Constantly changing business dynamics that impact revenue, cost and profit are clearly a fact of life. Unexpected troughs and peaks will always be there of course, but if anything these turbulent times are unusual. This year, for example, there seems to be far more clarity going forwards as to what to expect, but far less on how all should improve data quality and timeliness of information to support their future business goals in this volatile environment.
Digital enablement has accelerated during this pandemic out of the necessity of ongoing business continuity, as well as supporting #WFH initiatives. The latter has gone on in some parts of the world to even challenge the more traditional 9am to 5pm daily working routine, with the longer term impacts of this likely reaching fever pitch later in 2022 as the “great resignation” collides with urgent corporate requirement for new hires.
Today’s challenges regarding existing business models are in fact unprecedented in so many ways, both in terms of their depth, but also their breadth. As well as the ones already mentioned above, ongoing hard or soft lockdowns, or increased staff absenteeism due to latest virus variants, continue to disrupt final or interim supply chains both far and wide, particularly during those mind boggling periods of massive business acceleration or deceleration that tends to occur as “lockdowns” start or end.
Inflationary pressures from the above are already becoming very significant, noting that the actual % rate currently varies across the world. Add to this the fluctuating but connected changes associated with FX rates, interest rates, energy costs and tax rates (including BEPS 2.0) requires that business teams be fully aware of their changing environments at both a segment and aggregated level. Achieving this means striving for both improved data quality, together with having access to more timely information flows to proactively enhance decision making.
Data management, cybersecurity, sustainability should also be considered as being fully integrated or part of every process. Data management, for example, must be considered ground up to take into account the cybersecurity and location specifics of jurisdictional PII data management, e.g. the EU’s GDPR, China’s PIPL, Thailand’s Personal Data Protection Act PDPA as well as others, noting that the scheduled enforcement for Thailand’s PDPA starts 1st June 2022. Sustainability, at a more detailed practical level, includes the management of ongoing KPI’s that support ESG and DEI initiatives, including their specific goals over multiple years.
A less obvious example of an augmented end to end process might be during CAPEX business flows, with the capturing of relevant ESG information that can be further incorporated into your longer term ESG and cybersecurity related KPI’s (e.g. is the item to be insured; power consumption management; recycling options post use; additional requirements if the assets are to be part of protected critical infrastructure; ESG credentials of supplier etc etc).
Downside risks associated with not doing this well, or indeed fast enough, are much higher than ever before as both internal and external stakeholders are able to greatly amplify their grievances against individuals or companies, both publicly and globally, by using socially focused internet platforms.
Your customers, especially among the younger demographics, have different value sets, and are very focused on the environment. It does not take much for any unrecognized unaddressed material issue within the company to quickly become amplified, not to mention front and center in the eyes of local and global media.
Sanctions on individuals or companies are not new, but today they are very much in the limelight, meaning that identifying risks to your business through business links ie looking behind shell companies, assessing different names of the same person etc, should be a proactive exercise as well as timely, particularly now that the weaponization of them in the financial markets is being seen by some as an effective geo-political tool.
Current technologies will benefit users in their digital enablement and sustainability initiatives, but it is important to recognize that success will ultimately depend on three things: i) your ability to design and deploy compliant value-added ultra-granular transformational processes for an increasing number of data types, which should also fully leverage your other core ERP systems to protect your past investments; ii) having the required all round project team representation to ensure success as transactions flow end to end; and iii) access to relevant ERP system integration skills to enable smooth actionable contextual business flows.
Going forwards industry leading property companies need to continually invest resources and dollars into their underlying business and ERP systems to prioritize the removal of bottlenecks. This will include digital transformation, which at the same time will free up both compute and domain resource function time for your other ongoing core management activities.
This continual investment should not be seen as being the replacement of your ERP systems, but is more about the leveraging of them. This will enable you to reduce existing transactional friction to free both time and resources for other activities. As you progressively move forwards this will also likely involve the smart leveraging of API’s to make seamless connections between different ERP systems, even those that are from other well established third party specialist providers.
These specialist companies are highly likely already part of your ongoing business process activity, but not fully integrated into them. These types of interconnections are the same ones that streamline the business flows that are used within FinTech and Insurtech.
