Small Business pays for Technology supplier's mistakes

I have run across two instances lately of a small business that paid for mistakes made by their technology supplier.

Most suppliers to small business are small businesses themselves. When they make a recommendation of a solution to their customer, they tend to charge in two parts. The first part is for the hardware and software. Since they must purchase this themsleves, they tend to charge for it up front. They charge for their time later. This is something they can control, and it is where they make their profit.

All of this is understandable, and if the solution was guaranteed, it would not be a problem. But since the supplier had to pay for it up front, if the hardware doesn't do the job, new hardware must be bought. The client ends up paying for this. The first purchase is a loss.

This may be understandable except for one thing. In both cases that I mentioned, the supplier had made an assumption. They assumed that because this was a small business, they did not want to pay for a top of the line solution. They bought a cheaper solution, because they assumed the client would not pay for it. The client wasn't given the opportunity to choose. The quality of the hardware may have been ok for most situations, but not all.

Technology suppliers need to change their approach with small business. They need to assume that their clients are intelligent, even though they don't know the details about the technology that they are buying. They need to make clients aware of the options and the risks that exist. If they do that, then their client will have more respect for them and trust the solutions that are recommended. Until that happens, small business will continue to feel that they do not have any control and will not trust the solution providers. That is one of the reasons why many small businesses are reluctant to take advantage of new technology. They knwo that they are likely to get the shaft. They only go there when they have no choice, or have totally satisfied themselves that the solution is right. Both delay the implementation of solutions that could bring productivity advantages to their business.

Making Information Technology simpler for small business

I spoke to a couple of small business owners last night, who complained about the lack of solutions to their business needs. Every "solution" proposed by consultants and software suppliers started with "well, in order to do this, you've got to BLAH, BLAH , BLAH". That is what the small businessman heard.

Why? The business owner saw a small problem and wanted a small solution. What he got was a complex "solution", one that involved changing his business. Most software products used by business have been developed with all of the checks and balances that are needed to make sure that the business functions as it should. This is good if the business is actually doing this. However, most are not. So the problem is that a proposal to totally restructure the way the business operates is met with resistance. The business owner sees a small benefit, while the "solution" provider wants to make sure his software is used properly.

Added to this problem is that the business owner can't articulate his problem, nor communicate what he wants to the software supplier or consultant. The software supplier sees only the software and how it "should" be used.

Most software is flexible enough to be used without all the bells and whistles. There are limitations to the benefits when this happens, and potential problems down the road. But when the owner doesn't see the problems or benefits, he/she is often unwilling to commit to the major effort to achieve it. Software suppliers often ignore all of this in their efforts to sell the software. They quote the benefits without showing the impact that it will have, nor the prerequisites to getting all of the benefits.

I have written many times about the need to understand the business process improvements expected when you install new software. While that is valid, there is a need for the business to evolve and learn what the benefits can be and identify new problems that can be solved. If the owner cannot see these problems, then there is no benefit of attempting to solve it.

I prefer and incremental or iterative approach.

1. Identify the problem as the owner sees it.
2. Outline a solution with minimal effort to solve that problem, without putting them in a box.
3. Once that is solved, look at the new data provided and how that expands the possibilities that may be available to the business.
4. Identify the new problem as the owner now sees it. More information will help to describe the past problems in new ways, requiring new solutions.
5. As the business learns, the solutions will get bigger, and the prerequisite activity will get larger. However, the business will see that incremental effort yields new benefits and be more willing to support it.

Most small businesses don't have the resources to take on a large job. They may be willing to invest in the software, but not be prepared for a major investment in staff resources and time to do what's needed for a complete makeover.

Most businesses never use all of the functionality provided by the software products that they buy. When the big bang approach is used, they will be scared off until they need major enhancements again. They will put off the pain of the big bang for a long time, maybe until it's too late.

The incremental approach makes progress regularly, gets benefits in small chunks regularly and makes it more acceptable for small business.

Is a technology upgrade necessary or adding value to your business?

Many small businesses face a challenge when dealing with todays technology. Most of the hardware and software far exceeds our capacity to use their features and functions. Yet in order to maintain support from the software supplier, we have to upgrade to a new version.

This might be ok, except for the fact that there is so much extra capacity in the hardware that the software developers do two things:

• They get sloppy with their development or add new features, because the new hardware can support it.
• They include these new components in the basic package, forcing you to run out of capacity on your desktop or server.

