ALDA & Associates International, Inc. Newsletter
January/February 2012
The
ALDA Rapid Solutions (ARS) Framework
ARS is a results-oriented, quick payback approach to solving business problems and seizing opportunities. The ARS process co-designs and facilitates desired improvement in an accelerated timeframe.
Why ARS Can Make a Difference
Most organizations have improvement opportunities, but frequently the path way to realizing these opportunities is unclear. Perhaps it is because such opportunities initially may be viewed in a negative light. That is to say they may be seen as real challenges, or problems difficult to overcome. Or maybe it is the thought that too much time would be required to successfully address them. These are not the kind of activities people are eager to acknowledge, much less attack. (However, as one of our clients said appropriately not so long ago-“ Out of Adversity Comes Opportunity ”)
Thus, meeting challenges head on and solving problems can often lead to very positive outcomes. With a mindset focused on the possibilities of what could be - as opposed to what is, improvement becomes much easier to accomplish.
The ARS Approach to Improvement
What may help most in actualizing opportunities for improvement is a disciplined, structured, collaborative process. ALDA has developed such a process to solve business problems and take advantage of opportunities and to improve results dramatically. And, this process is designed to be accomplished in an accelerated timeframe. The emphasis is on focus, co-design and practicality. Put another way, the objectives are (1) to be specific, (2) work closely together with the client, company and (3) yield measurable results – all in a timely manner.
This business process is called ARS , for ALDA Rapid Solutions
How ARS Actually Works
The ARS process is comprised of 3 phases.
The starting point has to do with the array of current realities internally at the client company organization and externally in the competitive environment or marketplace. More importantly, key implications are developed from these realities. Additionally, a sharp and crisp definition of the opportunity for improvement is articulated in this phase, along with the specific goals the client desires to achieve. As mentioned above, ARS is a collaborative process. Clearly, this first stage of the process can maximize its value by combining the in-depth knowledge of the client company about their business with the broader and more objective perspective of the client's business advisor.
The second stage of the ARS process concentrates on co-developing a feasible solution for the matter at hand. Again, to make this phase as productive as it can be, it is critical that the client company and advisor work hand-in-hand. Attention here is given to specific planning of the project, detailing improvement actions, leveraging previous learning and experiences, assigning roles and responsibilities (together with deadlines) and then implementing action items. Done properly, this leads to the quick payback which most client companies desire.
The third and last phase of ARS relates to measurement and value. Efforts at this juncture center on the value received from employing this problem solving, opportunity seizing process. Deliverables are evaluated, success measurements reviewed, and the impact of results analyzed. Upon assessing the value received from the ARS process in the short term, additional improvement opportunities can be identified. If desired, other short term or even long term plans may then be evolved, thereby building on the initial value received.
CASE STUDY 1
XYZ, a national physician staffing company, with approximately $70,000,000 in revenues was experiencing significant business challenges. They were losing money and in default on a major credit agreement with less than two weeks to rectify their situation when ALDA was brought in.
ALDA consultants implemented the ARS process and within 72 hours of initiating the engagement had identified the following challenges/opportunities (the items below do not represent the entire findings but should serve as an example for this case study):
There was significant overlap and lack of clarity in reporting relationships and excessive headcount. There was approximately $1,500,000 of compensation cost of which $425,000 was represented by Information Technology salaries. These combined amounts are significant (and excessive) in relation to total General and Administrative Costs compared to current revenue levels. Much overlap existed which resulted in a lack of accountability and specific responsibility in a number of areas. A sizeable increase in data processing staffing had occurred, which provided numerous sophisticated operational reporting efficiencies to the company but was unnecessary for the future. Additionally, these sophisticated systems did not provide adequate interface with or otherwise complement the accounting system.
Decisions had to be made as to whether it would be more prudent (1) to manage current profitability by Reductions In Force (RIF) and sacrifice short-term growth or (2) try to grow the business more rapidly to balance the overhead burden. It was decided, based on our experience, that there was a higher probability of success from managing the bottom-line rather than accelerating growth without proper controls in place.
XYZ Company, on our recommendation, had to purchase and install an adequate accounting system capable of providing accurate and timely financial statements for a $75 million company. The current system was clearly inadequate in all respects and presents significant challenges to be in compliance with the provisions of Sarbanes-Oxley
XYZ Company had a myriad of medical malpractice insurance policies including combinations of occurrence and claims-made based policies with $2.6 million ncluded in the accrued liabilities for claims incurred but not reported (“IBNR” or “Tail”). There were three actuarial studies estimating total loss exposure which could aggregate $3.2 million. However, the assumptions underlying all these studies were provided to the actuary verbally, thus allowing for erroneous calculations. While the insurance broker had provided an exhibit which indicated that there was no IBNR or Tail liability, we believed that significant exposure existed. ALDA weas able to assist the Company in navigating through this morass and successfully renegotiate the entire malpractice program at a total savings of $900,000 on $2,700,000 of premiums for the following policy year.
The DSO in Accounts Receivable approximated 56 days; HOWEVER, the billing system had the potential to increase the aging (and delay collection) of clients who were billed monthly. Invoices were not processed until the fifteenth of the month following service. Consequently, services provided on the first of the month were not billed until 45 days later on the fifteenth of the following month. This was compounded further if the invoices missed the initial billing cycle. Our involvement enabled these areas to be addressed and DSO reduced to 45 days, thus decreasing financing needs and costs.
As characterized throughout, ARS (ALDA Rapid Solutions) is a disciplined, problem solving process intended to assist organizations in achieving opportunities for improvement in an accelerated timeframe so as to advance their business.
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To explore whether ARS may have potential value for your business improvement opportunities, please contact David H. Fater at dfater@alda-associates.com or Richard M. Cohen at rcohen@alda-associates.com or (877) 845-4657.