Selection of Vendors while Outsourcing - Look Under the Surface

Selecting an outsourcing vendor implies a complex process to gauge not only what the provider can do, but also the way it’s done. If your organisation’s assignment falls in the wrong hands, it could endanger organisation’s strategic plans. In return, with a well-selected provider, you will see savings, enhanced product value, and greater speed to market, thus giving your business a competitive edge. Therefore, effective and meticulous due diligence of each vendor is of extreme significance, having high impact on the business and the future plans of the organisation. Today we rarely buy anything without doing our comprehensive research. The story is no different while selecting a vendor – we need to perform a detailed under the surface study as we do while estimating the size of an iceberg.

Generally, Request For Information (RFI) is issued when a company seeks to gain market intelligence regarding options available to meet its requirement. Typically the company enquires the vendors about services they could potentially provide, what differentiates them from other vendors in the marketplace, etc. With an RFI the company does not state a particular intention to award a contract. However, since responding to an RFI is time-consuming for suppliers, generally suppliers will only respond to the RFI if they expect that the buyer will eventually issue an RFP or RFQ.

Web research does provide us some of the key areas to rate a vendor on, such as company overview, market expertise, strengths, etc. All these things can be commonly found after some basic research, and a few discovery demonstrations. Nevertheless, we still see cases where a company has selected a vendor, and that vendor continues to fail on their delivery of the solution. You would think that these failures would be picked up on during their extensive, informed research, but there is more to a company than the aforesaid points. Here we discuss few additional factors to consider when selecting a vendor while outsourcing a business process, service, etc.—those that go beyond pricing, features, and tools.

Financial Health: As mentioned earlier, it is criti­cally important to examine and evaluate the vendor’s financial well-being as well as their services. Today, mergers and acquisitions have become so common that it is not rare that a company’s control is sometimes in the hands of VCs. Venture capital investment, loans and lines of credit to keep operations going—many more complications which necessitates to examine the financial details of the vendor.

i. Search the Web: Look for press releases from investors on your vendor, and read carefully on whether the investment firm is providing capital, or actually purchasing the vendor. Do basic read of the company profile through trusted agencies e.g. D&B, Gartner, etc.

ii. Scrutinize Debt to Equity Ratio: Core finance people would easily understand this while for others, let me quickly explain - this is a swift way to see the financial health of an organization without prying into their books. The Debt to Equity ratio will indicate how much they owe versus how much they own. Understandably, companies with low debt to equity ratio are preferred.

iii. Analyse Annual Growth Rate: Analysing annual growth rate for a horizon of 3-5 years would be good. It provides a more accurate depiction of how the company has fared financially over the past few years. Another similar parameter to study would be annual net income growth rate for the same period.

iv. Cash Flow details: Sometimes companies go bankrupt despite having good annual growth and income. Shortage of cash aggravates the survival, eventually making the go kaput.

Referrals: Besides looking for case studies, it is recommended to get some referrals from some of their customers. This is a good yardstick to gauge their capability, credentials, scalability, quality of workforce, global and functional/industry exposure – this can be inferred from the referrals and the customers they have. Remember, selecting right vendor is important not only as an investment in a solution but it can also be an investment in the people within the vendor-company. Multiple inputs from their customers add dimensions to the vendor (e.g. implementation track record, consulting assignments, etc.) and also give you an indication of the health of the company.

PoCs and Workshops: If you find two vendors at par, then it might be time to suggest a workshop or proof of concept. These are typically 1-2 day engagements with the vendor whereby you give them a simple set of requirements, and ask them to implement it on a small scale. This demonstration makes it powerful and you can get a glimpse of how your future relationship with the vendor will be, and how they work when implementing your solution/business process.

In the contemporary digital world where information is available at behest of our fingertips, there are still those data points that are not publicly known, and getting the right answers can make a big difference in your decision. So it’s important to do your research. Lastly, remember that outsourcing is a long-term relationship, and choosing the right vendor is crucial to meeting your technology, business, and financial objectives. If you base your decision on following the steps above, you will eliminate (or at least minimize) the risks of engaging in a wrongly-selected affiliation that can not only fail to improve your business, but even do harm.

Intricacies of Family Run Enterprises

When we say family business, the first thing most of us envisage or visualise is a small or mid-size company with local-market focus and concentrating on one-business space, at the same time companies having similar problems such as arguments over succession-planning. Now wait a minute before you continue with same notion. Think about the top big companies. Walmart, Ford, Samsung, LG, Fiat, News Corp, Tata Group, Marriott, Reliance Industries and Cargill – these are few companies tasting success globally and are family businesses. Few of them have thrived in diversifying selling from salt to software and from textiles to vehicles.

