This document outlines 9 potential projects for Avinger's 2017 initiatives focused on improving business processes and driving strategic goals: 1. Put more focus on projects that support the company's strategy. 2. Re-assess customer needs through feedback and ensure products/services meet changing needs. 3. Take on business process improvement projects to streamline ineffective processes. 4. Revisit vendor offerings to ensure they support business needs and future growth. 5. Review and update information systems and technologies used by the business. 6. Review the employee "hire to retire" process to optimally deploy human resources. 7. Simplify the chart of accounts to improve accounting processes.

1. Avinger Business Transformation & Process Improvement
This Initiative is tailored to the challenges of driving business results from business
transformation programs — for example:
Change Evangelists of transformation need insight into how to transform work, and inspire
teams, executive management and value chain partners to pursue common goals.
Business owners - responsible for delivering the targeted business results from transformation
projects — need decision guidelines to optimize business processes across the organization.
Solution architects and application portfolio managers need guidance on how to design,
implement and manage applications that support the different process styles and software life
cycles needed to deliver targeted business outcomes.
Business Transformation Structured Approach
This approach may vary depending on the problems that we are trying to solve and the
decisions that we are trying to make:
Strategize and Plan: Anchor the transformation or process management program to strategic
business results our organization must deliver within 12 to 18 months. For large programs,
prioritize projects to deliver optimized business results and communicate a common vision.
Develop Governance: Solicit peer input to craft process governance and decision policies. Get
executives to hold process owners accountable for business outcomes. Assess process styles
and interdependencies to determine the impact of operational change.
Drive Change Management: Motivate behavior that accelerates delivery of desired business
outcomes. Communicate and socialize ideas via multiple channels. Get buy-in from
stakeholders at all levels. Avoid change fatigue and establish a broad capability for Big Change.
Execute: Optimally operate the initiative in accordance with business goals, and update it in
response to changing business requirements. Use BPM technologies and services to extend
existing systems of record and accelerate differentiated and innovation solutions.
Measure and Improve: Continuously capture process intelligence from stakeholders, events,
social interactions, and structured and unstructured processes to assess in near-real-time.
Apply advanced technology to dynamically adjust and optimize processes.

2. Challenges in Business Transformation programs
Weak sponsor engagement - Perhaps the most critical challenge of any business
transformation program is ensuring strong sponsorship throughout the program lifecycle. The
program must be built in a way that ensures regular sponsor engagement from start to end,
Lack of clearly empowered roles and responsibilities - Change must be led by example, and if
the senior leadership are not seen to drive change, nobody else will believe the change is real.
Therefore, the identification of appropriate change agents is critical. Another challenge for
business transformation programs is to ensure the team driving change is empowered to make
the decisions that fit a dynamic corporate governance model. This will help minimize
unnecessary delays in waiting for the sponsor to be available.
No pragmatism in assessing capability and capacity dependencies - Even when willingness to
change exists, capability and capacity gaps will dictate the pace of change deployment. It is key
for senior leadership to understand how much capability and capacity the organization
possesses when driving business transformation. Setting a faster pace than the organization is
able to follow will lead to frustrations and reduction in buy-in. Setting the right pace will allow
for change to feel “right” to the organization.
Unclear and intermittent communication - Having experts to drive change is not enough. They
must be able to explain complex methodologies in simple terms and must be able to re-explain
it repeatedly. If the organization does not understand what the change process is supposed to
look like, they are likely to disengage and lose interest. Only when they start to understand
what comes next (and why) they will allow change to take place.
Inaccurate effort estimations - Some stages of transformation programs can be very resource
hungry. Not knowing the scope of the information that need to be gathered and the number of
people that need to be interviewed during fact finding stages (As-Is) can lead to capacity issues
by project teams.
Wrong timing for improvements due to lack of context knowledge - As important as
maintaining momentum in a change program is building momentum for change. A key part of a
change program is to understand what doesn’t work, and find ways to fix it. Pro-activeness is a
quality that every organization looks for; however, it can sometimes fail to succeed due to
wrong timing.
It is critical that solutions should only be proposed once the problem has been perceived, and
this is the reason why the As-Is and the Initial Gap Analysis deliverables are done prior to
defining a new vision in a business transformation program. If the problem is not perceived
prior to proposing a solution, the solution is unlikely to be embraced during the change process.
As an example, if you know customers do not like what you provide them; ask their opinion,
just so the “problem” can be "created and perceived". Ensuring a perceived reason for change
to exist goes a long way towards gaining support for change.

