In this time of recession, many organizations are looking to reduce costs. They typically look at traditional ways to reduce costs. That may mean buying less of something reducing staff, getting cheaper products or whatever.
Most small businesses probably think that process improvement is something that only applies to large organizations, and is too expensive and not enough value for small business.
There are many stories of process improvement in large business, and the costs of doing it, as well as the difficulty in doing it. Many of these stories show how the improvements can result in big savings that can only be found in big porganizations.
While it's true that big organizations can find big savings, they also have big challenges to face. It is very hard to get a big organization working together to achieve these big goals because they have BIG communication problems. Process improvement is not hard. It is simple and straightforward. Communication is hard. Because the management team doesn't communicate their goals effectively, different people in different parts of the organization are operating on different goals. This is what causes the problem.
Most people work in isolation, not recognizing that what they are doing is having a negative impact on what somebody else is doing. This is where a lot of time is wasted. By getting everybody to look at the same process and see the inefficiencies and waste, they understand what is happenning and the problems are typically easy to fix and don't cost a lot of money.
There are times when major changes are needed and they cost a lot of money. However, it is often possible to make small changes that can have a 10, 2 or 30% improvement with minor expenditures.
How can we educate business owners that this is possible?
Wednesday, December 17, 2008
Tuesday, December 16, 2008
CRM for your business or your sales force?
Customer Relationship Management (CRM) is a big issue for any successful business. The better you manage your relationship with your customers, the more successful you will be at keeping them as your customers. This is why many software companies are in the business of selling software to help you do this.
IF CRM is so important, why is there such a high failure rate in CRM projects. I speak to many people who attempt to implement CRM, and most have the wrong approach. They look to the software as the solution and ignore the people.
In a recent discussion with a sales person, I found a very frustrated individual. The company had decided to implement CRM. He hated it! It created more work and didn't help him do his job. That doesn't sound like it will be a successful project.
To address this problem, you have to understand what CRM is all about. The purpose of CRM is to collect data, so that you can understand your customer better. If you collect bad data, you will have bad information about your customer. If you have bad information, you have no chance of satisfying your customer. If your sales people are frustrated with the CRM software and don't see the value, they will not collect valuable information. There is an old saying that I learned in my early days working with computers: Garbage In, Garbage OUT (GIGO). It applies to the CRM project.
There are two things that you need to do:
1) Define a very clear goal. Show how what you are doing will help you achieve your goal.
2) Ensure that what you are doing with the software will make it easy to capture the information to help reach the goal. The more difficult it is to capture, the less chance you have of reaching your goal.
This means that your sales people and your sales support people need to clearly understand and support the activities. If you don't, you will fail.
You may be able to get your support people to "follow the rules". You will have more difficulty with your sales people. They rend to be independent and are measured differently. Do your assessments of performance measure them on the "new Rules".
IF CRM is so important, why is there such a high failure rate in CRM projects. I speak to many people who attempt to implement CRM, and most have the wrong approach. They look to the software as the solution and ignore the people.
In a recent discussion with a sales person, I found a very frustrated individual. The company had decided to implement CRM. He hated it! It created more work and didn't help him do his job. That doesn't sound like it will be a successful project.
To address this problem, you have to understand what CRM is all about. The purpose of CRM is to collect data, so that you can understand your customer better. If you collect bad data, you will have bad information about your customer. If you have bad information, you have no chance of satisfying your customer. If your sales people are frustrated with the CRM software and don't see the value, they will not collect valuable information. There is an old saying that I learned in my early days working with computers: Garbage In, Garbage OUT (GIGO). It applies to the CRM project.
There are two things that you need to do:
1) Define a very clear goal. Show how what you are doing will help you achieve your goal.
2) Ensure that what you are doing with the software will make it easy to capture the information to help reach the goal. The more difficult it is to capture, the less chance you have of reaching your goal.
This means that your sales people and your sales support people need to clearly understand and support the activities. If you don't, you will fail.