Let me give few more facts which may reveal more things. Family firms account for up to 90% of businesses in the world - and in several nations, these companies are a strong and durable support of the economy. The contribution of older, long-established family firms to a nation's economy is excessively greater than that of many public firms. As per BCG, the family firms contribute more than 30% of all companies with revenues exceeding $1 billion. A Morgan Stanley study shows that family firms generated Return on Equity of 18.5% as compared to 14.1% from non-family corporations. The sustainability of family businesses is another feature. Few of the oldest companies are family owned business e.g. Faber-Castell (8^th generation), Moller Group (7^th gen), Kongo Gumi (46^th generation, Japanese construction company), Barone Ricasoli (Italy) – many of these being more than 500 years old. All these evidently establish the fact that the family-controlled firms have a very strong and dominant role in the global economy.

Even less than 30% of family-run enterprises are successful to survive to second generation and the figure comes to a low 10% from second to third generation. Despite this, these figures are far better than small businesses not controlled by family. Though family run businesses also deal with routine issues that emerge around turf battles, they also have additional problems – such as succession issues, dealing with family discord. John Kotter in his book “Leading Change” also touches upon the challenges faced by the people who lead family businesses.

Lets gradually look deeper into the functional operatives of the family controlled enterprises which have led to their tremendous success. Family businesses concentrate more on survival than performance. They sometimes relinquish the excess earnings available during heydays in order to increase their possibility of survival during rough times. While non-family businesses focus more on performance that too short-term performance. The family businesses often invest with a 10- or 20-year horizon, concentrating on adding value for the next generation. Apropos expenditures, the family run companies have more prudent and economical cost-structures which explain that most family businesses enter recessions with leaner cost-structures.  This also elucidates the reason family-run enterprises always maintain low debt ratio. Family businesses believe in the organic growth and generally do not prefer acquisitions that too of big companies and into different business.  A study reveals the rate of acquisitions of non-family run enterprises is almost double to that of family-run enterprises. It is common myth that the owners of family-businesses are conservative people. Well, the family businesses do always keep an eye on diversification. On one hand companies such as Ford, Michelin, New Corp and Walmart still continue to focus on their core-business while on other, there are companies – Cargill, Tata Group, Hyundai Group and LG – epitomise diversification. A study shows that 46% of family businesses are highly diversified while the same figure is mere 20% for non-family businesses.

Honestly, it is really tough to answer whether any business is more enduring or universal than a family business. In his book “Centuries of Success”, William O’Hara very aptly commented ““Before the multinational corporation, there was family business. Before the Industrial Revolution, there was family business. Before the enlightenment of Greece and the empire of Rome, there was family business.”

Mushrooming Malls and Dynamics of Successful Malls

Shopping at malls is becoming a popular phenomenon world over. There is a huge sum invested in such properties beginning from its development to managing, leasing, marketing and so on. So the big question is - How can mall developers maximise the returns on their investment? Malls across India have turned out to be the central institution of modern shopping culture. The environment is full of choices and lures, which takes the consumers’ soul into the temptation of buying the world. People of all races, creeds, ages, and social status flock to shopping centres to participate. The ascendancy of malls as a significant shopping, social interaction and entertainment destination has a major impact on retail strategies and the retail landscape in numerous Indian companies. In India malls are amongst the very few options available where people can conveniently shop keeping in mind the country’s extreme weather conditions, lack of utilities such as absence of washrooms and parking spaces on high streets. Another reason for the growing mall culture in India is that the country is currently deprived of good entertainment places where people can spend quality time with their families, and  hopping centre is perhaps one such great entertainment place.

With the increasing number of malls in India, and many more in the pipeline, mall management has been identified as the key to success of malls. Therefore, it is critical to have a well thought-out mall management strategy and the first step to address this urgent need is to understand the factors that determine mall management. With malls becoming the preferred choice for shopping these days, it is clear that the retail real estate industry in India has a promising future with lots of growth opportunities. However, managing a complex entity such as malls is not easy. Therefore, it has become all the more imperative for mall managers to take into consideration the needs of all the stakeholders such as customers, retailers, employees and statutory bodies.

