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The Keys to Operational Success By Dan Kraus How does a small to midsized enterprise (SME) owner increase profitability in spite of growing competition? By employing the right technology that will provide a unified, up-to-the-minute view of operations, allowing for improved business process efficiency and a more efficient business. Today's SME is faced with a number of significant challenges. Recent quarterly indicators by the U.S. Small Business Administration (SBA) have shown that SMEs are performing well in a strong and growing economy, but many SME owners are worried about the threat of decreased consumer spending connected to rising oil prices and economic infrastructure damage from Hurricane Katrina, as well as the increasing compliance burdens brought about by federal regulatory initiatives. As SME owners decrease their level of optimism, many realize the importance of gaining operational advantage over their competition. This decrease in business confidence can further be attributed to a variety of factors. Increasingly, SME owners must contend with considerable challenges that have the potential to directly affect their bottom line. Businesses today must be prepared to deal with an educated, savvy, and global client base that has access to extensive information via the Internet and global markets. The proliferation of information available to prospective customers poses a formidable challenge. How does a company differentiate itself from competitors that offer similar products or services at reduced rates? In addition, economic uncertainty adds to the mix while fluctuations in world markets directly affecting business operations. Cost increases felt by suppliers are quickly passed on to the business owner who must either absorb the cost directly or pass it on to the customer base. Further, recent corporate governance scandals in larger organizations have shed a more critical light on business operations overall — regardless of company size. The term “accounting irregularities” is now part of the cultural vernacular, further underscoring the need for businesses to manage a tight-run ship — with operational transparency being the standard, not the exception. This fact alone poses considerable implications. Most small businesses begin with a simple system — one that works to maintain the basic business operations indicative of a start-up company. As business expands, however, many companies do not keep up technologically, resulting in either inadequate or poorly integrated collections of outmoded applications. The implications of having an out-of-date system are numerous and far reaching; most importantly, information gaps ensuing from disparate systems often result in business process breakdowns and lost revenue. In addition, data stored in multiple locations that is often disconnected abandons valuable customer and production knowledge and slows business processes. Time is money; accordingly, using an outdated solution can adversely affect a company's bottom line. To be successful, an SME should utilize a system that immediately optimizes business processes, decreases operational costs, and improves customer acquisition and retention. Using technology that can incorporate all these assets typically results in a lower total cost of ownership and increased profitability. SMEs should look for a technology solution that offers: Scalability and flexibility The ability to integrate current systems with existing disparate or outmoded applications is one of the keys to operational success. SMEs are wise to utilize a system that is quickly and seamlessly integrated with their current applications. Businesses should also consider software that will allow for support and integration of future business needs. The ability to quickly and easily modify existing IT investments will result in minimal ongoing IT administration and training, leading to a lower total cost of ownership. Operational transparency Today more than ever, companies must closely monitor internal processes. Stricter global accounting and corporate governance requirements have placed pressure on businesses to obtain greater transparency, time lines, and accuracy in both financial reporting and managerial control. The integration of financial and business information readily available within the system allows for a more streamlined and highly functioning establishment. Smart business owners utilize solutions that facilitate minimal error in the form of a singular, integrated system. End-to-end, real-time visibility The ability to harness information on a business's supply chain — from material purchasing to shipping — is invaluable. The current fast-paced global business environment demands every business to use a system that can deliver up-to-the-minute critical information across manufacturing, customer relationship management, and finance. Performance slowdowns result in lost or decreased productivity and revenues. Adopting a system that provides a full view of operations allows for greater insight and costs savings, while further enabling managers to be better-informed when making critical decisions. Integration The ideal business software for SMEs is one that is intuitive, accurate, and easy to use. Robust functionality — delivered in a familiar environment — results in a shorter learning curve and more timely results. Business owners should look for software that can be easily integrated into the company's existing system and has an easy-to-use interface. By leveraging technology investments already made, the company can quickly realize profitability and a lower total cost of ownership. Ease of use and user empowerment An internal system should allow for the efficient and proactive use of technology to further company objectives and increase the bottom line. When determining the technology or software of choice, a company should consider usability as a key component. Information gathering should be quick and easy, allowing the user to gain knowledge regarding specific processes with a few quick clicks of the mouse. Customized preferences for specialized users and managers will also allow for greater efficiency and user control. Analytics SMEs should consider implementing software that has a strong business intelligence or analytics component. A facts-based understanding of a company's customers and prospects — as well as suppliers, partners, employees, and broader economic indicators —are fundamental to experiencing both strategic and operational successes. Credible, clear, and comprehensive insights into every aspect of the business will give a company the competitive advantage. In summary, the task of aligning IT investments with business goals can be challenging, but companies can reap the benefits quickly and cost effectively by making proper IT investments. SMEs can avoid hefty costs often associated with integrating vendors' products together and opt for a fully integrated, affordable, and scalable business management solution. The right IT investment can significantly affect a company's success. By selecting solutions that are designed specifically for growth, companies can positively impact the bottom line and look to provide a greater return on their investment. |
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