BusinessAcumen SafrinHeruwanto Helmi
BusinessAcumen SafrinHeruwanto Helmi
BusinessAcumen SafrinHeruwanto Helmi
“Sahewa”
Full title: “What The CEO Wants You
To Know: Using Your Business
Acumen To Understand How Your
Company Really Works”
3
Do You Understand & Speak The
Universal Language of Business?
IT
Business
Services
Business IT
Staff Staff
5
Some
Terminology
PROFIT MARGIN
Gross Margin = Total Revenue – Direct Costs (Product)
Net Profit Margin = Total Revenue – All Costs
(Business)
VELOCITY
Turnover of goods by frequency, i.e. the number of
times you can make, sell & deliver your wares.
RETURN
ROA = Margin X (Sales/Assets)
ROI = Margin X (Sales/Investments)
ROE = Margin X (Sales/Equity)
RETURN = MARGIN X VELOCITY
6
Relationships: Margin, Velocity &
Return
Keep in mind:
The best companies make 10% ROA
The big mistake is to focus too much on Margin,
instead of Velocity
The lazy product developers will look at premium
pricing as the way to get a quick return, instead
of putting effort into operations (production,
marketing & sales) so that velocity can be
increased.
The cost of borrowing capital (for investments) is
typically 10%+!
Sahewa Larasindo. 7
Some Terminology - GROWTH
What if there is no growth?
Costs are cut
Personal development
opportunities dry-up Change For Bad
The best people leave
Costs increase
“Death Spiral!”
Sahewa Larasindo. 9
Customers ….
Sahewa Larasindo. 10
Business
Acumen
Means understanding:
Cash situation
Profitable items
Non-profitable items
Velocity of products
Customers
Sahewa Larasindo. 11
Dragon’s Den Of ITSM
The CIO
Sahewa Larasindo. 12
The CEO
Dragon
Focus is on business objectives.
Do you know your current
business objectives?
If not, where can you find
out?
Make reference to specific
business objectives in your
proposal
Describe how the outcomes of
your ITSM project will enable
the business objectives
BE SPECIFIC!
Sahewa Larasindo. 13
The CFO
Dragon
Focus is on revenues and costs.
Make sure you know how
much your project will cost
Be realistic when estimating
costs
If the costs cannot be
contained by the current
budget – make sure there are
very specific and achievable
business benefits
BE SPECIFIC!
Sahewa Larasindo. 14
The CIO
Dragon
Focus is on IT resources and risks
to IT performance and image.
Explain who will do the work
Explain what tools and
resources will be needed
Explain how much time will be
needed
Explain the potential impact
on other projects
BE SPECIFIC!
Sahewa Larasindo. 15
When You Get Back To Work
Sahewa Larasindo. 16
When You Get Back To Work
Develop a
Practice
risk Key financial
management levers
financial
strategy
literacy
Module Two: Seeing the Details create
the big picture.
Big Picture Sanford I.
Weill
Business acumen requires an
understanding of finance, strategy,
and decision making. Most managers
and employees, however, are
responsible for specific areas, and
they have little understanding of the
impact their decisions have on other
areas.
Short and Long Term Interactions
Build Use
relationship feedbac
s k
Offer value
Recognize Growth Opportunities
Be in the moment
Be Clear
Make a choice
Everything is Related
Be Comprehensive
Be Balanced
Be Incorporated
Case Study
Angela had to decide which direction to take
the company to improve the profit margins
Growth requires recognizing opportunities. Not seeing the big picture will result in
overlooked opportunities.
4. What will market research provide?
a) Investment opportunities
b) Long term interactions
c) Short term interactions
d) Information on customer needs
Identify criteria
Employee buy in
is essential
Strong Initiative
Recognize spots for improvement
Which
Who is
questions
affected
need answers?
?
Actions
needed?
Case Study
Recognize objectives
Internal External
Employees Suppliers
Making Adjustments and
Corrections
Constant monitoring
Improve performance
Risks change
Knowing When to Pull the Trigger
or Plug
Not every
program will Opportunity
succeed Costs
Selected action -
Alternative decision
Case Study
Kay created a financial risk strategy for her
young company
Request
Reflect Study
Feedback
Case Study
Craig felt like he was running in circles at
work
He was always putting out fires that came from his past
decisions
Craig chose to learn from this mistake and alter the pattern
Module Five: Review Questions
1. Which of the following requires individual initiative?
a) Imitation
b) Exploration
c) Exercise
d) Creation
Examine Influence
your Services the
products future
What Were Sales Last Year?
