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The mechanism of profit and the role of automation

The mechanism of profit has only two levers: revenue and expense, and operating those levers can keep the best and brightest awake at night

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A business process automation platform such as Intrexx simplifies the mechanism of profit.

 

You may have many aspirations for your business, but for those of us without a Softbank pushing cash in our pockets, making a profit is our greatest responsibility. The mechanism of profit has only two levers: revenue and expense. Only two levers, but operating those levers without crashing into the constraints of the market and competition keeps the best and the brightest awake at night.

So, to improve profits, we need to convince customers our products/services are more valuable than the competition’s and/or reduce our costs below the competition to undercut their prices, or simply be more profitable at market rates – preferably both.

But moving the revenue lever is tough. Occasionally, we are struck by an epiphany illuminating the path to true customer satisfaction. More often, however, we are faced with a great, long product roadmap, which we must navigate to arrive at just the right spot, at just the right time to win just that one more deal. Oh yes, combine that with constant pressure on pricing, and revenue can be tough indeed.

Expense, on the other hand, is far more easily manipulated. No epiphany required to see how the money flows from the coffers. Thankfully, automation can help us stem this tide and, with any luck, also give customers reason to view us more favorably.

As an example, say you purchased two bike tires online. They had slightly different specifications and, having no other criteria, you sourced each from the lowest priced vendors. One from Vendor A and one from Vendor B.

Unfortunately for everyone, the tires were not compatible with your rims, so back online to generate the RMAs. Vendor A asked for the invoice number and dutifully generates an RMA label. Vendor B also asked for the invoice number, but then navigates to the invoice from which you select items to be returned. For each item selected, you’re presented a list of reasons for the return. Then you’re sent to the shipping options and given the chance to pay the shipping fee and schedule pickup.

Vendor B then sends you an automated email asking about the compatibility issue. You explain and a human responds that they are already expanding the product description to clarify this requirement. They send automated progress emails on your refund and within two weeks, the money is back in the bank. You also receive a note apologising for the inconvenience and a code for a discount on your next purchase.

Vendor A, well, you haven’t heard back and you’re still chasing for your refund.

Same product, same sales channel, very different outcome. You’ll likely remain loyal to Vendor B for the foreseeable future.

Clearly, one of Vendor B’s advantages is its use of automation. Automation created the duel benefit of improving internal efficiency and providing a better customer experience.

What a great idea

At Vendor A, we can assume their systems were “siloed”, with very little automation and data analysis available to improve business processes.

Not that silos are inherently evil. They are a natural part of efficient division of labor and required for security, etc. When your company grows beyond your garage, however, efficient division of labor and security can quickly become inefficient communications, mistakes, bottlenecks, lost opportunities, unhappy customers and even more unhappy employees (no one likes to fail). Given the growth in the “mobile workforce” and “digital workplace”, this automation becomes all the more important.

If we look at Vendor B, it’s likely they have integrated many internal and external functions to achieve their superior performance. The functions likely include:

Internal

External

  1. Customer website
  1. Customer
  1. Procurement
  1. Card processors
  1. Accounting (AR & AP)
  1. Carrier(s)
  1. Warehousing
  1. Search engine SEO/SEA
  1. Shipping
  1. Suppliers
  1. Support
  1. 3PLs
  1. Sales
 
  1. Marketing
 
 

Considering only communication channels and the eight internal functions likely integrated at Vendor B, we see the potential improvement of this “business process management” (BPM) automation:

We all want to reduce errors, speed transactions, improve compliance, maximize data captured, enhance communication and cooperation, etc, all for the greater good of the bottom line. So how might this cost reduction work in your business?

Rather than a “bet the farm”, “strategic” digital transformation, we suggest a simple, pay as you go, automate what you should, approach that lets you build up your automation arsenal in line with your near-term goals and current resources. And, unless you’ve had that epiphany, expense is easier to tackle than revenue. You already know what the easy big-ticket targets are: AP, HR, GDPR, etc.

The aim, however, is not just automating approvals and documenting GDPR compliance, but to begin building the infrastructure which allows the “silos” to communicate as necessary. There will always be a new bottleneck impeding your profitability and automation should be there to help you overcome it.

What to do?

Look for a solution that allows you to move at your own pace towards a “just in time” digital workplace. Something that can grow as you grow, with features such as: PaaS/SaaS, “responsive” web-pages which automatically support mobile, IoT frameworks, low-code to reduce time and cost of implementation, pre-defined modules, etc.

Since 1998, United Planet has carefully evolved Intrexx to be just that product. If you have the internal resources to begin your BPM journey, Intrexx is designed for ease of implementation. If you’re looking for a jump-start, we have qualified local partners ready to help.

A business process automation platform such as Intrexx simplifies the mechanism of profit. With it, you can pick and choose what you need from your functional silos to do things just that much better than the competition. And should that epiphany strike, you’ll be ready!

For more information, visit intrexx.com/en/intrexx

Lars Matzerath is Head of Sales at United Planet. He can be reached at lars.matzerath@unitedplanet.com