High Tech CEO Agenda – What issues are Tech CEO’s talking about
Tech Sheets - The High Tech Blog
Posted by John Ciacchella on February 20, 2012
Every quarter we sponsor the Silicon Valley Executive Summit and meet for a day with a group of 16-18 CEOs from High Tech companies around the Bay Area to network and discuss specific issues that are top of mind to tech executives. Our last meeting took place in mid December, and Dave Couture and I thought our High Tech colleagues would find these discussions of interest. So I’ve captured and summarized the top discussion points to share here on Tech Sheets.
From the Winter 2011 Silicon Valley Executive Summit:
Economy: What’s the view on 2012?
The Tech industry was coming off double digit revenue growth in 2010 and slowed down for the industry overall in 2011. Floods in Thailand had impact on disk drive market slowing growth of PC/Storage markets in particular. Semiconductor market seems to be slowing down across the board. Component sales peaked last year, and are now down and flatlined. Europe in particular has slowed down and at lower run rate. Component and Semi book-to-bill ratios have been negative since June. Overall most are forecasting very modest levels of growth for 2012.
Natural Disasters: What to do differently going forward?
Supply management is becoming a board issue and being looked at as a part of company risk management process for the business. Some companies are enforcing dual sourcing strategies for key suppliers. Not just dual source but considering geographic and regional footprints as part of that strategy. Critical questions raised - are upstream supply chain participants willing to make or allow for the investment required for more diversification? Is procurement willing to look at supply base beyond lowest cost and factor in supply continuity?
Transformation: How do you know when done, when to start a new wave?
Focus on specific metrics that show results have taken hold. Set up metrics that look at qualitative and quantitative indicators of the business. Use benchmarks to help identify when change may be needed. Set three year goals and plans, review progress quarterly, make these planning/review sessions count. Emphasis on adaptability, making the adjustments required to meet changing business conditions.
Acquisition Valuations: Is this a good time to buy?
Overall, the group feels this is a good time to be buying, valuations are reasonable. Private companies are very attractive and seeking buyers. More inventory of opportunities on the market. Most companies in the summit group are actively looking at acquisitions with focus on growth, entering new market areas, and building and supplementing engineering capabilities and extending geographic footprint.
Restructuring for cost and operating structure: Lessons learned?
Keep tabs on ratios for operating margin and labor. Look at overall and breakdown of headcount, is it justified for where the business is going, what it needs? Control hiring; make those who hire responsible to also fire. Use change events like market changes, acquisitions, and organization changes as opportunities to look at restructuring and headcount rebalancing.
Human Resource Management Systems (HRMS): How much value are companies seeing?
Overall, the group felt they are only getting limited value from their HRMS systems. There was a feeling by some that value was oversold, some implementations were more difficult than anticipated, and a few are not seeing any real change or results. Most felt HRMS software is just a process tool. However, a few noted success was realized in some of the decisions and data clean up done ahead of the system implementation (e.g., reducing number of job codes).
Business management: How to balance long and short term with investors?
Focus of discussion was on cash and how to best deploy and invest. Pressure on stock buy backs, dividends. Challenge using cash to invest for longer term business. Participants agreed on the need to proactively communicate and meet with key shareholders - communicate longer term vision and roadmap. They seek to build a longer term investor profile if possible.
Board Access: How much access should the board have to the business?
Group had strong opinions about boards having unrestricted and one on one access to business managers. Instead, preference is to have members of CEO team and select managers participate in board meetings, especially when doing business unit reviews and strategy sessions. Need to keep clear lines between role of management and role of board.
As you can see, we covered a lot of ground during the meeting. If you think of this as the current "CEO Agenda" for high tech executives, how does it compare with what you are seeing with your clients and in what you are hearing from your own networks? What implications does it have for how we should position, promote or develop our services over the near term?
This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.