One of the most challenging times for a growing business, is that point where you realize that your current business systems aren’t up to the job anymore. An implementation of a new ERP, accounting package, billing system, or other new business systems can create disruption in your business. Unfortunately you can’t eliminate all the pain of making these kinds of transitions, but you can prepare for them in a way that will allow you to make the transition much smoother. Your business has processes that you are accustomed to, and your systems have potentially years of data that will have to be transformed, cleaned, and moved. Evaluating, planning, and analyzing your existing business processes and data can prepare you to pick, and more smoothly implement the right systems. If you are like most business owners you try to maximize the time your business spends on revenue generating activities. As your business grows this task becomes much harder for a number of reasons. I have over twenty years of experience working on implementations and acquisitions inside of growing companies, and understand the struggles relating to implementing new business systems. Before you ever request demos and pricing for new business systems, there are a few things you can do to reduce the disruption to your business. Consulting hours you will spend with your software provider or implementation consultants are expensive. Once you pull the trigger you will be struggling to keep the hours within budget, and battling deadlines and business disruptions. Here are a few basic activities that will help you to prepare for and reduce future headaches. Much of the work can be done internally before you ever begin an implementation.
Document and Streamline Your Existing Business Processes
Documenting your existing business processes will allow you to evaluate systems in light of current processes in order to get a clear picture of the fitness of the new software for your business. It will also allow you to uncover opportunities to streamline and automate current business processes. For smaller businesses who currently employ cash accounting, and will be implementing accrual accounting, this step is critically important. Likewise if you are anticipating having to implement key performance indicators for debt covenants, and other governance requirements associated with business growth and funding this is also very important. If you want to create or maintain agility in your business, implementation of good business processes is essential.
Evaluate, Clean, and Deduplicate Your Existing Data
This activity will help you get the most out of your new systems. If you want to take advantage of automation, clean data is a hard and fast requirement. Data migration is one of, if not the most painful and time consuming processes in a new software implementation. It is also one of the most notorious reasons for missed project deadlines. Good business owners and CEOs understand that twenty percent of activities generate eighty percent of the results. This is why they are rightly aiming their teams efforts at revenue generating activities. As a consequence of this a company will inevitably end up with duplicated and dirty data. This is not a real bad thing for a growing business when they are small, but as a business grows the cost of bad data increases and is more hidden. It also makes everyone’s job harder. It impacts customer satisfaction, employee satisfaction, revenue, expenses, and will keep you from implementing automation to reduce costs, and increase margin.
Evaluate Key Performance Indicators and Reporting Requirements.
The first step in this process is evaluate what reports your company currently requires, and metrics (KPIs) you use to measure the success of your company. Ensuring that you have the reports and metrics you need to run your business is where most implementation consultants fall short. Reporting can’t be an after thought, because whatever business processes you implement with your new systems have to provide you reporting to measure the success of your business. The other and equally important reason to evaluate your companies reporting is to take advantage of some amazing opportunities to allow the data from your new business systems to truly help you gain often hidden insights about your business. The cost of data science and analytics is becoming more accessible for small businesses, and a competitive requirement for larger businesses. Evaluating your current reporting could pay very large dividends.
Return on Investment Analysis
I think it is appropriate to close this discussion with a conversation around the bottom line impact to company revenue and expenses. You will want to do a thorough analysis on all of the costs associated with the licensing, support, labor, and other indirect costs associated with your current business systems. As a company grows, so does the cost of business systems. If you currently own your software and possibly pay monthly or annual support, you may be aware that most software companies today have moved to a software as a service model (Saas) where you pay monthly to use the software. Doing a cost analysis is important, because you will definitely aim to offset he increased costs with gains in efficiency. This is much easier said than done, and the sales team from potential software vendors will likely over promise an under deliver, and you will like under estimate the cost and complexity. If you under estimate the cost and over estimate the benefit you will be in good company. Unfortunately that tends to be the way with software implementations. The good news is that a little diligence now can go a long way to offset the imbalance between expectations and results. We have reached a place where technology is paying dividends. My wife opened a small business in 2012, and I was truly amazed at how little hands on was necessary for me to keep up with bookkeeping, payroll, and accounting without paying for an accountant or bookkeeper. If we had opened the same business in 2000, the time spent would have been quadrupled. That kind of efficiency is finally reaching larger businesses, so there is tremendous opportunity for savings to offset the new software costs so the system you choose is very important. It is also important to beware of the monoliths who are still selling basically the same software they did in 2000, with a few new features, but nothing like the efficiency you can gain from the cloud born solutions of today.
I don’t make any recommendations for specific software here, because the systems you choose will greatly depend on the size, type, and preferences of your company. Please feel free to reach out to schedule a free one hour consultation before you choose your next platform. bpinkston@brentpinkston