Does Open Source Software equate to Piracy?

In an article in the Guardian (see http://www.guardian.co.uk/technology/blog/2010/feb/23/opensource-intellectual-property ) a US Lobby group is seeking US Legislation to make it as much. However an influential US research group has suggested that open source have saved the consumer worldwide $60bn.


Trading companies in difficulties

Are you suffering in the current economic climate?

Do you have a profitable core operation that is being damaged by the rest?

Do you have too many employees for the work coming in?

Will you survive if the Business Tax Deferment Scheme is cancelled or your participation in it is ended?

Send me an e mail in the first place on brendan.obrien@breezeandwyles.co.uk so that we can discuss your options.


Weathered the Recession: Are you planning for growth?

In mid January I wrote two starts to this talk, each of which deals with the alternative outcomes that could have been revealed by the economic data and which were released at the end of last month.

So the data was positive and that the UK has exited the recession even though that the data is likely to be revised twice in the next six weeks. We need to be cautious. The figures are so close to zero that any assumptions may be premature and prove disastrous if acted upon.

Although there seems to be light at the end of the tunnel in this recession, each market sector faces its own challenges, and the economic data is not a panacea for all business ills. Over the last two ears we have for the most part focussed on survival. The landscape for most of us has changed but we have been unable to change due to the pressure on our cash-flow and funding. The norm post recession will be so much different from 2007 that we will have a lot of catching up to do.

The Business environment has always been cyclical in nature, and those of us that have looked ahead for the opportunities that follow the recession will have the competitive advantage in the ensuing upswing because having identified them we shall be able to create and implement a plan for them.

Most properly organised and managed businesses will have survived the recession by implementing some or all of the following steps. For instance: -

• Retrenching to core products thereby limiting research and design costs
• Reducing staffing levels
• Outsourcing expensive parts of the business process offshore or to cheaper alternatives
• Moving to smaller premises
• Where possible extending credit facilities with new or existing bankers
• Encouraging suppliers for extended credit or enhanced credit terms

However ironically, it is the climb out of recession that often causes a significant amount of business failure. Survival strategies are not the same as success and growth strategies. In fact that they are so incompatible that the longer a survival strategy is pursued the harder it is to effectively implement a success or growth strategy.

Why is this so?

2007 was the best year that I can remember in terms of business return. The Banks and other credit businesses were on a spending frenzy the likes of which we had never seen. However, the warning signs were there if you looked closely enough, but the vast majority of us didn’t see it coming because we were ‘nose to the grindstone’ throughout this time ensuring optimum return and a maintenance of quality standards. We can all identify in hindsight the point at which the warning signs became obvious. When we consider those symptoms and the causes it is clear that a return to norm is not likely within the short to medium term. The growth needed to get to those levels needs to have strong foundations. This is not possible where a business starts from the basis of having followed a long term survival strategy.

Companies that keep struggling but hoping to get back to 2007 returns are going to be surprised that the upswing is not anything like 2007. For companies with old products and services selling to mature markets, the next year or so may seem like a continuation of the recession. For those with new products developed for different or new markets it could be an extremely successful period. Businesses that wait for the market upturn will be left behind those competitors who go looking for the opportunities a develop strategies and processes to meet them.

Whilst having some similar features survival strategies are not success strategies.

Altering business processes to remove unnecessary costs is an essential management task whether in survival or growth mode.

The paradox is that some businesses risk their chance of survival and longer-term success by losing or having lost people who would have been star performers in the post recession growth stage. Businesses with good, trained teams have the best chance of survival, and expansion after the worst is over. Good people keep quality high, fast-moving market information up to date, and existing as well as new customers delighted. Businesses that prosper in the years after a recession will be those that kept their best people during the hard times, and made sure they were trained to take advantage of new opportunities. Indeed, the Department for Business in its report entitled “Engaging for Success” which can be found at www.berr.gov.uk/files/file52215.pdf sets out the proposition that the successful businesses going forward will be those that engage with their staff. Particularly in the service sector but across all business sectors our staff are a key asset in the delivery by our business of its products. The report proposes that businesses increase communication to the staff to ensure that they are aware of the businesses objectives and have something which they understand to implement. The communication should not be scatter gun but accurate and concise and to the level that all staff can understand.

Expansion makes it easier for everyone to look like a star, which leads poor managers to believe that somehow, everyone just got better. Those that mistake upturn success for good performance often find themselves with a line-up of C players when the next recession arrives. The best companies are as rigorous in evaluating people during good times as bad. It can hardly be the case that Manchester United play their A team throughout the run up to the Champions League final last year only to play its academy side in the final.