Examples of these specialist companies (non-exhaustive), include those providing sanction based checks on individuals and companies, HR onboarding for management & employee development, bond management, payments, and global treasury links for core cash related activities i.e. investments, deposits, payroll etc. All done with ground up compliance being incorporated into ERP system processes at the same time.
Smart processes can be introduced where required to become the digital glue between your ERP systems, including those from third parties. Smart processes enable a very flexible secure & compliant end to end design, including extensive data transformation for decision, support, controls and management activities. In other words, the detailed transformational handling of different chart of account structures, currencies, % share ownership, and segments for all required financial statements etc.
So a process effectively goes from data collection (including RPA, if required for document onboarding that can be with or without AI), through all required data transformations / enrichments to contextual actionable reporting / visualizations +/or workflows @anywhere @anytime + API’s @anywhere to other applications or ecosystems (including the leverage of Open Banking API’s w/payments @anywhere) + simulations. The above is a bit of a mouthful for sure, but you get the gist regarding the flexibility, noting that the steps here are optional, and non-exhaustive.
In essence these ERP systems at a higher level can be visualized as being apps + your applications + smart processes (digital glue) that are designed to securely and fully or partially automate your end to end business flows for both qualitative and quantitative business workflows with compliance.
Some examples of their current and potential future use:-
Rental Concession Scheme in Hong Kong. Modern day property management systems have Lease Management functionality options incorporated within them that both create and explode accounting entries over the life of the lease (same functionality is available to corporates) . Any successful lessee : lessor negotiation can be reflected in the back office over the life of the lease with very reduced effort.
This might include re-allocating unused rental free periods to be within the rental concession scheme period; changing the composition of the regular lease payment to have a higher component of sales turnover; innovative and creative payment provisions to re-phase lease payments etc; leveraging pop up stores or other marketing initiatives in other relevant lessor /lessee geographic locations to improve, albeit from a distance and indirectly, the financial wellbeing of the lessee. Where applicable under the proposed arrangement, modified debtor workflow arrangements can also be recorded within the property management system.
Procurement and Payroll. Removing transactional friction effectively frees up domain resource time, but there is more to it. Areas of your business that have emerging risk can have additional financial controls introduced. For example, threat actors often attempt “Business Process Compromise” by inserting themselves within your payroll and payables processes to redirect management bonuses or large procurement related sums to bank accounts that they control. To prevent this, additional sign-off processes, based on user defined workflow criteria, can be put into place to mitigate this risk.
Moving on to the economic drivers:-.
Consumer and business confidence will of course constantly ebb and flow depending on the economic environment and where, when, and how the current pandemic rolls out across the globe with its variants. Governments, responding to the pandemic, will drive local demand through various forms of concessions, incentives and subsidies as a tool to consumers, lessees and lessors, but there will inevitably be some increased detailed management focus required by corporates to manage these supportive changes.
Other sudden, more gradual changes are also going to be thrown into the mix that will also impact sentiment and have ongoing budgetary significance. From reducing or increasing real estate and lease pricing, full on or full off inflows and outflows of tourist, business and residential traffic, and all in macro terms balanced with the opportunities of Hong Kong being at the gateway to mainland China. This also includes those opportunities currently being discussed or implemented at board level around the Greater Bay Area (GBA) and more broadly within the Regional Comprehensive Economic Partnership (RCEP). Managing the current and changing business mix will require data quality, relevant segmental analysis, and timeliness of information to gain best leverage.
Technologies have made a step change. All corporations are broadly aware of this, but sometimes struggle with how to move forwards to unleash its power on a cost effective basis within a business environment. As data quality and visibility improve, business decisions will ultimately benefit from being more data driven than today.
GaiaPM, a member of the FlexSystem Group, provides lease and property management software designed to help you drive performance up and costs down. As a global solutions provider in over 38 countries GaiaPM, together with proven solutions for financials, human resources, and operations is a business software vendor to 1 in 10 Forbes Global 2000 (May 2020), and 1 in 5 Global Fortune 500 (August 2020), operating at the intersection of new digital process and payment technologies, whether on-premise, hybrid or cloud, to provide you with iterative opportunities for value creation.