John Linton
For as long as I've been responsible for some or all aspects of planning it's been a point of 'principle' for me to complete what I was responsible for in time for other people to be able to make suggestions and required changes so that all of the resulting assignment of responsibilities and task assignments can be completed prior to July 1st of the new financial year. I realized a long time ago that this requirement can never be met if planning for a new year doesn't actually simply consist of extending what is already in progress and is in place in detailed form already in some formal ways.
It's obvious that you can't decide to sell 3,000 ADSL services a month if you aren't already selling ADSL services and therefore have in place all of the contracts and logistics that make that possible. It's equally obvious that sort of 'constraint' applies to almost every other aspect of a commercial entity's activities.
So all revenue planning these days is simply done on a 'rolling' forecast of sales results from current activities which is adjusted and changed based on daily 'analysis' of what 'comes in the door' and how the trends of the different 'coming in the door' are indicating what might need to be done in terms of increasing or decreasing those order 'flows'. The full implementation of computer/data base systems from the 1970s onwards has made the future progressively more certain to predict, from a planning point of view, and has made 'annual' business plans virtually redundant except in terms of planning new capital expenditures and estimating 'ramp up' order flows.
Even end of year revenue and profit results are predictable from the mid way point of any reporting year with less than around a 5%+/- differential as the 'instant' results reporting now available in any sensibly run organization allows ongoing adjustment on an actual versus planned basis pretty much daily and confirmed within a few days of the end of each month via the management accounts that give detailed figures for every part of a commercial company's operations.
So when I say "I've almost finished Exetel's operating plan for FY2009" all I really mean is that I've included my best guesses of what effect I think the new
activities will have on the old activities and therefore on the monthly revenue and profit results. It's a little more complicated than that as a company's operating plan is based on its current personnel and any planned additional personnel but that's a subsequent and different planning scenario and a different process.
The major operational considerations we have had to incorporate in to our Exetel Australia plan are:
1. The gradual move of the telephone and email support functions from Australia to Sri Lanka over the coming twelve months.
2. The introduction of an HSDPA service with all the complexities of dependent hardware ordering and lead times (and cash flow implications)
3. Changes in suppliers, and therefore pricing models, for several important services
4. The very different costs and operational challenges of a multiple PoP based service and support structure
5. The move from 'monolithic' management to 'distributed' management of our 'awkward size' company
6. The transition from a 'base' service provider to a 'value added' service provider
So it's fortunate that 'modern' planning tools make it simple to extrapolate current results and cost structures forward another 12 months (those planned numbers are already in place) to determine the planned monthly, quarterly and annual revenue and profit targets. The FY2009 operating plan has, effectively, been in place for over twelve months. All that really has to be done, to produce that sort of plan, is to insert revised buy prices that are likely to be in place over that period and re-assess the accuracy, or otherwise, of the order inflows.
Piece of cake - no wonder it can be done well ahead of schedule. Basically Exetel's automated data base systems develop the Exetel Australia operating plan second by second, 24 hours a day every day of the year.
What I find very difficult is determining the changes that will take place over the coming twelve months that will make the current computer tracked trends and extrapolations less than definitive.
The 'computer' shows that Exetel Australia's revenues will increase by 28% over the coming twelve months and our profit will increase by 40% - very comforting predictions based on very precise current results, long, medium and short term trends and known buy price changes.
If only I could believe what the computer systems are telling me will happen.
I'm pretty sure that the ability to continue to provide services to the Australian marketplaces we address at lower operating costs than all competitors will be sustained throughout FY2009 and, based on the Sri Lankan 'venture' being as successful as we think it will be and the full implementation of GURUS delivering the new second by second levels of control we plan for then I think that our current operating cost advantages will in fact become larger.
My concern, and a very real concern, is that, at least as far as 'base' services are concerned, the current 'buy price' cost disadvantages will widen more than they already have and that our slim planned profits will not be enough to address any significant 'worsening of the terms of trade' disadvantage that we already operate under. The longer term way of addressing this key issue is to complete the move to relying on 'value added' services for the ongoing profitability of Exetel Australia but that is a three year (at least) project and needs a great deal of skill to execute - it certainly won't be able to make a big enough contribution in FY2009.
So, despite all the numbers (courtesy of the computer systems) looking as neat and hopeful as ever the completion of our FY2009 operating plan will, as usual, depend on 'guesswork' and the ability to put in place alternatives and direction change options to cater from the less desirable results of various competitor's actions and the unpredictable nature of the marketplaces themselves in difficult political times.