The end result is that you have to upgrade your hardware and software, just to maintain your status quo. The alternative is to lose support from the supplier.

Many small businesses do just that. They can't see the value of the upgrades and don't see support as a major concern. They get very little anyway.

The the big one happens. They have to upgrade because the software will no longer do the job. This causes a major disruption. The changes are so large that it is just like buying a new software product.

Most small businesses resist the upgrades because they can't see the value. They are given no alternative.

Developing changes in the industry are addressing this issue, but many small businesses are reluctant to take it on, because the model is different.

In the past, you bought your hardware and software. You owned it. You didn't have to pay for usage. The new model is usage based. You pay of usage of software. This payment never ends. The advantage is that you don't have to worry about hardware and software upgrades. No large capital expenditures. The supplier is responsible for keeping the hardware and software up-to-date. This is called Software as a Services (SaaS).

A small business should look at this in the same way they look at a building. You rent space. The advantage is that you get a cheap entry point. When you need extra space, you rent more. If you need less, you can release the space. When major changes in building codes come up, you let the landlord pay for it.

This is a good solution for small business. Most small businesses cannot afford the skills and time required to maintain all of the hardware and software. Hardware and software upgrades add no value to their business.

You do more than outsource the maintenance of the technology, you have outsourced the responsibility for it as well.

Todays tools allow you to do this for software and servers and also desktops.

an example.

Organizational silos -why do they exist

Organizational silos are a big source of waste in most organizations, large and small.

This question was asked on Linkedin and thought it was worthwhile posting here.

Lean is the way for business startups

We have seen many articles about the Lean manufacturing process started by Toyota.

What is just starting to gain traction is using the Lean priciples in non-manufacturing processes. Think of a business process in the same fashion as you would a manufacturing process. It is simply a bunch of activities put together to create a defined result.

There are two major differences between a manufacturing process and an office process.

1. A manufacturing process uses machines to perform the activities. An office process typically uses people, supported by software.
2. Waste is typically obvious in a manufacturing process. You find it in poor quality products, in wasted materials, etc. In an office environment, you find it in two places: Wasted time and bad data. You don't see wasted time; it doesn't accumulate. You don't see bad data until you try to make decisions; you end up with wasted time.

While some large companies are staring to use Lean principles in the office, it is seldom looked at in small businesses.

I thought the following article was interesting because it talked about Lean in new business startups.

IBM provides software to help businesses to improve value of Technology Investments

In a recent article on MSNBC, IBM announced that they are providing new software to help improve the value of technology investments. Some of the failure statistics identify the failure rates of IT organizations to achieve business goals. This has been the history of software projects. Part of the reason has been that IT organizations have been focused on success of the IT project, even though the project was initiated to meet business goals. Most of the studies of project success have been in large companies (small ones may not have as disastrous results, or the business fails if it does, so there is no company to study). However, many small business software projects fail as well.

My experience has been that the business goals have often been a fuzzy vision versus measurable business goals. When these can translated to project goals, they get very specific and often the business goal gets ignored. In addition, most of the focus goes to implementing the technology and not on meeting the fuzzy business goal. In addition, the business people are not interested in the technology and don't get involved until the HAVE TO. This is often too late as most of the business value comes from business outcomes that need to be delivered by the business. The technology project plays a supporting role.

What is interesting in this announcement is that it comes from the general manager of Managed Business Process Services, not from the software group. The software will help organizations to communicate more effectively to develop the business process, so that the software project can support it.

While small businesses likely can't afford IBM's software, they also don't have as large a problem as large companies do. They can communicate more easily, if they focus on their business processes. This is where the value can be found.

Start with a well defined business outcome. Define how your business process has to change in order to achieve that business outcome. Assess whether the software can help to achieve the business outcome. Measure the project results, not from a technology point of view, but from a business outcome point of view. The technology will get implemented, but it's not at the top of the list.

If you want to cheack out the MSNBC post, you can do it here.

Why don't more Small Businesses look at improving their business processes?

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?

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.

Click here for the blog article that was referenced.

http://www.cio.com.au/article/270919/blog_surprise_surprise_sap_promotes_enterprise_software_investment?eid=-154

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:

• 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?

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.

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.

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.

Are employees laying bricks or building a cathedral?

There is an old story about three bricklayers, who were asked what they were doing.
The first said he was laying bricks.
The second said he was buliding a wall.
The third said he was building a cathedral.

