance 34% US$20m to US$50m 19%

Marketing and sales 24% US$50m to US$100m 30%

Operations 23% US$100m to US$250m 34%

Information technology 19% US$250m to US$500m 17%

3. Which of the following statements best describes your 4. Which of the following do you consider the most important
company’s approach to operational excellence? component of operational excellence?

We have implemented a formal The ability to have end-to-end
operational excellence strategy 26% visibility into financial performance,
operational activities and customer
We are in the process of developing relationships across all business
a formal operational excellence units and geographies 45%
strategy 30%
The ability to add value for
We recognise the concept of customers through the entire
operational excellence in our product lifecycle 40%
strategy or planning, but do not
have a formal operational The ability to integrate quickly
excellence strategy 34% with external systems and partners
to facilitate collaboration and
We do not include operational exchange 13%
excellence in our strategy or
planning 9% Don’t know/not applicable 1%

Don’t know 1% Other 1%



7.5
15
60
30

5. Which of the following statements best describes your 6. How does your company plan to grow during the next
company’s view of the perceived benefits of operational two to three years?
excellence? (Select up to three)
Organically (by entering new markets,
Greater efficiency by increasing capacity, by acquiring
54% new customers or by selling more to
Reduced operating costs existing customers) 53%
54%
Both organic growth
Increased revenues and M&A 29%
50%
Improved customer service Through mergers
41% and acquisitions 8%
Faster responses to changing demand
27% Growth is not a priority
for our company 8%
Improved customer insights to facilitate development
of new products and services Don’t know 2%
14%
Improved ability to expand into new markets 6+
12%
12.5
Improved regulatory compliance 50
12%
25
Faster responses to the actions of competitors
7.5 8%
Other 15
1%
60
8. What are the biggest obstacles to your company’s ability to
30 grow organically, in your view? (Select up to two)

Inability to move quickly enough to exploit market opportunities
and challenge competitors
7. What are the biggest obstacles to your company in achieving 44%
operational excellence, in your view? (Select up to three) Time-to-market delays in launching new products and services
28%
Lack of essential people skills in critical operational areas Lack of scalability of operational systems
51% 26%
Lack of end-to-end real-time visibility into operational processes Difficulty in integrating and/or expanding legacy systems
for senior management 26%
35% Lack of capacity for product-line growth and expansion into new
Inadequate linkages among internal departmental systems geographical areas
29% 26%
More complexity in products, manufacturing and/or service operations Other
28% 9%
Inadequate integration/collaboration with external partners Don’t know
26% 2%
Shortened product life cycle and time-to-market delays in launching
new products or brands
22%
Increased geographical dispersion of internal operations
17%
Delays and/or inability in carrying out financial analysis
to support new investments
15%
Other
5%
Don’t know
2%



7.5 5
15 10
60 40
30 20

9. How is your company enabling future organic growth? 10. What are the biggest obstacles to your company’s ability
(Select all that apply) to grow through acquisitions, in your view? (Select up to two)

Anticipating customer needs as they emerge Inability to quickly integrate acquisitions into existing operations
59% 40%
Identifying core people assets that contribute to competitive advantage Inability to obtain sufficient value from acquisitions after they are assimilated
58% 31%
Adding functionality to existing systems to support growth Inability to manage acquisitions in unfamiliar business lines or geographical areas
54% 31%
Supporting idea development to identify, assess and execute Inability to identify and assess acquisition opportunities before competitors
opportunities for innovation 29%
44% Other
Providing integrated, single-view data reporting for management 9%
10
decision making Don’t know
37% 5% 20
Focusing on faster time-to-market when launching new products 80
33% 40
Providing individual employees with role-based information that allows
them to continuously innovate within their own space
32%
Questions for IT respondents only
Other
7.5 What is your IT department doing to support your organisation's
3% strategy for growth? (Select all that apply)
15
Don’t know
1% 60
Refining systems to align more closely with business needs
30
73%
Enhancing end user support
59%
Expanding existing systems
11. How is your company enabling future growth through 58%
acquisitions? (Select all that apply) Reducing total cost of ownership of technology
50%
Identifying gaps in product/service offerings that can be filled by acquisitions Devising faster and more efficient deployment processes
58% 46%
More efficient processes for integration of systems of acquired companies Improving IT training systems
48% 41%
More efficient processes for due diligence of proposed acquisitions Designing role-based interfaces to improve user efficiency and
46%
to control data access
Implementing systems easily adapted to different currencies, regulatory 33%
regimes or business models Building in flexibility for future integration of legacy systems and systems
26%
of acquired companies and partners
Other 32%
4%
Building new scalable systems from the ground up
Don’t know 29%
5%
Other
2%



12.5
5 25
10 100
40 50
20

Key
Questions for IT respondents only
In the previous question, you checked the following actions Questions for IT respondents only Very successful
your organisation is taking to ensure that its IT systems can What was the effect of Successful
support its growth strategy. Which one of the actions you your first-ranked choice from
Neither successful nor unsuccessful
chose is the most important? the previous question in the
following areas? Unsuccessful
Very unsuccessful
Refining systems to align more closely with business needs
41% Don’t know

Devising faster and more efficient deployment processes Promoting growth in revenues
10% 13% 55% 27% 3% 3%

Enhancing end user support Promoting growth in margins
10% 7% 51% 35% 3% 3%

Expanding existing systems Increasing launches of new products and services
10% 10% 40% 39% 6% 2 4%
Reducing total cost of ownership of technology Promoting high customer satisfaction
7% 18% 58% 21% 3% 1