With the mushrooming of malls in India, the competition among them is becoming intense. As the competition intensifies, the need of the quality mall management becomes evident. A major challenge for mall developers these days is attracting and winning over the hearts of increased number of customers and retailers, although it brings ample opportunity in disguise to serve the lifestyles of the shoppers through deliberation of mall experience. Since shoppers today are quite informative and value their time and money, the priorities on which they evaluate the services of the malls generate a lot of challenges and opportunities for mall developers and retailers to study shoppers’ preferences while selecting a shopping destination. Against the backdrop of shoppers’ choice of the shopping malls, it is necessary to have a look at the determinants of mall management which shoppers assess before gathering an enjoyable experience. Mall management implies positioning a mall, attracting the best tenants, formulating tenant mix policies, promotions and facility management. The influx of malls in India as cynosure of social activity becomes instrumental for the retailers to acquire space in shopping centres. Malls’ ambience and facilities become the competitive advantage for retailers as these attract and induce more foot-fall in the region.

The initial work starts with the location analysis. An important dimension of mall management is its location as in India nearly majority of the visitors depends upon public transport facilities. People who frequently visit the mall are those who stay nearby, so proximity to home or work place is an essential criterion of any shopping centre. Other factor which comes under consideration while formulating the strategy is the anchor tenants. Anchors in the malls are chosen very carefully since they are the footfall generators for the entire mall. For example, apart from multiple luxury brands available in the malls, almost all malls do accommodate multiplexes and departmental stores/super markets – the latter being the footfall generators. The promotions and the other activities constitute to the differentiating factor of any mall. Promotions such as monsoon bonanza, winter offer, festival arrivals, etc. are few which we often come across. Other activities such as contests, celebrities’ appearances, musical events, etc. are few things through which malls try to allure more footfall. Brand positioning of the mall is also very critical. While national and international retailers set the brand positioning of a mall, regional tenants add uniqueness to it, which help them stand out of the crowd. Stressing that there should be a fine balance of national, international and regional retailers in any particular mall. Localising the mall in tune with the local needs and preferences of the catchment thus becomes very important. This becomes all the more important as today’s consumer owes no loyalty for a shopping centre unless it meets her high expectations and has something unique to offer.

Road Ahead for the Global Banks

Four years after the genesis of the global financial crisis, the global banking sector is still struggling to come to grips with the fact that regulators around the world have set out to fundamentally change the way banking operations are conducted. Here are few of the challenging fronts and how the road ahead for the global banks lies:

• Regulatory environment. In the wake of the financial crisis, numerous regulatory changes have been implemented or proposed, but the regulatory future remains unclear. Two scenarios envision a regulatory environment much like that in place today or likely under laws and rules in the pipeline. Two others imagine worlds in which regulations are much more onerous.
• Economic shift. BRICS nations such as China, India, Brazil, and other growth markets are likely to account for a larger share of the world’s economic activity, providing opportunities and challenges for banking. Two of the scenarios assume that the role of emerging markets will evolve at a relatively slow, incremental pace, while the other two assume that a shift in economic power will make this factor more significant in determining banks’ prospects over the next decade.

