Informing better business decisions

24 Oct 2007

Turning your company into an information-driven business shouldn’t be an aspiration but a reality

There’s an understandable temptation among many small-to-medium business owners to think of software simply as a cost — a necessary evil to help make life easier by managing tasks like accounts or wages. But used properly, it can be an asset to help the business function more effectively.

Look past all of the buzzwords and acronyms like CRM and ERP and what is at stake is the ability to run a business more efficiently, more measurably and more profitably.

There is a range of business applications from established suppliers like Microsoft, Oracle, Sage, SAP, Mamut and others. They give managers up-to-date information about company performance across the entire organisation, from stock lines to supplier and customer details.

A common misconception is that such systems are complex and therefore only suited to larger organisations. Not true, says Donal Reilly, applications sales director for Oracle Ireland. “I’m a small to medium enterprise but I still need to go through the same business processes as the big boys.”

The first step on the road to an integrated, information-driven business is an enterprise resource processing (ERP) system, which essentially gathers together all of the financial and operational data from around the firm and holds it in one place.

According to Conor Wickham, Microsoft Dynamics marketing manager, getting a single view of the business is an achievable goal with the right business applications: “As you start to build out your ERP system you need to integrate the financial reporting with supply chain management and so on because that’s the way to get the right information out of your business.

“The software can be easily set up to suit the needs of different users,” Wickham adds. “A business application should help an organisation to make the right decision — if I’m a financial director, the economic information should be visible to me; if I’m the sales director I should be able to look at sales information, the pipeline and revenue flows.”

Alan Moody, managing director of Mamut Ireland, adds: “It’s a total business-management tool. It will show you who your best salespeople are and what are the best-selling products, or will show the product age so that if there’s an expiry date coming up you can decide to offer a discount deal to customers.”

Businesses shopping for a new application should also check whether their vendor has products suited to a particular vertical industry sector, such as manufacturing warehousing, distribution or retail — most of the main suppliers have customised modules to suit these markets.

Payback can be fast for implementing ERP, claims SAP Ireland’s managing director Phil Codd (pictured). “We can see return on investment in under 12 months in most cases,” he says.

“Companies are starting to understand that they can get competitive advantage from software. It’s an asset they should be trying to maximise.”

Teresa Maguire, sales manager for the mid-market division at Sage, points out the price of the software licences is normally a fraction of the overall project cost. Most of the company’s expenditure will go towards implementation, staff training and the change management process.

Next on the business checklist is customer relationship management (CRM).

As costs continue to rise in the market and margins inevitably tighten, keeping track of customers is essential, especially as the cost of winning new business is much greater than retaining current clients.

“CRM is still evolving, but the challenge is, once you purchase CRM, there definitely is a need to integrate that into the accounts information,” says Maguire.

The advantage of integrating CRM into the financial package is the ability to run joint reports, so that managers can query the system to see how many times a particular customer has been contacted and how much business the company has received as a result.

Being able to store sales information in a more granular way brings to light important details.

“For example, a sales rep making a call can see how much a customer spent, what products they bought or what their debt position is — elements they need to introduce into the conversation. Essentially, the salesperson is more productive,” says Donal Reilly of Oracle.

After that, another useful application to consider is a supply chain management (SCM) system. This deals with information about products moving through an organisation and out to the customer.

According to Reilly, it’s about more than simply being able to tell a customer where their product is and when it will be delivered. “You’ve got to look at the whole supply chain side.

“You schedule the manufacturing if you build to order. In that, you need to be efficient and reduce downtime of the machines. It allows you to optimise your manufacturing schedules.”

The market is ultimately moving towards business intelligence — a ‘digital dashboard’ on any managing director’s desk that shows how the company is performing in real time. It’s the talk of the IT community but some believe it’s not quite ready for prime time.

“My view on where business intelligence needs to be heading is intelligently analysing the business — it should be able to tell us things intuitively,” says Alan Moody of Mamut candidly. “We’re nearly there; it’s certainly an area we can strengthen — pushing information to a user as opposed to ‘the information’s here, come and get it’.”

“That’s the kind of detail we should be able to get to. The prediction stuff I would say all vendors are relatively weak at, but that’s where we’re going in the next 12 months,” Moody says.

As a final point, deciding whether to source all of the elements from a single vendor, or cherry-picking different components from multiple suppliers is a perennial debate for buyers.

Software standards around information sharing mean that the latter approach is possible for any business that doesn’t want to feel bound to one product company.

But, perhaps unsurprisingly, most of the IT companies we spoke with advise customers to choose one supplier, claiming that this offers more
advantages — notably, removing an IT management overhead from the customer.

“The challenge is to get down to fewer systems and reduce the total cost of ownership. Otherwise, managing the various interfaces becomes a nightmare,” Codd concludes.

By Gordon Smith