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Year End Results and Outlook for 2009February 15th, 2009 – Minneapolis, MN Message from the Managing Partner and CEO, Eric Mahler. Fulcrum Consulting showed growth in top line revenues year over year and a stabilization of profitability as we ended 2008. Our business strategy of providing management consulting, IT professional services and financial staffing capabilities not only provided diversification protection but has become primed for better days. We have shown remarkable resilience, even with the struggling economy. Our balance sheet is in good shape and we continue to have strong banking relationships that allow us opportunities for growth, unlike many other organizations. Even with the economic uncertainties, we are confident in both our industry and in our company over the long term. We said during the summer last year that we expected revenue and operating margins, some of our industries key performance measures to be down in North America in 2009. Despite this, and even though the U.S. has been in a recession since 4Q 2007, we have much to be grateful for. First and foremost, we have a terrific management team, who have been through significant downturns before and have noted that each time they’ve come back stronger. We also have a great and growing brand name in the markets we serve. Before things get better though, we're going to have to navigate through a tough 2009. In our work with customers around the country, we have seen firsthand the struggles many companies have finding answers in difficult economic times. Across the spectrum of business performance, no company, not even those in the ranks of high performers, is insulated from the impacts of the current downturn. Every company today is under intense scrutiny…from investors, debt holders, potential buyers, nervous boards, impatient regulators and concerned customers and employees. 2009 has started off as a brutal year for U.S. workers. Many companies have announced layoffs, salary freezes, unpaid furloughs, hiring freezes, plant closings, and budget cuts. Those who work in the IT profession are certainly not immune to the pain that has been afflicting the U.S. job market, but they do have a few factors going for them that could help many of them weather the storm better than some of their co-workers in other fields. The biggest factor that IT professionals have going for them during this economic downturn is that many organizations are looking to IT to help the company streamline, automate, conserve, cut costs, reduce headcount, and generally do-more-with-less. In some cases, that will mean spending more money in IT in order to reduce costs in other departments. The challenge for IT is the ability to demonstrate value. One of the biggest targets for cuts in many organizations is IT services, which is being cut in order to reduce overhead. Highly-centralized IT departments will be a huge target because IT professionals are typically well-paid on the salary scale and a centralized IT budget is typically a big number, which puts a huge bulls-eye on it. Ultimately, some centralized IT departments that have not articulated their value well enough will be hit hard by this current economic downturn. However, a lot of others will seize on this as a great opportunity to demonstrate the value of IT at a time when the chips are down and a lot is at stake. During these exceptional times, companies need to demonstrate the ability to run day-to-day operations better than ever. Their leaders need to maintain flawless operations despite the need to tighten belts and deal with suppliers and customers lacking in confidence. We know that high performance is the result of good choices—about where and when to compete, how to be productively distinctive and how to align employee mindsets to drive success. We believe that in the current environment, making choices that will lead to high performance will require the simultaneous application of two broad approaches to business management: a more focused and disciplined use of the ordinary levers of managing during a downturn combined with a pursuit of a particular strategy based on a company’s current strengths and weaknesses. As Fulcrum navigates these challenges in 2009, three operational imperatives will guide our actions: 1. Operational excellence: This imperative takes on added importance for us as we provide services nationally. When all aspects of our organization…sales, delivery, resource management, operations and management are spread, operational excellence depends on the development and management of an effective operating model to take all these activities into account. We will regularly review our operating model, where it is weak and how it can be changed to ensure operational excellence. 2. Customer acquisition and retention: We will always want to keep good customers and find new ones. This imperative takes on even greater meaning today. Nervous customers may be tempted to stay on the sidelines until the economic outlook improves. Our consulting group will need to help those customers see the value of making prudent, customer-centric investments in marketing, sales and distribution. We will focus on sustaining our customer base with the expectation that Fulcrum will able to take share from weaker players and build new markets elsewhere. 3. Sustained cost management: Costs, assets and investments will be scrutinized rigorously along the entire consulting value chain. The key will be to balance the speed of cost reduction, if necessary and the delivery of cash to the bottom line with the retention of critical delivery capabilities for our customers. Fulcrum will not undertake indiscriminate cutting of costs or jettisoning of assets that will leave us unprepared to rebound during the upturn. We will do everything in our power to use the downturn to grow, add customers, consultants and strengthen our brand. The benefits of scale, broader geographic reach and access to scarce resources will also make acquisitions a prospective source of future growth. Given long-term trends of eroding vendor loyalty and declining service advantage, an enhanced focus on the customer will be necessary to maintain top-line growth. To place the customer at the center of Fulcrum’s business model, we must do more than pursue traditional marketing and customer relationship management. We will need to incorporate the customer’s perspectives, values and actions across our business, in terms of both strategy and operations. For business leaders, the greatest changes in companies’ relative position within their industries occur in times of economic turbulence, not calm. As a result, simply weathering the storm is not enough. As change accelerates in the business environment, a company’s ability to make the right decisions quickly and to act on them with conviction must increase accordingly. Essential to this ability is a top management team that is tightly knit, highly communicative and skilled at making rapid, collective commitments to action. During the past few months, I have been speaking with many business leaders around the country. From my conversations, it is clear that no organization, not even from the ranks of high performers is immune to the impact of an economic downturn. But at the same time, I have found most leaders are looking at the downturn as an opportunity to strengthen their marketplace position and outperform competitors. Although no one can predict when market conditions will improve, we do know that positive action now can help leaders navigate through these extraordinary times. At Fulcrum Consulting, we view this current economic downturn as both challenge and opportunity. We will use it as a time to improve our operations and competitive position, enter new markets and identify new sources of talent. These moves will enable us to grow and emerge stronger than ever. I wish everyone the best for 2009. About Fulcrum Consulting: Drawn to the company’s client focus and consultant first philosophy, large businesses have turned to Fulcrum Consulting for business guidance and the provisioning of IT and Financial staffing services to help them meet their business goals and objectives. Founded in 2003, Fulcrum Consulting has grown to become a market leader in business and technical leadership services. Please direct questions to inquiry@fulcrumconsult.com News Archives
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