3. Common Business Transformation program mistakes
Strategy – The final product or the "means to an end"?
The first step to properly deploy business transformation is to define or re-align the
organization’s strategy. The reason why this should be the first step is so to define a reference
for all future organizational growth and development.
What many people mistakenly conclude is that business transformation equals having a
strategy. The organization’s goals will drive change for benefits to be realized, be them related
to conquering or survival. Only when you understand that the strategy formulations are only
the means to an end, that you will be able to adapt to deliver value.
Growth or cost reduction, not both - Sometimes organizations think they should tackle all their
challenges at once, and often they try to grow at the same time they try to reduce costs.
Although they are both equally important, they should be driven separately. They both drive
value and benefits to the organization, but when done concurrently will often lead to cognitive
biased decision making, because they can’t see that both are equally important but
independent from each other.
Lack of engagement and communication - the delivery of detailed procedures and documents
does not necessarily drive people to deliver change, continuous engagement does. Especially
when dealing with different cultures and parts of the world, one should not underestimate the
importance of appropriate engagement. Documents and emails only guarantee some limited
level of awareness, not actual engagement. It is critical to understand the organization you are
dealing with and carefully plan the communication strategy.
Not focusing on what adds value - it is easy to lose focus and end up building reports that do
not necessarily take you in the direction you should go. It is extremely important to analyze the
organization before defining a new vision and strategic direction. Having said that, analysis
should only be carried out if it adds value to the program.
Underestimating the importance of the “people” element - theory is extremely important in
defining the approach to drive business transformation. Having said, theory and practice
present very different challenges. Some theorists are extremely process driven and believe that
if process steps are followed, change will follow. It is when they forget that “people” are the
ones to accept, embrace and propagate change, that practice teaches theory a lesson. People in
an organization each have different situations and realities, therefore, are motivated by
different things. Understanding how to engage with these people will dictate the success of the
project.
Not listening to what customers want - every organization has customers and they are the ones
who justify your existence, be that in the public or private sector. In marketing, there is a
concept of “producing what you sell”. This concept revolves around ensuring you know what to

4. produce before you produce it, knowing someone will be interested in buying it. The opposite
of this concept would be to “sell what you produce”. The importance of listening to your
customers is that you try to minimize trial and error, maximizing cost efficiencies and delivering
value with a faster time to market.
Margin management has been a top concern for Avinger, this is not surprising considering our
quality issues and revenues have been sluggish; we have had to keep a close eye on the delta
between cost and price. Margin is especially critical for our success. If margin management is a
key initiative for our company, improvements to our supply chain can make a big difference and
implement a deal desk to review customer pricing and discounting is aligned to the MSA
currently in place.
Here are a few opportunities for improvement and key areas of focus:
Order to Cash Optimization - Get accurate information on pricing, products, customers, and
contracts in real time – to help us hit our sales targets and delivery KPIs.
Manage the order-to-cash process seamlessly, across the organization. Track and manage order
generation, and processing by streamlining and automating the billing cycle management
processes.
Inventory & Warehouse Management - Improve operational efficiency by controlling material
movement and warehouse operations – from inbound activities to order fulfillment.
Automate delivery processes (directed put away) and optimize the procurement process
through intuitive user interfaces and item catalogs or categories.
Reduce manual labor and increase overall operational efficiency (deploy cycle counts) Improve
Inventory Control, enable Reverse or Cancel a PO Receipt
Demo / Evaluate Integrated Shipping Software (Print labels, Tracking, USPS,UPS & FedEX)
Demo / Evaluate Purchase Requisitions - to create multi-tier approval procedures and advise
management of buying requests using email notifications and electronic approvals
Advance inventory management using Material Requirement Planning (MRP), creates
recommendation for purchase orders and production orders based on the status of
transactions in the system (using S&OP forecasts)
Review Goods and Services receiving (2 way & 3-way match) within a business group. The
person conducting receiving affirms that ordered items are correct, in good condition, and in
accordance with requirements of the PO.
Automate ordering and receiving: Workflow tasks between buyers and suppliers such as
sending, receiving, acknowledging, and approving purchase orders can produce large amounts