Many people think they are doing their jobs when they do as the first bricklayer said. This is all most managers expect them to do. That is the cause of many problems and the reason that many managers are busy. They have to handle all of the issues caused by people who are simply laying bricks.

Just think of the third bricklayer. Is he likely to leave issues hanging? He is building a cathedral! You can't build a cathedral if you don't know what it takes to build a cathedral. The third bricklayer will do everything in his power to ensure that the cathedral will stand for centuries. The job of the manager is much simpler, as he knows that the bricklayer will not leave new issues to be dealt with every day.

What does this have to do with business?

I work with small businesses and help them to get a better return on their software investments. Invariably, I find them struggling with the software, because they may know how to use the software, but they don't understand how that helps the business to succeed. I work with them until they understand the business process and how they must work together to achieve the goals.

Two things happen:

• They understand what impact they are having on each other. They look for ways to eliminate negative impacts.
• They find that when they work together, the job is much easier for all of them. It is also easier on the manager, because he doesn't have to watch their every move.

At one company that I recently worked with, they found both those results. The comment made by one of the employees was that "he now understood all of the layers of the BIG MAC and why they were necessary".

This company got out of their silos and started to work together to achieve better results for their company as welll as made their own jobs easier.

Too busy to focus on process improvements?

In many of the assignments that I take on, I find that small businesses are struggling to make progress and move their business forward. The primary reason that they give is that they are too busy. When business is good they are run off their feet responding to customers' needs (often reacting to service problems) and when business is bad, they are too busy looking for business and finding ways to cut costs.

In many cases, they have made decisions to upgrade their business by buying software. Installing software takes a lot of time and effort. It isn't a silver bullet, automatically changing your business for the better. When it comes down to the hard work of implementing, the business is too busy dealing with day-to-day issues, and does not complete the implementation successfully.

Recognize that being too busy is a symptom of problems. Yes, on any one day, priorities arise that keep you from achieving everything you want to. But if it happens every day, something is wrong. A good reason is that your business has grown very quickly and you are responding to customer orders. However, if you don't look at how you can support this level of activity, then you will quickly deteriorate into the second reason.

The second reason is that the quality of service is a problem. You are constantly dealing with customer complaints. If that is the case, this is a huge waste. You must respond to this in the short term, but prevent it in the future. If you don't, you will lose customers or your costs of delivering service will grow and profits will drop.

As an owner or manager, you can't afford to let this happen. Waste is a natural occurrence in a business. You take care of your customers and as your business changes, processes are forced to change. As these processes are changed, waste gets introduced, because only part of the process changes. What no longer is required often remains because nobody has looked at it. This waste is easy to understand in large organizations, but assumed to be small in small businesses because everybody "knows what's going on". On the contrary, small business often starat to miscommunicate when there are about 5 people involved. It hurts more as it grows, often being very painful as you reach 20-25. Unless you stand back and look at how your business runs, the problem is there.

Stepping back and looking at your business can be very difficult when you are reacting to what's happenning. "When you are up to your neck in alligators, it's difficult to remember that you are there to drain the swamp". Often the business owner will need help to remain focused. The help can come in the form of a business coach or consultant, a mastermind group or mentor that can help you to remain focused, as well as provide advice and support as you make changes.

The benefits are significant. Some studies have shown that 30-40% of activities and supplies do not help to deliver value to your clients But they do add to costs. Looking for a bigger profit? Improving you business processes can be a major source. If you are looking at software, don't automate the speed at which you can produce this waste. Fix the process, then get the software to improve on it.

When you need Information, Think Process

Every business neds information to operate effectively. Much of the information that we use to make decisions is subjective, based on what we think is happenning, or what has happenned in the past. As your business grows and develops, this changes, but our thinking about it often doesn't.

A set of studies done by Kodak described the following:

• 20% of the data that we have in our business is structured.
• 80% of the data that we have is unstructured.
• Unstructured data is growing at a rate of 36%, which means that the problem will continue to grow.

What is unstructured data? Unstructured data is data that is disconnected from our business processes. It is produced by our business processes, but may not be captured automatically nor stored in a consistent form.

What does this mean? It means that when we need this data is required, time is wasted searching for it, or recreating it or finding it. This is time wasted or decisions being made based on outdated or incorrect information. A further element of the study, showed that:

• Most Managers spend 15% of their time searching for information.
• 42% use the wrong information once per week.

