Category Archives: CEO

Visibility Into the Present or Visibility Into the Future?

Tuesday, October 13th, 2009

I recently read a research summary (Sorry, they’ll make you register if you want to view it) jointly published by SAP and Industry Week. The summary and survey results were quite useful, but let’s wait to discuss those.

The SAP branding was fantastic. Attached to the end of the research summary, is a full page ad of a gentleman staring out over a clean, brightly lit factory floor. The bold SAP tag line reads “In a clear new world/you can see far into the present.”

This is great stuff. If you buy SAP software, you get clear visibility into what is happening on your shop floor right now. You will have visibility into how many parts are spinning off the production line and the current value of inventory. SAP delivers software that “runs” your business on a day-to-day basis; so, logically, it promises they give you clear visibility into your day-to-day business. I’m not being sarcastic; this is critical information for executives. If you are running SAP, SAP is probably the best software to provide you visibility into your day-to-day business.

However, ask yourself, how do you maximize your decisions? Are your decisions based on what is happening right now or are they based on what will happen in the future? Let’s make it personal, imagine making these decisions:

  • How many Xboxes do you build for launch?
  • How many people do you hire next quarter?
  • How do you reduce your inventory levels?

Do you make these decisions based on the number of Xboxes churning off the production line right now? Or the number of employees currently in your organization? Or the current value of your inventory? Surely, that information factors into your decision, but what information is key to your decision?

Imagine how your decision would change if you:

  • Knew the market demand for Xboxes upon launch
  • Knew your revenue next quarter (to plan hiring)
  • Knew how many units will ship next quarter (to plan inventory)

How do you make your decisions?

Executives make decisions based on what they think will happen in the future. They use current data to influence those decisions, but the best data would be an accurate sales forecast. If executives were armed with a trusted forecast, then they could confidently make decisions that deliver better business results.

Back to that SAP and IW research summary: the subject was “collaborative demand and supply planning.” One of the key takeaways of this study was the importance of forecasting. SAP and IW summarize the results: “forecasts should be continuously improving to be more accurate. If this is not happening, it will hold back all other significant improvements to supply and demand planning.”

The research speaks: companies demand a view of the future. If SAP gives you clarity into the present, who delivers clarity into the future? Who delivers a clear forecast?

Right90 does.

Right90 delivers a trusted, actionable forecast. Companies are using Right90 to get a clear and trusted view of the future, so that they can confidently make critical business decisions and reap better business results.

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Can SaaS deliver in this economy?

Wednesday, June 24th, 2009

Recently, I heard sad news that LucidEra, a company with a good product idea and incredibly smart and talented team, was shutting its doors. While this event may revitalize debate about SaaS viability in today’s economy, let’s not forget the facts.

LucidEra’s demise is not indicative of overall SaaS market.

The fact is that many SaaS application companies are thriving in this market. Companies such as Right90 and Marketo are growing rapidly by providing applications that automate both a transactional and analytical processes and deliver solid business value to their customers. For example, Right90 customers have decreased inventory by 20% and have increased revenue by up to 5%.

The beauty of SaaS is that customers are realizing that value within 3-4 months of purchase, whereas customers purchasing the traditional on-premise software solutions would be in the midst of a horrid 25+ person deployment project meeting. While it’s a shame to see a SaaS vendor shut down, a number of SaaS providers are still out there proving that SaaS does deliver business value quickly. And for that, customers will pay — even in these economic times.

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Why CEOs hesitate to invest in Sales Forecasting

Monday, May 18th, 2009

It always amazes me when I hear that a CEO does not want to make a modest investment in improving the quality of their sales forecast.

CEOs and CFOs alike will agree that the business value of an authoritative, timely and actionable sales forecast is huge, ranging all the way from higher margins and more revenue, to happier customers and smoother internal operating efficiency.

A lack of trust

So I asked some CEOs why that when they saw major business value in a better sales forecast, they did not make investing in getting a better one a higher priority. The reason that came back was both surprising and not: most CEOs do not believe that it is possible to get a sales forecast better than what they have today!

Most CEOs consider the sales forecast subjective and unreliable. So rather than trying to systematically remove the subjectivity, they instead marginalize the forecast and rely instead on separate forecasts created by Operations and Finance, usually based on histories of performance. The problem with this approach is that it tends to be backwards looking and it can miss or ignore important signals about where the business is going.

We have worked with customers that have seen dramatic improvements in their business results by making their sales forecasts better. Companies like Sharp and Thomson are figuring out how to take the subjectivity out of their forecasts and are getting a lot of benefit by doing so. We have seen examples of inventory reductions over 20% and margin improvements of over 500 basis points based entirely on an improved sales forecast.

Top 5 objections

Here are my top 5 reasons that CEO’s decide that investing in Sales Forecasting is a lost cause / waste of money:

  1. Flaky sales guys don’t bother to get their forecasts done well or on time.
  2. If customers don’t know or won’t tell us what’s happening, what can the rep do?
  3. Too much uncertainty for anyone to predict an outcome.
  4. Happy-eared sales people think they can close everything.
  5. One word: Sandbaggers.

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Who I am and why I started Right90

Monday, May 18th, 2009

My name is Kim Orumchian. Right90 is the 6th startup I have worked at and the second one I have started. The previous company I co-founded was called Fatbrain. Fatbrain was a b2b version of Amazon.com, selling books and training materials to corporations. Fatbrain grew from my house in Palo Alto, to become a $100M company with over 400 employees. We took Fatbrain public in 1998 and sold it to BarnesandNoble.com almost exactly two years later.  By that point we were the third largest online book retailer behind Amazon.com and BarnesandNoble.com.

At Fatbrain, I ran Engineering and Operations and was responsible for buying and implementing SAP R/3 to be the system of record. Although Fatbrain was technically an ecommerce retailer, we thought of ourselves more of a manufacturer – assembling orders of books from a supply chain of more than 50,000 book publishers.

There were 3 observations based on my experience at Fatbrain that led me to start Right90.

  1. Companies that have a complex product mix can get huge business value from predicting the mix correctly well in advance: better margins, higher customer satisfaction, predictable earnings, and lower inventory obsolescence.
  2. Sales people and product managers that are on the front lines and closest to customers usually have good instincts about what is going to sell and should be listened to yet management and other parts of the company usually ignore their perspectives. There should be an easy way to capture what they think and present it to management without taking a lot of time or effort.
  3. SAP and systems like it are not good at capturing and scrubbing sales forecasts but could benefit a lot from having better demand forecasts to drive operational planning, executive reporting and budgeting.

We created Right90 as a SaaS (software as service) company because we saw that sales forecasting would need to reach across company boundaries to involve supply chain partners, customers, channel partners, and distributors and that an on-premise solution would not be able to do this easily or effectively.

We chose the name Right90 to mean “have the Right 90 days” as in “have the Right quarter.”

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