You may be able to get your support people to "follow the rules". You will have more difficulty with your sales people. They rend to be independent and are measured differently. Do your assessments of performance measure them on the "new Rules".
Monday, December 15, 2008
Is it time to cut back or invest in Technology?
During times like these, it's always difficult to decide. It seems that this is true of many companies. And many times we view it from two perspectives. We often say "Do as I say, not as I do", and this is true of SAP, the software giant that says they can help you run their business better.
In a recent BLOG on the Australian CIO site, Thomas Waigum comments on what SAP tells their customers versus how they act internally. In October, they issued an internal memo saying "stop all spending on Technology hardware and Software". This month, they recommended that their customers should take this time to upgrade their business by buying SAP.
We all have this conflict. While I am not a believer in across the board statements like "decrease expenses by 20% everywhere" or "stop all spending", during these times it makes sense to look at what you are spending on. During peak volume business, it is very hard to focus on where you are wasting money. You are too busy reacting to customer needs. During weak periods, it is often easiest to cut back on everything. Large companies often cut to the bone and end up weaker after the recovery sets in. If you focus your attention on the areas of waste, you reduce costs in the short term and come out stronger in the recovery.
So the answer to the question is "It Depends". If the investment produces a return, then it is a great time to invest. If not, don't do it. The questions are: "how confident are you that it will produce a return?" and "do you understand how it will produce a return?".
However, now is the time to do it. When volumes are low, your people have more time: Time to look for improvement opportunities, reducing waste, improving productivity. One place to start is the software you already have. Most software is underutilized and has many more capabilities than are used. Getting better use of such an asset will position you for the recovery.
In a recent BLOG on the Australian CIO site, Thomas Waigum comments on what SAP tells their customers versus how they act internally. In October, they issued an internal memo saying "stop all spending on Technology hardware and Software". This month, they recommended that their customers should take this time to upgrade their business by buying SAP.
We all have this conflict. While I am not a believer in across the board statements like "decrease expenses by 20% everywhere" or "stop all spending", during these times it makes sense to look at what you are spending on. During peak volume business, it is very hard to focus on where you are wasting money. You are too busy reacting to customer needs. During weak periods, it is often easiest to cut back on everything. Large companies often cut to the bone and end up weaker after the recovery sets in. If you focus your attention on the areas of waste, you reduce costs in the short term and come out stronger in the recovery.
So the answer to the question is "It Depends". If the investment produces a return, then it is a great time to invest. If not, don't do it. The questions are: "how confident are you that it will produce a return?" and "do you understand how it will produce a return?".
However, now is the time to do it. When volumes are low, your people have more time: Time to look for improvement opportunities, reducing waste, improving productivity. One place to start is the software you already have. Most software is underutilized and has many more capabilities than are used. Getting better use of such an asset will position you for the recovery.
Click here for the blog article that was referenced.
Saturday, December 13, 2008
What's an Owner's time worth?
As with most small business owners, I always question whether I should pay for services from business consultants. Buying hardware or software is easy, but buying services that I could do myself always seems to be a difficult decision. As a consultant, I should be able to justify this, since I believe that specialists can do things faster (and cheaper) that non-specialists.
In a discussion with a client last week, I got a new perspective. Small business ownersdon't have a lot of time, and any time spent away from earning money is a waste. Most of us earn more in an hour than we gain from doing other work ourselves. Consider this:
In a discussion with a client last week, I got a new perspective. Small business ownersdon't have a lot of time, and any time spent away from earning money is a waste. Most of us earn more in an hour than we gain from doing other work ourselves. Consider this:
- A specialist can probably do a job twice as fast as a non-specialist, because they have done it so many times before.
- A specialist has made many mistakes in the past, and has learned from those mistakes. That means that they can prevent mistakes from happenning.
- A business owner cannot focus his or her attention on a single activity. There are too many parts of the business looking for attention. You can't tell a customer to wait, because you've got more important things to do. This means that you work in fits and starts, constantly interrupted. It takes much longer to get the job done.