Identify growth
Essential information
Operatin
COGS
g
Costs expenses
Interest
Taxe
and
other s
Case Study
Shelly’s company profit margin of 7%,
was 2% lower than last year
literacy.
Assets
Anything of value
Creates a profit
Money
Debt
owed
Financial Short or
health long term
Equity
10.What is Tim’s
equity? a) $25,000
b) $100,000
c) $85,000
d) $15,000
Module Seven: Review Questions
1. What do assets determine?
a) Profits
b) Company strength
c)
d)
InterestCash flow
Company strength is determined by its assets. Liquid assets prepare the
company for times of trouble. Utilized assets increase productivity.
2. What is the most important asset a company has besides customers?
a) Cash
b) Buildings
c)
d) Machinery
Employees
Not every asset appears on the balance sheet. Employees and customers
are considered to be the greatest assets a company can have.
Module Seven: Review Questions
3. Where do you find the information to create financial ratios?
a) Balance statement
b) Interest earnings
c) Financial statement
d) Income statement
Financial statements include the different elements of finance. The information on
a financial statement is used to create financial ratios.
4. Besides the inventory, what is necessary for an inventory ratio?
a) Cost of goods sold
b) Total revenue
c) Net income
d) Total assets
All of the answers are found on the financial statement. The cost of goods sold is
necessary for an inventory ratio.
Module Seven: Review Questions
5. What indicates that the company is in trouble?
a) Nothing
b) Assets are greater than liabilities
c) There are no liabilities.
d) Liabilities are greater than assets
Liabilities and assets work together to determine the health of an
organization. When liabilities are greater, the company has too much debt.
6. What will be paid within a year?
a) Short term liabilities
b) Assets
c) Long term liabilities
d) Equity
Liabilities are financial debts. Short term liabilities are typically paid within
a year.
Module Seven: Review Questions
7. Which action will increase equity?
a) Remove stock options
b) Issue stock
c) Increase inventory
d) Stop marketing
Stocks and equity are tied together. Issuing stocks will actually increase
equity in the company.
8. What is used to determine equity besides liabilities?
a) Ratios
b) Liquidity
c) Assets
d) Income
Assets and liabilities are used to determine equity. Equity = Assets –
liabilities.
Module Seven: Review Questions
9. What are Tim’s
assets?
a) $25,000
c)
b) $85,000
$100,000
d) $15,000
Tim’s liquid assets equal $100,000. His liabilities equal
$85,000.
10. What is Tim’s equity?
a) $25,000
c)
b) $85,000
$100,000
d) $15,000
Tim’s liquid assets equal $100,000. His liabilities equal $85,000.
This
makes his equity $15,000.
Module Eight: Financial Knowledge is
the
Literacy (II) fundamental
factor – the
major enabler –
Financial literacy requires you to read of enterprise
and understand different reports performance.
Gross
Revenue COGS
profit
Operating Net
EPS
income
expenses
Balance Sheet
Current assets
Total assets
Current liabilities
Total liabilities
Stockholders’
equity
Cash Flow Statement
Cash generated
How it is used
Periodicals
Trade publications
Blogs
Case Study
Brie prepared her balance sheet at the end
of the quarter
Mentor Invest
Communicate Evaluate
Change Management
Act Praise
Asset Management
Create a list
Develop a plan
Organizational Management
Requires planning
Structured
Linked together
Case Study
Angela decided to update the IT system for
her company
Identify assumptions
Explore perspectives
Examine evidence
Consider different
implications
Organize Data
Group
similar data
Evaluate the Information
Is it facts or opinion?
Is there bias?
Make the Decision
Options
Your feelings
Case Study
Doug was considering joining forces with a
startup
Employees
Customers
Trainin Products
g
Salary Experience
Effective Communication
Honest Clear
Polite Friendly
Process Improvement
Identify
Measure
Support
Implem
ent
Goal Alignment
All employees