Building in flexibility for future integration of legacy systems and
systems of acquired companies and partners
6%
Building new scalable systems from the ground up
5%
Improving IT training systems
5%
Designing role-based interfaces to improve user efficiency
and to control data access
7.5
3% 10
Other 15
20
2% 60
80
30
40

Questions for sales and marketing respondents only Questions for sales and marketing respondents only
How are your marketing and sales departments aligning to What is your company doing to ensure that your marketing and
support the organisation’s strategy for growth? (Select up to two) sales systems can support your organisation’s growth strategy?
(Select all that apply)
Faster responses to evolving customer needs
42% Enhancing Customer Relationship Management systems
66%
Stronger collaboration with customers and partners
37% Improving tracking and analysis of customer purchase patterns
45%
More effective integration of sales, production and delivery systems
34% Enabling remote access to customer information for sales teams
36%
Improved visibility into market demand and customer behaviors
33% Expanding data sharing with customers and logistics providers
33%
Better customer care
24% Streamlining order tracking systems
32%
Higher service standards
16% Improving visibility into order fulfillment processes
31%
Other
2% Increasing billing accuracy
26%
Other
4%
Don’t know
1%



10
12.5
20
25
80
100
40
50

Questions for sales and marketing Key Questions for finance respondents only
respondents only How is your finance department aligning to support the
Very successful
What was the effect of organisation’s strategy for growth? (Select all that apply)
Successful
your first-ranked choice from
the previous question in the Neither successful nor unsuccessful
Tighter control of financial assets, liabilities and cash flow
following areas? Unsuccessful 71%
Very unsuccessful
Faster, more relevant and more accurate financial reporting
Don’t know
69%
Promoting growth in revenues Improved due diligence to support mergers and acquisitions
18% 55% 21% 3% 3% 15%
Promoting growth in margins Improved ability to handle (international) financial transactions
9% 46% 35% 4% 5%
13%
Increasing launches of new products and services Improved ability to integrate foreign regulatory regimes
13% 44% 34% 4% 5% 11%
Promoting high customer satisfaction Other
27% 52% 17% 2 2 8%
Not applicable/don’t know
2%

10
6.25
20
80 12.5

40 50
25

Questions for finance respondents only Questions for finance respondents only
What is your company doing to ensure that your financial In the previous question, you checked the following actions
systems can support your organisation’s growth strategy? your organisation is taking to ensure that its financial systems
(Select all that apply) can support its growth strategy. Which one of the actions
you chose is the most important?
Better integration of financial planning to departmental and control systems
77% Better integration of financial planning to departmental and control systems
43%
Improved transactional efficiency, visibility and security
71% Improved transactional efficiency, visibility and security
More timely and accurate customer billing to reduce delayed receivables 28%
49% More timely and accurate customer billing to reduce delayed receivables
13%
More reliable systems for ensuring compliance and avoiding penalties
42% More reliable systems for ensuring compliance and avoiding penalties
More appropriate levels of granularity in financial data 5%
40% More appropriate levels of granularity in financial data
5%
Improved access to financial information about acquisition targets
30% Improved access to financial information about acquisition targets
5%
Other
3% Other
1%
1%



6.25
12.5
12.5
25
50
100
25
50

Questions for finance Key Questions for operations respondents only
respondents only Very successful How is your operational function aligning to support the
What was the effect of organisation’s strategy for growth? (Select up to two)
Successful
Improving management visibility into operational functions
40%
Very unsuccessful
Don’t know Increasing operational flexibility and agility
35%
Promoting growth in revenues
18% 57% 22% 2 1 Creating organisational efficiencies to meet customer demand
29%
Promoting growth in margins
16% 57% 22% 4% 1 Integrating processes across the value chain
28%
Increasing launches of new products and services
7% 34% 46% 5% 1 7% Planning for additional operational resources to meet customer demand
26%
Promoting high customer satisfaction
15% 48% 31% 3%3% Building new systems with scalability in mind
20%
Ensuring that growth strategy is supported throughout all company entities
10%
7.5 Other
15 1%5
60 10
30 40
20

Questions for operations respondents only Questions for operations respondents only
What is your company doing to ensure that your operational In the previous question, you checked the following actions
systems can support your organisation’s growth strategy? your organisation is taking to ensure that its operational
(Select all that apply) systems can support its growth strategy. Which one of the
actions you chose is the most important?
Integrating processes in sales, marketing, manufacturing,
product development, customer service and other functional areas Integrating processes in sales, marketing, manufacturing,
61% product development, customer service and other functional areas
Establishing end-to-end visibility of processes throughout the organisation 39%
52% Establishing end-to-end visibility of processes throughout the organisation
Improving visibility into customer demand, including what, where and why 26%
49% Improving visibility into customer demand, including what, where and why
Improving visibility into the supply chain, including suppliers and partners 24%
12.5
35% Improving visibility into the supply chain, including suppliers and partners
25
Other 11%
2% 100
50
1%

Questions for operations Key
respondents only Very successful
What was the effect of
Successful
Very unsuccessful
Don’t know
Promoting growth in revenues
20% 58% 20% 2 1
Promoting growth in margins
12% 49% 35% 3% 1
Increasing launches of new products and services
13% 45% 34% 5% 1 3%
Promoting high customer satisfaction
19% 55% 21% 3% 1 2


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