- If the job is really important, can you really afford to do it later?
This means that it will probably cost you three to four times as much to do it yourself, and may produce fewer results.
My client explained to me what I helped her with. I helped her to look at her operation with a new perspective, looking at how the organization could be more productive. This brought new opportunities into the discussion. Specifically looking at establishing standard processes which saved her time. When it was time to look for solutions, I was able to bring in new specialists, saving her time in finding and evaluating proposals. My experience in a broad range of technology allowed me to translate proposals that were essentially technical proposal into business terms. This again saved her time, since she didn't have to struggle to understand what the technicians said.
The biggest benefit that she described was time. Time saved by developing processes, time saved by finding opportunities, time saved by bringing in solution providers. All of this time could be devoted to developing the organization, upgrading technology platforms and generally moving ahead. Doing it herself would have increased the time requirement. There is one problem with time. There is never enough, and once it's gone, we can't get it back.
I knew this. We all know this. But why do we tend to act the opposite way?
Thursday, December 11, 2008
Are you Wasting your Software Investments?
I speak with many business owners that are frustrated with Information Technology. They start with seeing opportunities in software to help their business, but get frustrated because it doesn't deliver what they need. They then go on to try another and another, hoping that they will be more successful.
While some software products may be more suitable for one business or another, the problems seldom have anything to do with the software. The software is working for someone, so it can provide value. The problem is usually with the way the software is used.
Problems come from a conflict in business processes, the impact that software has on processes and people, and reality. The reality of a software installation is that business is going to change, and that change will take effort, usually at a time when you can least afford it. These issues are the source of the problems and the lack of results.
Getting back to the waste question, why do we allow this waste to occur? It is waste because we have spent money to buy and install this software and we aren't getting anything for it. Even worse, as we move on to the next software product, we are adding to the waste.
The problem with software waste is that it is usually invisible, except on the Balance Sheet. Software is stored on a computer's hard drive, and nobody sees it. There is another type of waste created by the software and that is productivity. Because we have installed the software and we aren't using it effectively, our people are less productive that they could be.
In a plant, when we produce inferior products or have too much inventory, it is often obvious. It piles up on the floor and is visible to everyone. Software waste piles up in invisible places, and productivity waste disappears (lost time is gone, never to come back).
Another form of waste is software functionality. As your business grows and changes, the software you already have may be able to provide you with new functionality that you have already paid for. You may have the opportunity to turn on this functionality. While it's not free (no effort to enhance your business is free), it won't increase your costs but can improve your bottom line.
Don't let your Information Technology Investments add to the pile of waste! Look at how the softwarean can be used to upgrade your business.
While some software products may be more suitable for one business or another, the problems seldom have anything to do with the software. The software is working for someone, so it can provide value. The problem is usually with the way the software is used.
Problems come from a conflict in business processes, the impact that software has on processes and people, and reality. The reality of a software installation is that business is going to change, and that change will take effort, usually at a time when you can least afford it. These issues are the source of the problems and the lack of results.
Getting back to the waste question, why do we allow this waste to occur? It is waste because we have spent money to buy and install this software and we aren't getting anything for it. Even worse, as we move on to the next software product, we are adding to the waste.
The problem with software waste is that it is usually invisible, except on the Balance Sheet. Software is stored on a computer's hard drive, and nobody sees it. There is another type of waste created by the software and that is productivity. Because we have installed the software and we aren't using it effectively, our people are less productive that they could be.
In a plant, when we produce inferior products or have too much inventory, it is often obvious. It piles up on the floor and is visible to everyone. Software waste piles up in invisible places, and productivity waste disappears (lost time is gone, never to come back).
Another form of waste is software functionality. As your business grows and changes, the software you already have may be able to provide you with new functionality that you have already paid for. You may have the opportunity to turn on this functionality. While it's not free (no effort to enhance your business is free), it won't increase your costs but can improve your bottom line.
