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Auditing –
at the dawn of opportunity
New tools and techniques
Significantly, top management is driving the BIPs, pursuing proven
tools for whittling down and preventing avoidable costs. Auditors need
to learn and apply them in order to become assessors. To effectively assess
management processes, other tools must be acquired and skillfully applied.
Here are but two:
• Value assessing. Not to be confused with compliance auditing popularly
dressed up as “value-added auditing,” it delivers a superior
service, a real contribution to business results, not bureaucracy.
• Value Indexing™, a new tool, is emerging, which should finally
assist organizations to truly track the extent to which suppliers (and
internal activities) improve their value for money, VFM, performance.
It is in that learning and application that the individual chooses the
road to professional advancement and success.
The needs of particular economic sectors
Apart from the general challenge of globalization confronting
business, there are many economic sectors in which opportunity knocks
for professional assessment activity.
Education: global competitiveness, national prosperity and security,
in fine, depend on the quality of the education system – at all
levels. Numerous, well-informed commentators in America’s serious
journals and media continue to express concern that America is slipping
behind others. The entire education system needs a BIP of enormous proportions
– now. It offers a huge opportunity for us to use value assessment
skills, revealing how that vital sector could improve.
Energy: The days of cheap oil and energy are gone. As global
demand grows, the law of supply and demand will prevail. Adroit deployment
of forward energy contracts (hedging) confers no effective permanent policy,
only a temporary respite on input costs whose long-term trend is upwards.
Organizations lacking energy management or planning will be competitively
crippled. Though other nations might enjoy lower labor costs, a more energy
efficient nation can reduce its process costs by way of response. Confronting
this reality and issues of global warming is unavoidable for any organization.
Specialized energy assessors can contribute by assisting firms with an
urgently needed revamp of their energy policies and practices: and by
constantly value assessing energy usage. They will possess particular
skills and knowledge including: energy metrics, conservation, carbon trading
programs, and how to cost and introduce new, alternative energy sources.
And, they will be involved in the design of new buildings and workplaces.
Capital plant and construction:
Apart from the construction of new, energy efficient buildings, consider
the following:
• Addressing America’s (if not the world’s) energy issues
will revitalize power engineering and construction. A huge raft of capital
projects will be floated as new capacity is built and aged, inefficient
plants are replaced. Installations ranging from wind farms to waste recovery
plants, distributed generation installations, solar panels and hydrogen
fuel cells will be built.
• America’s nuclear industry will experience a renaissance
as new, safer (pebble-bed) types of reactor are constructed.
• America must reengineer and renew its creaking power grid. The
massive August 2003 blackout demonstrated how vulnerable is the economy
to power loss, however induced. Power supply is the organization’s
jugular vein: uninterruptible power supplies are needed.
• A glaring shortage of petrochemical refining and processing capacity
needs rectification. And, increasing use of natural gas will require a
larger associated infrastructure.
• Recently, the rust has been coming off of America’s rust
belt and basic goods exports are rising. As global economic expansion
continues its explosive demand for basic materials, one might also expect
new mills, foundries and smelters to be built, replacing aging, less efficient
ones and increasing the nation’s capacity.
In aggregate the capital investment for those improvements will amount
to hundreds of billions of dollars requiring sound assessments to prevent
cost overruns, late completion and waste. Each sector will need dedicated
assessors unwilling to compromise over matters of project management,
quality, safety and the environment.
Environmental protection: This is another fertile ground for
specialist auditors. Quality programs are steadily increasing their attention
on recycling and control of byproducts. That trend will continue. To be
of use, though, assessors must become cognizant of material and process
technologies and associated issues. Otherwise they cannot be constructively
involved or make a contribution beyond trivial bureaucratic checks.
Demographics and services
Retiring baby boomers will demand new and better services from
business and all levels of government. In being the 1960s generation of
protest, unlikely to tolerate sub-standard, inefficient or bad service,
they are accustomed to making their voice heard, taking action if necessary:
a stentorian “voice of the customer” can be expected.
Only foolish organizations would presuppose a captive market of boomers.
Tapping into their considerable spending power necessitates immediately
pursuing substantial BIPs: complacent organizations will be crippled by
global competition. Boomers will significantly affect organizations and
professional assessors ought to be energized by the consequent need for
their services. Here, now, are a few examples.
Health care: The quality, not the quantity, of health
care available in America and the VFM it provides as experienced by the
patient, will be the prime concern. By surfing the web, boomers will find
what they want, where it is and whether or not it offers a VFM proposition.
Internationally, health care is a fast growing sector that will become
enormous.
Many nations already offer excellent, world-class services at a fraction
of current American prices. Their teaching hospitals, medical research
facilities, schools and certification schemes lack for nothing: India
is an example. Legions of Indian-trained doctors work in America. Back
home, their peers also offer excellent services costing, for cataract
operations, $50-$300 and, for a “Jaipur Foot”, $30. In America,
they can cost $2000 and $1500 respectively.
In 2003, 150000 international “medical tourists” flocked to
India: 1 million to Thailand, many for major procedures, demonstrating
those nations’ comparative advantage. America’s boomers will
surely follow, recounting to others their satisfaction, turning a trickle
into a flood of patients seeking offshore treatment. Insurers and health
care schemes eventually comprehending what is available internationally,
will probably amend their policies and willingly reimburse overseas health
care providers, as it would make sound business sense. Even the frequency
and cost of lawsuits may also plummet when offshore health providers do
the job.
To respond and prosper, America’s health care industry must improve
its VFM proposition, and bring its egregious excesses and inefficiencies
under control. Professional assessors, it is time to step-up and show
how.
Financial services: All types require urgent improvement. Apart
from issues of transparency, protection, probity and prudence demand attention.
Preventing identity theft, estimated by some as at 7 million USA cases
per year and rising, and fraud are serious challenges. The nation’s
(and boomers’) financial assets and savings warrant better processes
and safeguards than exist at present. Quality in the financial service
sectors needs constant review, development and assessment. And these,
too, are not necessarily the preserve of American domestic companies:
already, emerging nations are prospering by delivering cost-effective,
quality products. Step forwards the financially savvy assessor: you are
needed.
Information technology: is central for running organizations.
IT industry and departments must improve the quality of their products,
services and management processes to thwart the (foul) objectives of hackers,
viruses, spy ware, phishing, scammers, pornographers and identity thieves.
Specially trained assessors are needed in greater numbers to help in keeping
IT design and operation ahead of miscreants. If American IT companies
cannot or will not do this, foreign entities can, and will, take the lead.
Cutting edge technology: Money is pouring into research and development
of arcane technologies. The outcome of stem cell research, of work on
the human genome, of bioengineering, of nanotechnology and space can only
be guessed. But, when arriving as commercial applications each will involve
new processes compelling the development of innovative quality programs
for supplying the associated products and services into the marketplace.
Assessors will play a key role in assuring safety, efficacy and cost-effective
management processes.
Dawn
of change
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