LOUD AND CLEAR by Denzil Doyle

One thing the soaring loonie does is allow Canadian tech companies to put in place proper sales and service organizations in the U.S.

The big dollar presents big sales opportunities
From SCAN's Print Edition

Some years ago, I attended a luncheon here in Ottawa at which Ralph Klein, the then-premier of Alberta, was the guest speaker. Seated with us at the head table was a university student who was studying political science with a view to becoming a politician. The main course was chicken. Ralph asked him how he liked it, to which he nervously replied: “Just fine, sir”. Klein said, “You’d better get used to it, kid.” I think of that interchange as I listen to people commenting on the strength of the Canadian dollar. Like it or not, we had better get used to it. Those who like the strong dollar include snowbirds who spend their winters in Florida or Arizona and those who don’t like it include Canadian manufacturers whose markets are mainly in the U.S.

There are a lot of arguments being put forward on both sides of the issue. One of the silliest is that a strong dollar will allow Canadian manufacturers to improve their productivity by purchasing more modern production machinery. Our productivity has very little to do with obsolete equipment and a great deal to do with our branch plant economy. I have discussed that topic on many occasions in this space and I will not re-visit it here.

What I will address is the opportunity it presents to Canadian companies to put in place proper sales and service organizations in the U.S. For the past fifteen or twenty years emerging Canadian companies simply could not afford to put their own “feet on the street” in the U.S. and had to rely on agents, distributors and third party support organizations to get the job done. While such an approach can be made to work in some industries, it has its limitations in the high-tech industry, particularly in the area of customer feedback that can be so critical in developing product migration strategies.

In order to take advantage of the situation, some Canadian companies will have to learn how to do proper sales and support from scratch. One thing they will have to do is develop a forecasting culture in which bookings (i.e. orders received) forecasts are submitted monthly and apply to a four-quarter period. These bookings forecasts should then be translated into revenue forecasts and ultimately into cash flow forecasts. It sounds simple enough but very few Canadian high tech companies do it properly – mainly because they can’t get meaningful bookings forecasts from their agents or distributors.

The development of a strong forecasting culture will require new management processes that are based on the management of a sales organization’s forecasting performance and not just on its ability to book orders or generate sales call reports. It may seem like a lot of extra work, especially for small companies, but many well-managed companies put a lot of effort into it, knowing that it will pay huge dividends in terms of asset management.
There are other aspects of management that will be impacted by the strong dollar. For example, hardware intensive companies will find it less costly to carry raw materials and software intensive companies will find they have lost their competitive advantage over foreign code writers. Whatever the issues, we had better get used to them, because they are likely to be around for a long time.

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