• Globalization. In many industries, companies now compete in a global market. While a global strategy can boost revenues, it can also put pressure on earnings and draw criticism from locals concerned about lost jobs and unfair competition. Two of the scenarios imagine worlds with an ever-growing degree of globalization and market integration. One envisions pockets of protectionism, and one anticipates a turn toward protectionism around the world.
• Type and degree of competition. Banks are facing new competitors, including institutions in emerging markets and nonbank companies such as utilities, retailers, and mobile services providers. One scenario anticipates limited impact from new competitors; one assumes non-traditional competitors will move into some of the most attractive market niches; another assumes such competition will be significant mainly in emerging markets; and one envisions a surge of competition from nontraditional banking providers around the world.
• Financial crises. Two crises have occurred in the past decade. Will these so-called black swan events be common in the future? One scenario anticipates no financial crises during the next 10 years; another envisions massive crises with worldwide impact; a third calls for smaller crises with limited impact; and the fourth envisions massive crises affecting mainly the developed world.
• Lender of last resort. Central banks have stepped in to shore up the financial system in several recent crises, most recently the credit crisis that began with the mortgage market and home-price collapse in the United States and the debt crisis in Europe. Two scenarios assume lenders of last resort will continue to provide safety nets, while two assume this source of back-up funding will no longer be available.
• Debt situation. Mushrooming government debt is a serious issue in the United States and in Europe, where in many cases governments have shouldered private sector—including bank—liabilities. Two scenarios assume this debt will be contained to manageable levels; a third envisions a moderate worsening of the situation; and the fourth assumes the situation will dramatically worsen.
• Securitization market. In the wake of the global financial crisis, production of private-label, mortgage-backed securities has all but ceased in the United States, leaving most of this market to government-sponsored entities. New regulations are designed to encourage more standardization of these and other asset-backed securities while driving trading from OTC markets to exchanges. Some experts expect this to make the securitization business less profitable. One scenario assumes the private securitization market will recover; a second assumes it will continue to be limited in scope; and the third and fourth assume it will find equilibrium somewhere in between.
• Retirement environment. Populations are aging in many developed countries, putting stress on government programs while also raising demand for retirement-oriented products and services. Two scenarios assume government-funded services for senior citizens will be financially stretched, but capable of delivering most of the services promised, while two scenarios assume many of these systems will collapse.
• Role of technology. Technological advancement is inevitable, but unpredictable. Advances in front- and back-office technology may make banking operations more efficient and improve real-time understanding of opportunities and risks. One scenario assumes advances in both front and back offices will be only incremental, while a second assumes significant advances will center on risk assessment and improving back-office operations. A third assumes technological advances will transform operations throughout the business, and the fourth assumes transformation will mainly take place in the front office.
• Customer empowerment and posture. The Internet has made it easier for consumers to shop around for financial services. It has improved price transparency, and provided easy dissemination of reviews and critiques of products and services by experts and other customers. At the same time, recent regulations are forcing credit card issuers, mortgage lenders, and other providers of financial services and products to disclose fees and contract terms more clearly. One scenario assumes a low-pressure environment for increased consumer power. Two assume the pressure will be high and that consumers will adopt an adversarial attitude toward financial providers. The fourth assumes consumers will gain power, but not feel adversarial when dealing with their banks.
• Credit protection rights. During the financial crisis, government bailouts tended to protect creditors’ rights, often making owners of bonds and debt-related securities whole while leaving equity holders with deep losses. Critics argue that in the future, creditors should share such losses. Two scenarios assume that creditors’ rights will be relatively low or diminished from current levels, and two assume they will be relatively high or as strong as or stronger than they are today.

Collateral Management in OTC Derivatives Market

Collateral management is at the center of over-the counter (OTC) derivatives regulatory changes. Many industry initiatives are being developed to improve collateral management and optimize the supply of collateral - collateral optimisation and transformation solutions, automation, evolution of CCP practices to allow cross margining and expand the range of eligible assets to a certain extent. Collateral are assets that are pledged or transferred as security on the value of a loan or more generally of a credit exposure in order to mitigate the risk that a counterparty will default on its payment obligation. Collateral decreases the credit exposure by the mark-to-market value of that collateral. Haircuts are used to adjust the value of collateral according to its quality.

Collateral, which has been chosen by regulators as the main risk mitigation tool for putting in place the G20 commitments, is used to secure many types of transactions:

• Funding by banks at central bank
• Funding by banks or broker dealers at banks, by fund managers at prime brokers
• Derivatives transactions: i.e. initial and variation margin posted for on-exchange and OTC derivatives deals, contribution to the CCP default fund
• Securities lending
• Securities transaction settlement.

International Swaps and Derivatives Authority (ISDA) estimated that collateral used in uncleared OTC derivatives transactions reached approximately $ 3.6 trillion in 2011 and has grown at a compound annual rate of 17% over the past 6 years. The most predominant forms of collateral used for derivatives transactions are cash and sovereign debt from the main developed countries (G7 countries). Resort to collateral and demand for high quality liquid assets are expected to grow significantly in the coming years with the implementation of new regulations following the financial crisis.

Collateral Management Challenges (Source: Deloitte)

Central clearing of standardized OTC derivatives transactions due would become mandatory by the end of 2012. This is expected to raise the needs of dealers and their clients for high quality collateral since CCPs often demand more collateral and of a higher quality for equivalent positions than bilateral arrangements. Basel III liquidity coverage ratio (LCR) requiring banks to hold enough liquid assets to get through a 30-day period of severe funding stress will further reduce the availability of safe assets.

