1. Input takes longer than output
Capturing data is absolutely essential to business intelligence. It is extremely important that data capture is simple, quick, highlights errors and duplication and is comprehensive, collecting all the data you need for your business metrics. If your business system is too onerous, or requires intensive manual labour to capture data, your staff will avoid it or cut corners wherever possible. This then leads to the introduction of bad data, which devalues any insights you do generate from it.
2. You do all the reporting
It goes without saying that a finance director should be good with numbers as part of their job. And because reporting involves numbers, it makes sense for the finance department to undertake such activities. But is it really the best use of finance employees’ time to follow up time sheets or sales team performance figures? Aren’t there already departmental managers who should be reporting on the performance of their own teams?
If your current business system only empowers the finance team to undertake reporting functions, then it is clearly holding your business back.
3. Compiling reports takes too long
Many businesses retain different applications for managing the data belonging to each department or business unit. Obviously the accounts department has their own system for managing income and expenditure, while sales and support probably use another tool for managing client relationships. But what happens when you need to compile a company-wide report? Relying on siloed data sets means that running a report could take days or weeks, by which time the results generated are already out of date.
Your ideal business system will replace several disparate departmental applications with a single common data store and interface. Reports can then be compiled, in real time, from the most-up-to-date information without waiting for data from other departments. Planning and decision making will become quicker based on live, accurate data, helping make your business more responsive and agile.
“From a company point of view, [data] silos need to work together. But too often that doesn’t happen. Problems arise when departments do not share the same priorities, knowledge, or information, and when managers work in an independent, entrepreneurial manner–in short, when people are operating with tower vision.” – ‘How Excellent Companies Avoid Dumb Things‘ by Neil Smith with Patricia O’Connell
4. Forecasting is difficult and/or inaccurate
If you cannot obtain accurate information quickly and efficiently, you are extremely unlikely to be able to create the forecasts you need for drawing up realistic budgets or business strategy. Forecasting is always subject to some degree of uncertainty, but if your existing business system is adding to that variability, it is clearly not fit for purpose.
Your ideal business system will validate data at the point of entry to avoid the introduction of manual errors and allow you to access data in real-time, thereby improving the accuracy of forecasting.
“While there is functionality contained within these tools that can help a small business, growing organisations may find that they quickly grow out of these tools. Organisations that use a set of multiple disparate applications, however, lack this unique advantage of ERP.” – Nick Castellina, ‘ERP and the Small Business‘.
5. Finance is divorced from project management
ERP is not, nor should it be, a system purely for managing production lines. Each project your business undertakes will have a budget attached – so why would you segregate that information from your main finance system?
However, some professional services businesses persist in operating standalone finance systems. This means planning, budgeting and forecasting becomes less accurate as information needs to be manually transferred between systems. Also accounts and project data are both liable to ‘contamination’ by manual data entry errors. It becomes impossible to accurately manage profit and loss across across multiple projects where resource utilisation shifts constantly. Your ideal business system should unite finance with project management to give a clearer understanding of business processes and their true costs.
6. Your business system is too manually intensive
Whether it is manually copying data between screens, or even exporting and importing data into other applications, the more you need human intervention, the greater the risk of creating errors.
Among the problems caused by manual intervention are:
- Poor resource utilisation – staff time and resources are wasted manually copying data or moving processes forward;
- Increased costs correcting manual errors; and
- Reduced efficiency as staff need to devote even more time to spotting and correcting manual errors.
An idea business system will make use of automation and advanced error checking to reduce the manual labour required to keep things moving. These added efficiencies will then translate into direct cash savings. Remember, “Poor data can cost businesses 20 per cent to 35 per cent of their operating revenue”.
7. Your system does not match your sector
Having grown out of the manufacturing sector, many ERP solutions are still geared towards that sector. Although some can be heavily customised this presents some problems. The add-ons rarely translate well to the professional services sector; customisations are often ‘clunky’ and do not interface smoothly with the core platform; customisations and enhancements can be extremely expensive, adding to the cost of deployment and maintenance of the system and upgrades are technically challenging/impossible and therefore costly.
To avoid these issues it is important to select a platform that has been specifically designed for your sector. This will help minimise costs and reduce the time to ROI realisation.
Make sure you’re aware of these warning signs so you can make justified business decisions to help move your business forward in the right direction.
Neil Davidson is vice president of enterprise at Deltek UK.
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