Don't let your Information Technology Investments add to the pile of waste! Look at how the softwarean can be used to upgrade your business.
Thursday, December 4, 2008
Recession and Opportunity in Information Technology
A lot of talk is going on about the current state of the economy. Most people see it as a negative thing and assume that they will have difficulty maintaining sales, and will have to cut costs and reduce staff.
While this is a possibility, it is alaso an opportune time to improve your business operations. Improving business operations can reduce your costs, increase the quality of your products and services and and put you in a better position to maintain sales and be more ready to take on more business when the recession is over.
Let's look at the situation when things are going really well. We are so busy responding to customer needs that we do anything to deliver. This often means bypassing existing processes because they slow down deliveries. We also ignore excess inventory because we need more to satisfy customer needs. Over time these excesses cost us money and create excess overtime and waste.
As business slows down, your people have more time and while you can't afford to let them go yet, they have more time available. They are also more receptive to change, because the recession forces us all to think about it.
This is an excellent time to start to look at your business processes and how they can be improved. You have the time. You may also find ways to reduce costs. You may find ways to improve the quality of your products and services. All of these improvements may allow you to keep more customers because you have the ability to serve them better. A recesion provides a buyers market. Better capabilities means you are better positioned.
Another opportunity is your existing software. Usually when we buy software to run our business, we buy it for a particular reason. We get what we want from it (if we are lucky and do it well), then we move on. We seldom go back and look at the software to see if it can help us solve other problems.
Our business changes over time. As we grow, our needs change. These needs may be satisfied by software that we have already purchased. We don't have to evaluate new products, we don't have to install and learn new software, we just try the new function and see if it helps. That is like found money!
Nobody likes a recession. However, with every problem comes an opportunity. A recession provides an opportunity to improve your business so that you come out stronger and more competitive when it is over.
While this is a possibility, it is alaso an opportune time to improve your business operations. Improving business operations can reduce your costs, increase the quality of your products and services and and put you in a better position to maintain sales and be more ready to take on more business when the recession is over.
Let's look at the situation when things are going really well. We are so busy responding to customer needs that we do anything to deliver. This often means bypassing existing processes because they slow down deliveries. We also ignore excess inventory because we need more to satisfy customer needs. Over time these excesses cost us money and create excess overtime and waste.
As business slows down, your people have more time and while you can't afford to let them go yet, they have more time available. They are also more receptive to change, because the recession forces us all to think about it.
This is an excellent time to start to look at your business processes and how they can be improved. You have the time. You may also find ways to reduce costs. You may find ways to improve the quality of your products and services. All of these improvements may allow you to keep more customers because you have the ability to serve them better. A recesion provides a buyers market. Better capabilities means you are better positioned.
Another opportunity is your existing software. Usually when we buy software to run our business, we buy it for a particular reason. We get what we want from it (if we are lucky and do it well), then we move on. We seldom go back and look at the software to see if it can help us solve other problems.
Our business changes over time. As we grow, our needs change. These needs may be satisfied by software that we have already purchased. We don't have to evaluate new products, we don't have to install and learn new software, we just try the new function and see if it helps. That is like found money!
Nobody likes a recession. However, with every problem comes an opportunity. A recession provides an opportunity to improve your business so that you come out stronger and more competitive when it is over.
Monday, December 1, 2008
Why the traditional approach to IT staffing doesn't work
I see many small businesses that hire technical staff to support the technology used by their business. They often have been poorly served by sales people or buy technology from their local business or computer store. Things invariably go wrong and they don't know how to solve the problems, so they hire someone who is comfortable with technology and can fix the problems without having to call in tech support.
This makes the management more comfortable because they don't have to worry about technical problems. Someone else is responsible for handling it. In most cases, these businesses end up with reliability problems and problems that impact productivity of the business.
Why is that?
First of all, there are so many types of technology out there and no single person can be an expert in all of them. The result is that anytime something new has to be looked at, a lot of time is spent understanding and evaluating tools. This time could be saved by getting help from an expert.