The increasing awareness of counterparty risks following the Lehman bankruptcy and the downgrade of bank ratings are additional drivers to the usage of collateral, as well as the impact of the sovereign debt crisis on related banks e.g. Spanish and Italian banks having to pledge higher quality securities (such as covered bonds) to access funding. Reduced availability of collateral in a context of increasing demand should increase the cost of obtaining and using collateral and may potentially lead to a liquidity squeeze and systemic risks if demand cannot be satisfied. Many solutions detailed below have been developed in the industry to improve collateral management:

An impact assessment of existing and projected collateral management solutions could be conducted at market level, in order to evaluate their potential capacity to address as a whole the increased demand for collateral in the coming years, taking into account the main milestones of on-going regulatory reforms. This would allow a better evaluation and anticipation of the possible shortages of collateral over time and a calibration of required solutions. Additional solutions could be envisaged for cash and non-cash collateral in order to e.g. increase the pool of collateral which is at present provided mainly by traditional buy-side participants (for example by involving some cash rich corporate players in financing mechanisms) or enhance the safety of traditional financing vehicles such as repos for borrowers.

Collateral optimization services:

Collateral agents propose a range of services to optimize the handling of collateral. Specific infrastructures have also being developed by the main triparty collateral agents to allow collateral to flow more easily, leveraging the pool of collateral available in these infrastructures or handled by these players. Their objective is to consolidate collateral pools at market level, enable market participants to keep track of the assets deposited and help holders of collateral to channel securities.

Collateral transformation services

Collateral transformation involves clients swapping non-eligible collateral for eligible collateral (e.g. cash or higher quality securities) via the repo market which can then be posted with CCPs.

Evolution of CCP practices

CCP practices could evolve in order to optimize collateral requirements (i.e. reducing overall margin requirements for related products), but these evolutions will probably remain limited in order to preserve market integrity and investor safety. Cross-margining can be used in order to reduce overlaps in collateral between closely related products e.g. between OTC interest rate swaps and interest rate futures products or between cash and derivative fixed income. Expanding the range of eligible collateral e.g. accepting some high-quality corporate bonds as collateral for OTC swaps can be another option.

OTC Derivatives under Central Clearing

Recent regulatory efforts, especially in the U.S. and Europe, are aimed at reducing moral hazard so that the next financial crisis is not bailed out by tax payers. Central Clearing was proposed by G20 as the solution (for OTC trading) after the financial crisis and mandated all these derivatives should move to Central Clearing by end of 2012. Failing to comply with this may result in charge of significant amount of capital. What this means is that rather than these derivatives being traded as mere contracts between two parties, these should go through one single entity. The financial crisis following Lehman’s demise and AIG’s bailout has provided the impetus to move the lightly regulated over-the-counter (OTC) derivative contracts from bilateral clearing to central counterparties (CCPs).The motive behind this proposal was to increase transparency on positions, reduce counterparty risk and reduce operational risk. This intends to reduce the exposure to default of each party. Per the OTC derivatives reform, standardized derivatives (~60% of the current OTC market) need to be electronically executed (SEFs), centrally cleared and publicly reported. Under the present regulatory overhaul, the OTC derivative market could become more fragmented. Furthermore, another taxpayer bailout cannot be ruled out. A key incentive for moving OTC derivatives to CCPs is higher multilateral netting, i.e., offsetting exposures across all OTC products on systemically important financial institutions’ (SIFIs) books. 

Of course, all this works only if the Central party is safe. The intent is also to keep Central counterparty  to be remote from bankruptcy and thus immunize it from default. For this CCP needs to have line of defence. Each of the parties trade with CCP and even though the trade is long-dated, those are marked to market every day and settle up with CCP. This is not how futures work. This entire process expedites the CCP’s ability to address any default immediately. Secondly, CCP maintains buffer to offset the default risk which is called risk/initial margin which accounts for the fact that the market move a bit or substantially. Third thing in the line of defence is guarantee or default fund which comes into involvement when these risk margins are not sufficient to handle the default risk. 

    

So the parties (which may include hedge funds, banks, and asset managers) now face new kind of risk. Earlier, the main exposure was to credit but the price of moving out the credit part out is liquidity. The market is going to move to either side of the pendulum every day and this calls for cash in hand. There are varieties of different entities providing services in different types of derivatives. Following figure shows how all these stakeholders' roles fit together. 

