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August 25, 2009

Asking the Right Questions

Filed under: All Blog Postings — Craig Pollack @ 4:31 am
2009-08-25 David Faye

I just got out of a meeting with the CEO at a client where the meeting began by him asking me the question "What technology is out there that can help my business?"

We spent a lot of time discussing various different technologies and how they might be appropriate -- enhancements to his accounting & ERP software, VOIP, implementing a fax server, having his sales & marketing team make social networking a bigger percentage of their effort, expanding their online sales capabilities and presence, etc.

However, we didn't really get to the meat of the conversation until we re-phrased the initial question.  The challenge with many business owners today is that when it comes to technology, they tend to ask the wrong questions.  Asking about available technologies might be elicit some "interesting" answers and maybe even some "productive" answers, but it's not the best way to get at what the owner really wants.

A better question is -- "What does my business need to meet its goals and how can technology help?"  When you phrase the question this way, it forces you to consider the business first instead of technology first. 

What does the business need?  Cut costs?  Great...let's talk about two things -- is there a way to cut technology costs?  And...is there a way that investing in technology can help you cut other costs? 

What does the business need?  Increase sales?  Great...how can technology help your sales team increase sales?  What tools are available to help marketing generate more leads?

What does the business need?  Improve customer service?  Great...how can technology help improve customer service?  What tools are available to help customer service staff provider a higher level of service to customers and give them the ability to stay more in touch?

What does the business need?  Reduce inventory turns?  Great...how can the ERP software be redesigned or engineered to provide better inventory visibility to help ensure that the right quantities of the right products are purchased at the right time?

Contrary to the approach of many technologists, the issue is not with the technology.  The issue is asking the right questions.  Make sure you're working with someone who does this.

August 18, 2009

Using ERP Software with the End in Mind

Filed under: All Blog Postings — Craig Pollack @ 4:19 am
2009-08-18 David Faye

When you implement new accounting and ERP software, do you do it with the end in mind? What I mean is, do you think about what you want to get out of it before you decide on the particular software and before you decide on how to configure it? Over the years, after working with hundreds of clients, I can tell you that most people don't. And this is primarily because most software is implemented by managers at the controller level, instead of getting the buy in and input from C-Level executives. Most C-Level executives don't want to be bothered with being involved in the implementation of an accounting system. However, if you don't provide input about what you want out of the system, you pretty much guarantee that you won't get it.

The key thing to remember is that these systems are a tool to help run your business more efficiently. Other than that, they have no value. So, doesn't it make sense to configure your "tool" to give you the data you need? Any system will produce a Balance Sheet and Profit & Loss Report. Any system can track receivables and payables and inventory. However, the true value of a system is in its ability to generate reports that provide key indicators of the health of a business. The key indicators might be different for every type of business, but they are whatever you need to run your business well. If you were on a desert island, and you only had one minute on the phone with your management team, what data would you want to know to be able to know if the business was doing well? Inventory turns? # of days in receivables? Average sales per day? Number of invoices per month? Average invoice value? Number of customers? Number of net new customers? These are various kinds of both lagging and future key indicators that business owners can use to tell how the business has done and how it is likely to do in the future.

Have you configured your accounting & ERP Software to produce these types of key indicators? Or do you have your accounting staff preparing them manually in Excel every month? Or, have you been told it's "impossible" to generate this data, and you've given up asking for it? We know businesses in all of these scenarios. Which are you?

 

 

August 17, 2009

Do you have an IT Guy or a Trusted Advisor?

Filed under: All Blog Postings — Craig Pollack @ 10:11 am

Before you ask yourself - Do I have an "IT guy" or a "Trusted Advisor"? - first you have to ask yourself, "do I care?" If you don't, then there's no doubt that you have an "IT guy". Regardless of what he's capable of, if that's all that you're ever going to see him delivering, then that's all he's ever going to be. If you do care, then even before you ask yourself what you have, you have to consider what you want.

My point is, it's quite difficult (if not almost impossible) for your IT Service Provider to be a Trusted Advisor if you won't let them be one. We run into this all the time. If all the client cares about is doing the absolute minimum, reacting to problems, keeping costs down (at all costs), and always thinking short term, then you're in trouble.  There's almost no way to be a trusted advisor to someone who doesn't want it.