5. of waste between employee time, errors and delays. Automating these activities can enhance
processing speeds by more than 80 percent while reducing costs by approximately 25 percent.
Implement smart labeling: Many companies report that they lose or must reorder/rush order as
much as 15-20 percent of misplaced inventory each year due to miscommunication/poor
instructions at the receiving dock.
Enforce shipping requirements: Orders arriving too early, too late, or with the wrong amount of
goods can add unnecessary costs to your materials, inventory, and production line. Too early
means you must hold that inventory and potentially pay earlier than you should. Too late
causes production line delays. The wrong amount — too much or too little — results in the
same additional, unnecessary costs. Enforcing delivery window and amount agreements via a
shipping collaboration solution reduces these unnecessary costs and helps improve margin.
In my short tenure with Avinger, I have noticed that the current P2P process is not optimal and
we should implement and deploy an improved business flow to help with end user adoption.
Currently many items that should be placed on a PO are being expensed through concur and I
believe it relates to the current manual process and lack of end user training and knowledge
using the SAP Business One ERP platform.
Efficiently managing suppliers, vendors, and the purchasing process is critically important for
our business. The ability to streamline workflow and minimize delays in purchase orders and
approvals is essential. But one of the biggest obstacles in the purchasing cycle is getting the
purchase order approval. Currently the PO approval process involves manual routing and paper
shuffling that is slow and error-prone.
Using workflow automation technology, you can convert that manual process into fast and
efficient automated routing and approval. It is important that purchasing workflows are as
quick and efficient as possible to make sure that the information held in SAP Business One is
correct and is up-to-date. At Avinger purchases require multiple levels of authorization that are
built around unique business rules and departmental structures – especially if the value of the
PO exceeds a designated amount. This can result in delays and manual communication being
pushed through the organization as the POis passed around until it finds the appropriate
department or manager(s). This can obviously stifle company productivity ... and potentially
delay shipments to customers if you don’t get the material or inventory you need in time.
For example, you might decide that orders over $2,000 require approval by one person and
orders over $5,000 require a two-person approval.
If the purchase order requires a second approval, the workflow automation system simply
repeats the steps with the updated information (i.e. 1st level approval complete) and
automatically notifies the second person.

6. Once the automated routing and approvals are complete, the SAP Business One user that
originally entered the purchase order is automatically notified of the updated status, including
all comments.
Once a purchase order has begun its journey in the ERP system, SAP Business One does a great
job of automating and streamlining the rest of the process. If manual approvals and paper
chasing are killing productivity at our company, I am also willing to consider workflow
automation technology. My goal is leverage the out of the box features and transform the
current process by utilizing your experience and expertise.
2017 Initiatives
Project 1: Put more focus on projects that support strategy (Executive)
Project 2: Re-assess customer/client needs (Marketing)
The result for businesses ultimately is to meet the needs of customers, regardless of a product
or service. Now is the time to pause and think about whether our product or service is meeting
the needs of your current or potential customers. Have you solicited feedback? What feedback
have you received? Is the product or service that we provide meeting their needs? If not,
something needs to change. If we are meeting their needs, maybe exceeding expectations
could be the new goal. Either way, this would be a good time to assign project management
resources to address this, and stay ahead of the game. Remember, client’s needs change. It is
easier and less costly to keep an existing client happy than to have to find a new one.
Project 3: Take on business process improvements (BPI)
The processes that were put in place when the business started may not be effective or even
relevant anymore. This is another area businesses should revisit annually to reduce manual
workarounds caused by ineffective business processes.
Project 4: Revisit vendor service offerings
Many business owners and management intend to make vendor- or service-offering-related
changes but, because they are so busy, they plod along paying for services that do not fully
meet their needs. As companies grow and change so do their needs. Often their back-office
functions can no longer keep pace in a way that supports current and future business growth
requirements or potential (Cash Flow Better Payment Terms or Discounts)
Project 5: Review and re-vamp information systems and technology (IS&T)
In conjunction with revisiting vendor service offerings, taking an inventory of our current
application portfolio (information systems and technologies) should also be on our project list.