An important distinction among these is the degree to which they allow cross-margining. Cross margining is the ability to offset the marginal requirement of product trading with one in another product with the same counter party. The main three CCPs are CME, ICE and LCH.Clearnet. At the moment, the flow is really with these big three. LCH has cleared around 40% of IRS (interest-rate swaps) market. ICE cleared around 65% of the CDS market. Credit Valuation and Adjustment (CVA) is the mechanism that the banks used to account for the possibility of the counterparty default when they do derivatives trading with bilateral counterparties. This was very relevant when the main risk was credit. As we move into CCP world, arguably CVA becomes less important. The majority of dealing houses have moved to OIS (Overnight Index Swap) for the valuation of collateralized derivatives, however no such consensus exists for the valuation of uncollateralized derivatives. The recent Libor scandal has put the spotlight on the debate around how banks measure their cost of funding and highlighted the possibility of banks introducing a funding valuation adjustment (FVA) to more accurately reflect the cost of funding in their valuations.

All these are measures for standardized derivative products. There is a need for managing more complex products. It is expected to have higher margins for non-cleared swaps. CFTC is suggesting that it may double the initial margin for the non-cleared swaps. So the complex derivative trading is expected to become more expensive. Therefore, the P&L is going to be affected for these entities.

Making OTC derivatives more accessible to the investment community poses significant risks, as well as benefits. Whenever more firepower is vested into the hands of investors, the risk that they will do themselves damage increases. Although a number of factors will help to mitigate those risks—including increased transparency, the attraction of new forms of liquidity, and a central clearing structure to minimize bilateral counterparty credit risk—there is still the possibility that a rush of interest in OTC derivatives stokes the next bubble. 

Business Imperatives in the Era of Analytics

There has been a lot of buzz about Big Data. It is claimed to be the next frontier of innovation, competition and productivity. It is a growing torrent..!! Lets see whether there is dearth of evidence for all these claims. Per a recent research by McKinsey, 30 billion pieces of content are shared on Facebook every month. Around 40% project growth in global data generated per year compared to 5% growth in global IT spending. Approximately $600 billion is the potential annual consumer surplus from using personal location data globally. Around 60% can be the potential increase in retailers’ operating margins possible with big data. Per IBM recent report, 90% of the world’s data was created in last 2-3 years. This is just the tip of the iceberg – of the amount of data we have and the potential it has.

Big Data and analytics actually have been receiving attention for a few years but the reason of discussion is changing. Earlier companies used to think how to get the relevant data and use analytics to make sense of it. Now, companies see that their competitors are exploiting the data and they are left behind. Companies get many advantages from using data and analytics – how they improve in pricing, how they can offer better customer-care, how they can improve in segmentation and how they can optimize inventory management. The key is to focus on the big decisions for which if the companies had better data, better predictive ability, better ability to optimize, they would make revenues/profits. There is no point of mining data where it would not fetch worth revenues or profits.

Key success for exploiting data analytics comes down to three things – data, models and transformation. Data is the creative use of the internal and external data to give a broader view of what is happening in the organisation (e.g. operations, customers, marketing, sales, etc.). Modeling is using this data into workable model that can either help them predict better or allow optimizing better in terms of business. Finally transformation – is about enabling the company to adapt the company to take advantage of this data in models – such as using tools for managing and monitoring. For implementation, companies need to have people who have sense of business as well as understand analytics else they will end up making naïve business decisions. Besides, companies need to focus – meaning do not try to change several things at once rather just try to and focus on 2 or 3 things.

Analytics can help companies synthesize data into insights – help in key decision-making, thus increasing revenues and profits. In top performing companies, analytics have replaced intuition as the best way to answer questions about what markets to pursue, how to configure and fix price-offerings and how to identify where operations can be made more efficient in response to cost and environment constraints. Many business leaders are anxious to capture the benefits of new intelligence but they need to take analytics the full distance. Top companies are enacting their business analytics and optimization vision, making it possible to operationalize decisions and optimize business performance across the enterprise. To achieve this, they are using various tools, effective governance. Driven by intelligence, companies can better anticipate supply chain constraints and competitors’ countermoves. A focus on driving change – in people, business processes, in organisation structure and management systems – has the greatest impact on achieving breakaway performance.

This is the time when organisations should institutionalise data-driven decision-making rather intuition and harness Big Data. To find the ways that are most appropriate for a given company, leaders need to figure out how the company’s data might address specific business needs. But three of the ways that every organization should think through are:

• Creating a data-driven culture

• Informationalization

• Big data/advanced analytics

Putting data to work requires changes in how companies typically operate when it comes to data. It takes a laser focus on data quality, disciplined data-management, the right talent and a facilitating organizational structure. These are, certainly, the business imperatives if the companies do not wish to be left behind in the era of Big data and analytics.