Do you really get value out of all your IT investments?
In another interesting article on the www.proformative.com’s website, the author Doug Sleeter, President at The Sleeter Group, Inc. brings up the challenge of identifying good technology products and separating them from products that are often marketed using unrealistic claims; products that rarely live up to the expectation. Although the author is mainly referring to software products, it is clear that these principles apply to all technology products and service offerings.
Software is a major contributor here, causing disappointment for users of various products soon after implementing these solutions. This is primarily true for consumer software products but is also widespread among business applications.
I am exposed almost daily to technology products, many of which are software products in the area of accounting and finance. These products are intended to either interface directly to ERP applications or used stand-alone. Of these I can mention sales commission automation software, supplier management and performance software, contract automation, fixed assets management and maintenance, etc. These products, according to their developers and publishers are there to solve common business problems and deal with challenges organizations face on a daily basis. It seems that everywhere you look there is a solution they want you to believe you cannot live without.
In finance, the most common such application is in the area of planning, budgeting with forecasting, enterprise performance management and business intelligence. Many of these applications are bundled in one package, as these tasks are usually related. Others are licensed by function or offered as “light”, “intermediate” or “advanced” or in any imaginable selling configuration to entice people from different business environments and sizes.
In the past 20 or more years I have personally tried a variety of software products, all intended to enhance business functions or solve a real world business problem. Lately, this has been far more noticeable with mobile device applications, some of which are targeted to business users. My experience with new technologies and the accompanying new software products is that in many situations it is hard to justify the commitment to acquiring and implementing many of the product offerings, even if it seems appropriate (and most often tempting) to invest in such products. Proper research almost always proves that.
When evaluating new product offerings we need to carefully weigh the benefits (must be measurable) versus the cost (total cost, not just the software licensing fees).
Here are two examples:
Sales Commission software: Unless there are more than several persons for whom sales commissions must be calculated and there is a complex commission plan in place, it is hard to justify licensing (either SaaS or on premises) such an application. There is a one-time license fee (on premises) or monthly subscription fees (SaaS) plus annual license renewal fees (on premises). To that you must almost always add implementation fees, consulting fees for special maintenance and modifications, training of company employees, and other costs. When you reach a point where the benefits outweigh the total cost by a good margin, you are ready to commit to such an undertaking.
Payroll Processing Software: Here there are clear benefits for nearly all size companies. Experience over the last three decades shows that benefits gained by automating this function almost always outweigh the costs involved in doing it manually and guarantees compliance when correctly used. Only in rare circumstances and usually in very large organizations is this service performed in-house.
As for the planning, budgeting and business performance management software mentioned earlier, I find that the benefits gained from implementing such software dramatically outweigh the costs involved when the following results are achieved:
A. A well-implemented plan and analysis process, done year-round provides management the tool to gauge actual company performance against its initial or updated plan or budget.
B. The planning software allows management to evaluate the forecasted future financial health of their organization, through accurately produced forecasted financial statements, customized reports and dashboards of financial ratios and KPIs, and other tools.
C. Management uses the data obtained from the system to arrive at relevant decisions and act quickly in response to this data.
D. Fewer decision errors are usually made when data is available immediately after an accounting period is closed.
Since this type of product is now available to small and medium size companies, many organizations can enjoy the benefits while implementing the software at a reasonable cost.
As with other software applications, there is also marketing hype and unrealistic expectations in the planning, budgeting and management performance product category. My advice is always to evaluate as many products that are available for the specific market segment and company size and choose the one that can realistically deliver results as described in A-D above.
Remember that marketing hype is human nature, as we all want to present our product or service in the best possible light, sometimes omitting weaknesses or exaggerating features or benefits. Separating the fact from the hype is what it takes to find the right product for the defined task.