Is Revenue Hiding in Plain Sight?
Is Revenue Hiding in Plain Sight?
New Book Explores Unexpected, Untapped Profit Centers in Every Organization
NEW YORK, March 21, 2012
NEW YORK, March 21, 2012 /PRNewswire/ -- Companies spend considerable amounts of time and money on strategies to streamline their operations, in order to improve business processes, boost efficiency, and cut costs. However, according to Yair Holtzman, director at the global tax and business advisory firm WTP Advisors, there are two departments that are often overlooked by management when it comes to applying strategic operations. Yet, these could hold the key for future growth, and they might even prove to be untapped sources of revenue: the R&D department and the tax department.
"In order for any organization to rise from the ashes and thrive in 2012, it needs to take a leap forward, and apply operations strategies to fresh departments – those formerly thought of as cost centers should now be considered potential profit centers," says Holtzman, in a newly released book Advanced Topics in Applied Operations Management, published by Intech, an Open Access publisher of journals and books covering Science, Technology and Medicine.
Holtzman, who also serves as the book's editor, authored two chapters that go into specific methodologies for improving the R&D, and the tax functions within an organization: "Utilizing Innovation and Strategic Research and Development to Catalyze Efficient New Product Development", and "Harnessing Efficiency and Building Effectiveness in the Tax Department."
"My goal was to show CEOs and CFOs how you can take quintessential, tried and true, business process improvement strategies and use them in new ways, and harness resources already present in order to survive and prosper in a very competitive global world," says Holtzman.
He likens this approach to renovating a house. Kitchens and bathrooms are the likeliest targets for an update, but converting the basement or attic into useable space can also yield unexpected value and greatly improve a home's curb appeal.
The chapter on strategic R&D stemmed from interviews and discussions over the past several years with CEOs, vice presidents, and director-level engineers and scientists who wanted to know why their companies' R&D efforts so often fall short of target.
For one thing, most companies face constraints on the resources at their disposal to innovate and conduct R&D; therefore they need to allocate these resources selectively. One way to tackle this issue, says Holtzman, is by introducing a classic management tool such as linear programming, a mathematical technique designed to help managers plan for optimal allocation of resources.
"Aligning resources and getting the buy-in of the whole company, from marketing to accounting, to support R&D, is critical for the long-term success of new product development," says Holtzman.
In addition, although the ability to innovate and develop new products is vital to any company's growth, often, the R&D team is treated like an island, free to create, but somewhat disconnected from the organization's business strategy.
This is a mistake, Holtzman believes. The relationship between R&D/new product development (NPD) and organization operations must be symbiotic. Developing internal capabilities that support R&D will also ensure the product goes to market more efficiently, and will distinguish that organization as an R&D powerhouse moving forward.
"A visionary R&D, or new product, or service development that is not linked early on to excellent operational and governance processes cannot be implemented. Conversely, operational excellence may lower costs, improve quality, and reduce process and lead times, but without a strategic research and development vision and guidance it is unlikely to enjoy sustainable success from its operational improvements alone," Holtzman writes.
Finally, R&D and NPD efforts should be strategic in nature. In other words, companies that plan their R&D pipeline for the long-term are better positioned to develop a powerful arsenal of products, as opposed to one-off successes. By conscientiously laying the groundwork for R&D systems, an organization can boast more efficient and effective deployment of resources that creates a lasting competitive advantage for itself.
For many organizations, the tax department is typically viewed strictly as a cost center, a necessary service line that is unable in itself to generate any revenue. However, this cost center mentality does not need to be the case.
In this chapter, Holtzman argues that by investing in key changes, such as integrating various accounting, finance, and tax systems, organizations can eliminate time spent on tedious procedures such as data manipulation, or complying with regulations, and free up more time for employees to focus on tax strategies that can trigger revenue.
In addition, he says that the tax department has the potential to produce data analysis regarding future periods rather than simply reporting on the historical data of the company.
"This perspective enables the tax department to take on an active role in contributing to the organization's strategic, forward-looking directives. The selective implementation and integration of operations strategy tools and methods, with a focus on maximizing process improvement and efficiency enhancement, can lead to increased value within the tax department. Further, these management and strategy practices will expand the role the tax function plays in facilitating business process improvements, thus leading to increased value within the organization as a whole," he writes.
"One of the greatest opportunities for process improvement is in the tax arena. Tax departments that do a better job aligning and integrating their processes and technology can spend less time on data processing and more time on tax analyses that can actually drive growth."
WTP Advisors is a leader in tax and business advisory services for a global marketplace. Our highly skilled professionals equipped with years of industry experience, coupled with our cutting-edge technologies, make substantive and long-term differences to an organization's profitability. WTP Advisors is headquartered in White Plains, New York, with offices across the Americas, Asia and Europe.
SOURCE WTP Advisors