7. Advancements are always taking place, and as our business grows or changes, it creates the
potential for the systems/applications and technologies you use to also require changes.
This is not to suggest jumping ship annually with all vendors or service providers, only make the
move when significant gaps exist and existing offerings cannot sufficiently support the business
currently or going forward. As with the vendor service offerings mentioned above, it may be
time to either implement required enhancements if available internally or outsource to
specialized service providers. Careful planning and selection is the key to finding solutions that
are scalable to grow as your business grows.
Project 6: Review the Hire to Retire Process (Re-deploying HR)
This is one of the most important and most difficult projects to approach as it has the potential
to place employees in a state of panic. It can also be one of the most rewarding for many
employees as it can open opportunities for advancement as well. Be transparent and talk with
employees about this initiative in advance to alleviate the fear of job loss.
The goal behind this project should be to determine the most value-added use of human
resource by matching high-level skill sets to key job requirements, and then re-deploying those
human resources to better meet strategic objectives. It makes sense to sit down with individual
employees to discuss their interests and career goals in conjunction with the business goals to
create as much synergy as possible prior to making any changes.
Project 7: Simplify the COA, organized hierarchically representing assets, liabilities, equity,
revenues, cost of sales, expenses, financing, and other revenues and expenses (organize our
accounts in a logical fashion to improve our accounting (FP&A) processes
Project 8: Corporate Travel Policy (Concur) a recommendation is to amend the current
agreement by reducing (reorg) the number of transaction from 300 to 150 transactions a
month (as an example). We should review the utilization of the other modules (are these being
used by Avinger employees). As an example, we can eliminate enhanced reporting if this not
currently needed or used by the Finance team and confirm if the usage and need for the travel
management module (only if we are spending a minimum of $250K a year), and is the Concur
Mobile Application being used by all employees to process expense report receipts or are they
simply using the Concur portal?
Once we have reviewed the Concur services needed, we should reinforce our T&E policy by
publishing a revised Corporate T&E Policy with the most recent and relevant information on
how to process an expense report (best practices using Mobile App Expense Report Receipt
imaging? Simple How to Document).
Project 9: Optimize our Sales Process - we need to look in the mirror, before we pour our time
and energy into optimizing our sales process, make sure our team is ready to jump into high
gear and make the most of every improvement; to crush our sales goals in 2017:

8. Track Inventory - one useful metric to keep tabs on is our company's' product turnover
compared to the rest of the industry. Trunk stock is very complex over 400 warehouse move
into one virtual warehouse with row/shelf and bin locators and track by serial number. Having a
general idea of a product’s lifespan and knowing the trends in the market’s movement will help
us optimize our sales process in terms of timing visits and predicting orders. Plus, monitoring
inventory can highlight specific areas where products do well and where territories have or
have not been saturated.
Use Mobile CRM Software – to help our sales teams collect, maintain, and organize data about
their customers and products (approx75% of companies use mobile). CRM is critical to
maintaining efficient operations, especially as technology in the industry advances. Mobile CRM
software standardizes data collection and improves consistency, helping managers formulate
an outlook to guide future adjustments to the sales process.
Getting to know our customers better can help us optimize our medical device sales process.
Prioritize our Customers - when optimizing our medical device sales process, be sure not to lose
sight of our customers - they should always remain the driving force of our business. No matter
what changes we might make to streamline our operations, never let efficiency encroach on the
customer experience.
Project 10: Record to Report - High performing finance groups use clear “output targets” to
set goals that their customers care about; attributes like accuracy, timeliness, and satisfaction.
Then they create "process targets” for their own internal finance processes that will tactically
drive them to success—such as first time cash application match and number of
adjusting entries. Challenging the team with an outside perspective. At first, finance staff may
not push the envelope. They will think about ways to make the work get done faster, rather
than go away. This is natural. Many of these improvements fall into the “stop doing it”
category:
• Overly precise accruals
• Repetitive or immaterial flux analysis
• Too many layers of review
• Immaterial adjusting entries
• Unused reports
• Non-productive meetings
• Coding errors at the source
• Accommodating for exceptions and last-minute processing