Business process automation, this is both a key to survival and an absolute in service based businesses as regards growth. This is achieved mainly through IT development. Depending on who you use and the amount of bespoking involved the cost of change can be relatively inexpensive as against the rate of return. Customers are becoming more demanding in terms of the cost versus service dilemma. When implementing internal change to business processes to increase competitiveness it is imperative that managers ensure that the outward face of delivery is perceived to be improving. It is essential that business managers engage with clients and customers to ensure that the process of change is seamless and that it factors in excellence. If as the old adage goes the customer is always right then without asking the customer what they are right about in advance of growth then you are likely to be trying to grow without them.

In addition businesses should consider whether they are capable of outsourcing part of their business processes. Businesses must take a long, hard look at their offshore strategies, and do a better job of understanding and quantifying all of the risks associated with outsourcing production particularly in respect of loss of control and data protection issues. Inevitably those offshoring businesses that survive will have an increased focus on value-added innovation and on producing for growing local markets. Endeavour to engage with the potential suppliers to ensure that the decision to proceed or not is taken based on all of the information

Probably the greatest challenge that will be faced by business in the growth phase of the economic cycle is the ability to deal with suppliers and banks where the finance or credit terms have been stretched to the limit. Once again, engagement is the key. Shout about your successes but do the arithmetic and demonstrate that you have a grasp of your situation and where you will be in the medium term. Otherwise your business is likely to be the victim of the frenzy of profit taking that is to come. Banks appear to have applied a relaxed approach to debt levels over the last 18 months but this cannot continue. The banks must go through the pain of sifting through their customers and analysing the debt position and the risk of recovery. As they bring pressure to bear on their customers this will feed down the supply chain and credit control terms will tighten.

The reverse is also true. Make sure that you are engaging with the people that owe you money. The longer this is left the worse it will get and when eventually the bank comes calling on them you will be unlikely to recover anything. This leaves you with two choices, to continue your forbearance or decide that you no longer want to do business with this entity. How you proceed regarding the debt depends on what decision you make. If you continue to wait for the debt without taking any action you must continue the relationship however if you choose to terminate then you must target recovery assertively. Remember that being nice will not help you in the long term. Someone else will get their first and your return will be diminished. An assertive approach at the earliest stage of recovery is more likely to give you a 100% return on your outstanding debt.

Downturns are only a small part of the economic cycle, but these are the times when market leadership shifts. Managing intelligently during the next expansion, engaging with staff and customers alike, will be much more than a chance to rise in competitive rankings. As the next expansion starts, it’s time to make sure not only that you grow and succeed, but also that you position your business to win in the inevitable next recession.

Summary

Today’s markets are changing rapidly and demand sensitive market tracking with agile technology response. A company’s very survival may be threatened by under-performing and over-priced “new” offerings based on myopic marketing. This demands swift decision-making to abandon old “new” products and plans. Engage with the market and potential customers to ensure that you offering is current and where it isn’t make the changes necessary.

The good news is that there will be lots of new business opportunities when there is an upturn. The bad news is that those competitors who survive will be leaner, meaner and tougher when they fight for market share in new opportunities. The longer and deeper the recession, the more likely that customers will adjust their attitudes and behaviours permanently, and the competitive landscape will have changed. The winners will require top talent, clear market intelligence, impeccable quality and fast response to the challenges. The companies that will emerge from the downturn the strongest will be those that use this time of uncertainty to their advantage. They will improve market position through targeted investment in their core business either by adding capacity or capability. They will spend on bargain acquisitions to gain market share and take leadership positions. Some say that they will also avoid diversification, because it dilutes focus on strengthening the core business. The trouble is that the market dynamics may demand ‘added value’ services which can only be achieved by diversification.

Don’t rely on the general election to change anything. As it stands at the moment neither party is likely to have a significant majority and even if this does occur the party in power will have its fiscals hands tied. Cuts will be necessary and an increase in the tax burden is inevitable. Failing to action this will be disastrous for the UK economy and the business trading within it as interest rates are forced into an upward spiral. Let’s assume that the public debt currently stands at about £300bn - a new government will be required to deliver approximately £1bn worth of savings or increases in tax revenue for each of the weeks that it is in power assuming that it gets to the end of a full term. The impact of the cuts on the private sector will be noticeable as we see less demand as more public servants are made redundant and the tax burden increases reduced the value of our profit. I think it is fair to say that only the private sector will get us out of this recession.

By being proactive and remaining focused on their key business principles and processes forward thinking businesses will outperform hesitant and struggling competitors. However as a warning, being proactive does not necessarily mean overspending particularly as the economy shows signs of relief. We have all heard the horror stories about new starts and over expansion. Spending that dramatically outpaces growth will eventually force draconian cost cuts or even mean the end of the business.

so finally on that note - Make sure you are ready for growth when it arrives. This will ensure that you have some fun and make some money…again.

The best of luck for 2010!!!