Business value, SG&A optimization and the CFO
The ROI of Business Value
Now more than ever before business value and ROI is the decision driver for SG&A optimization based projects, i.e for top line growth, using the internet and inside sales to add top-line revenue. For bottom line improvements, SG&A expense reduction through layoffs, downsizing and right-sourcing allows CFO’s to cut costs not without a knowledge loss risk. Cost of sales and most SG&A costs can be softened with implementation of empirical best practices and a common taxonomy.
SG&A functions as a utility.
A SG&A taxonomy has, on average has up to 1,800 activities that roll up to functional units, i.e. Finance, HR, sales or IT in a typical US business today. Each function has two variables: what is cost to operate internally and price or external pricing by a service provider. If you can reduce the cost of a function, a total value of opportunity can calculated.
ROI with no top line growth.
Often a project for a SG&A function has empirical best practices, implementation of these proven practices continues paying dividends year after year based upon efficiency and effectiveness gains of your particular functional process or activity.
The bottom line.
In today’s economy a clear business value must be articulated for a project to get approved and completed. Effectiveness, efficiency or cost control must be at the forefront of every conversation. Have a clear message and identify exact SG&A functions and activities where your project’s solution effects bottom line savings or top line growth. Articulate the value of implementation of best practices and don’t underestimate the best practices your solution or project allows to implement in short order, offering low hanging fruit for quick wins. Most important have a taxonomy to speak the same language across the supply chain, HR, sales, IT, and finance.