Secondly, solving problems requires experience. So many things can go wrong. It can take a lot of time to identify the problem and get it fixed. In a small business, it is not often that the same problem occurs twice in a row, so your onsite staff starts again on every problem.
Thirdly, if you have a recurring problem, it has a major impact on your business. Your onsite staff may become expert on resolving it, but it still has an impact on productivity of the staff member who has the problem and the support staff that works on fixing it. Wouldn't it be better to prevent the problem in the first place? Most small business support staff don't understand the value and need for preventative maintenance nor what to do.
Lastly, if you have someone who is really good, they are gaining experience on your dollar. As soon as they have that experience, they are more marketable and you either have to pay more money or hire another untrained staff member.
A computer support company can be a much cheaper alternative, even though the rate that they charge is higher that an employee. This is not the case for all companies, but it is what you should look for.
They have a number of people and have a breadth of experience that you cannot afford in your business. You can get an "expert" in each type of technology. It will take much less time and effort to investigate and install new technology.
They see many different installations and see problems over and over again. While they may struggle on the first occurrence, they quickly learn how to solve these problems on somebody else's dime, not yours.
They learn what causes problems and how to prevent them. They can come to you with a preventative maintenance program, that ensures that your equipment keeps running. This increases your reliability and the productivity of your staff.
You don't have to worry about losing a staff member. Your support company is responsible for that. They can pay higher wages, get more qualified staff and keep them happier because of the range of challenges.
Hiring an IT support company can be as challenging or more challenging that hiring staff. It's important that you identify your needs and determine whether the company can meet them, and not put you in a tougher bind. This requires a good process for identifying the benefits of good management and ensuring that your supplier can deliver. Unless you have experience with doing this, you can get in trouble. Get somebody to help you structure this relationship.
This makes the management more comfortable because they don't have to worry about technical problems. Someone else is responsible for handling it. In most cases, these businesses end up with reliability problems and problems that impact productivity of the business.
Why is that?
First of all, there are so many types of technology out there and no single person can be an expert in all of them. The result is that anytime something new has to be looked at, a lot of time is spent understanding and evaluating tools. This time could be saved by getting help from an expert.
Secondly, solving problems requires experience. So many things can go wrong. It can take a lot of time to identify the problem and get it fixed. In a small business, it is not often that the same problem occurs twice in a row, so your onsite staff starts again on every problem.
Thirdly, if you have a recurring problem, it has a major impact on your business. Your onsite staff may become expert on resolving it, but it still has an impact on productivity of the staff member who has the problem and the support staff that works on fixing it. Wouldn't it be better to prevent the problem in the first place? Most small business support staff don't understand the value and need for preventative maintenance nor what to do.
Lastly, if you have someone who is really good, they are gaining experience on your dollar. As soon as they have that experience, they are more marketable and you either have to pay more money or hire another untrained staff member.
A computer support company can be a much cheaper alternative, even though the rate that they charge is higher that an employee. This is not the case for all companies, but it is what you should look for.
They have a number of people and have a breadth of experience that you cannot afford in your business. You can get an "expert" in each type of technology. It will take much less time and effort to investigate and install new technology.
They see many different installations and see problems over and over again. While they may struggle on the first occurrence, they quickly learn how to solve these problems on somebody else's dime, not yours.
They learn what causes problems and how to prevent them. They can come to you with a preventative maintenance program, that ensures that your equipment keeps running. This increases your reliability and the productivity of your staff.
You don't have to worry about losing a staff member. Your support company is responsible for that. They can pay higher wages, get more qualified staff and keep them happier because of the range of challenges.
Hiring an IT support company can be as challenging or more challenging that hiring staff. It's important that you identify your needs and determine whether the company can meet them, and not put you in a tougher bind. This requires a good process for identifying the benefits of good management and ensuring that your supplier can deliver. Unless you have experience with doing this, you can get in trouble. Get somebody to help you structure this relationship.
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