The word "advisor" is an active noun. It implies action. It implies proactive action. It's professional. If you're not planning, then your partner can't be advising. To have a "Trusted Advisor" is a two way relationship. It requires involvement on both sides. For us to be a "Trusted Advisor", we literally have to be a partner with our clients in their business.  We can recommend till we're blue in the face, but if nothing is done about it, are we truly advisors? No.

Now, you have to ask yourself - are you willing to pay for it? If the answer is no, then we're back to "do I care?" If you are (willing to pay for it), then regardless of whether you actually have to (pay for it, you've just escalated the discussion up to a whole 'nother level. The fact that you are willing to pay for it will take you to the level where your expectations are higher and the demands you'll be placing on your IT service provider are higher. And this is key. But - "willing to pay for it" doesn't necessarily mean what you think I mean - paying more for our services. On the contrary, we often times advise clients to spend less on us by spending more on something else. We may ask clients to spend for a better solution so that our ongoing support fees will be less and their productivity will be more (long term thinking)

For you to take your business to another level, you need to be surrounding yourself with advisors who bring more to the table than what you may be asking for. You need someone who will add value above and beyond what you ask for, but rather - what you need. This is where your IT Service Provider is truly a "Trusted Advisor".

So, back to the question - do you have an "IT guy" or a "Trusted Advisor"? The difference could be the difference between your success and failure.

Business Before Technology - We Get IT!

 

August 5, 2009

Like a Weed – The Hidden Costs of IT

Filed under: All Blog Postings — Craig Pollack @ 9:21 am

How often have you ripped out a weed only to find it growing back a week later? Annoying, isn't it? As I'm sure some of you know, it's not because of any magical thing that's going on, but rather because the part we remove is only the part we see. What we don't see is really one of most important parts. This too can be said about the cost of IT.

When people think about the cost of their IT, they tend to think about only the costs they see. This would seem to be logical - how do you think about things that you don't know about? But the problem is - When people think of the cost of IT, and more specifically, reducing their cost of IT, most of the time they're thinking only of the costs they see - the cost of the hardware, the software, and the related service fees. Rarely, in my experience, do you really see clients considering all the "hidden" costs.

Some of the most obvious "hidden" costs are those associated with lost or reduced employee productivity, wasted dollars spent on poor investment decisions, unseen administrative costs, and costs resulting from poor planning. Drilling down further, a lot of these costs are caused by things like downtime (caused by insufficient budgetting for proactive maintenance), poor performing machines (reducing staff productivity), redundant work (increasing staff costs), insufficient training (reducing performance), over-extending the life span of machines (causing increased support $'s and increased replacement costs), and improper configurations (also causing increased support $'s). Some of these are soft costs (lost productivity impacting staffing costs) while some are hard costs (increased replacement costs).

Rarely do we see clients considering the long term costs of their short term decisions. It's almost always, how do we cut costs NOW! But the reality is all of these decisions go to the bottomline impact IT has on your company. And more often than not, the long term impacts are way more costly than the short term savings. If I don't stay current with patching all my machines, I can save some $'s this month (while fixing that infected workstation will cost way more next month). But again, I believe one of the key components here is how clients define the word "cost".

You can easily have a conversation with a client contemplating spending $100,000 on a new piece of machinery with a 5 year life span, but talk about replacing the $3,000 server the business completely relies upon BEFORE it crashes and it's like pulling teeth. Why is it that people are ok running computers into the ground but wouldn't think twice to do this with almost any other part of their business? Why is it so rare that a business owner strategically acts to take a proactive approach to deal with IT issues BEFORE they bring their company to a screeching halt? Again, it comes back to the definition of "cost" (ie: how business owners currently think about costs).

I believe a lot of it has to do with the oversimplification our industry (with Microsoft leading the charge) has done over the last five to ten years. Everyone still thinks these machines are like calculators or dishwashers. But the reality is, when something that could bring your whole company to a complete standstill is treated like this, these hidden costs will continue to have a bigger impact on profitability than they really should. We (as an industry) need to do a better job of helping our clients understand IT "costs" and the business impact of them.

So, before you yank that weed (ie: make a short term decision re: IT), think twice about what's going to happen when it grows back...