Some years ago, I went to our local library and looked up the Alamanc of Business and Industrial Ratios in the Reference Section. I compiled the following interesting table:
The interesting thing about the above table is that in almost all verticals, Operating Expenses are anywhere from 40% to almost 80%. A large part of Operating Expenses in any company are dedicated to business processes of some kind: Product Development and Innovation Processes, Product Planning, Manufacturing, Marketing, Selling, Finance and Accounting, Service, Support, Warehousing and Logistics processes, and so on.
It's also true that if you look at the Net Profit picture of Fortune 1000 companies, most have profitability in the single digits!
What this means is that concentrating on Business Processes and improving them by even 10% could have a significant effect on the Operating Revenues as a percentage of Revenues. This only means that many companies, by simply effecting a 10% improvement on just the efficiency aspects (doing things faster, quicker and with less resources - people, material and overhead) could double their profitability potentially!
U.S corporations quite often looked at Cost reductions only in times like the present Global Economic Metldowns or when Wall Street is putting pressure on their quarter to quarter earnings. But systematic evaluation of business processes and improving their efficiency and effectiveness has the potential of significantly increasing the profitability of the company, every day!
Something to think about! There is a gold mine here, if only you look at it systematically!
No wonder Improving Business Processes has been the TOP Priority for CIOs the past few years - 2009, 2008 and 2007!!
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