Before you suggest that this is a big business problem, I have found that small businesses have the same kinds of problems. When I start to work with an organziation, I ask them what data they have in electronic form and try to analyze what's happening. Invariably, I am able to tell them something that they were unaware of. The problem is that the data is typically not 100% accurate, because it was not captured by a process that was designed for that purpose.

I often see decisions being made due to a lack of information. Attempts to collect the information often fail (except in large businesses where there are resources to do it) because staff are too busy delivering service and they must take time away from this to collect information. This seldom works very well of for very long.

The solution is to make data collection a by product of the process that you design. Most software has an assumed process built in. When you use it the way it was designed, it captures all of the data that you need and allows you to provide the information that you need to make decisions. When you only use the parts that you think you need, you lose all of the information you need for decision making, because not all of this data is captured.

The first thing you should do when you decide to buy new software, is to look at your business process (right after you define your goal and decide which process will help you deliver it). Identify how the software will help you meet your goal, including the information that you will need to make decisions or understand when you are having problems meeting your goal. Collecting the data should not be a major effort. It should be a byproduct of the process.

So when you want information about your business, think process. Design the process that will deliver not only the functionality that you are looking for, but also the information. Use the software as a tool to help you get there.

Information Technology is like a one legged stool

Every business today uses computers. It's hard to run a business without one. Even if you have a very simple business, you need to communicate with your clients and your suppliers and they force you into this world. Most businesses look at computers to improve the waay they do business. They look to productivity improvements, or functions that cannot be done without them.

Most of the technology that we buy is underutilized. The price of hardware has dropped so much that is is cheaper to put in too much hardware than to provide smaller alternatives. Software is the same. It is cheaper to distribute a single piece of software than to try and maintain multiple copies. So we have much more than we need.

There are two problems with this excess capacity. First, the software and hardware is more complex and harder to maintain. Each of us pays for this complexity. We may think we are getting value for money, but unless we can use it, the complexity adds up to more costs. In a large business, this may be manageable. In many small businesses, this can add up to slowdowns, extra downtime, extra support costs, productivity loss.

The second problem is that the complexity makes the software more difficult to learn and implement. I see many small organizations that fail to achieve the benefits from the software they bought. Part of this is caused by the fact that there are too many features. Part of it is caused by the expectation that the software is bought as a "silver bullet". Install the software and it's magic. Things will be better. It doesn't happen. It takes a lot of effort to get value from new software. Some parts may be easy. Getting real value is not.

I see Information Technology as a three legged stool. I will ignore the hardware at this point, because it doesn't provide value. It simply allows you to use the software. I will also ignore tools like Microsoft Office for the moment.

Leg #1 is the business software. It can be as simply as Quickbooks or as complex as SAP. Business software comes with built in business process assumed. It expects you to work in a certain way. If you do, then you get the best return. It helps you to do the job. If you don't, then it can make your life difficult, whether by forcing you to do things multiple times or by getting bad information because of the quality of data entered. If you look at your business process before you try to implement, you will be more successful.

That leads us to leg#2, the business process. The business process is how something moves through your organization, say from order to cash (your real goal is to get paid for the product or service that you deliver). If you understand all of the steps in this process, and understand how the software will help you to make that process more effective, then you will get significantly more value from the software. In many cases, even when an organization has looked at its business process, they encounter problems. The reason is that when you change business processes, you affect people. It's often been said that people resist change. That is true. People don't want to change if they don't see the value! Why should we? We are comfortable with what we do, we are more efficient when we know what we are doing, and we know how to prevent errors. Give me a new process that I don't understand, I will be less productive and I am more likely to produce errors. Why should I change? OK, some people like change for the sake of change, but we can only take so much. If you wake up one morning in a new house, have to drive a new car and go to a new job, how comfortable are you?

This leads us to the third leg: People. If you don't consider people, you will be less successful. I have seen many software projects that redesigned and implemented processes without involving the staff that did the job. The designs were based on senior staff or management input, and the process was automated to do what they wanted. The problem was that the process was not based on current reality. It was based on old experience (Senior staff and management don't do the day to day job), or on ideas of how things should work. The staff tried to work with it, but had to create all kinds of workarounds to get the job done. This reduced productivity, created frustrations with the staff and made them resent the change. Is there any doubt as to why people resist change? By involving staff in the goals of the change, in the redesign of the process and in how the software can provide tools to improve the process, you end up with a more effective process and less resistance to change.

So there you have it. A stool with three legs: Software, process and people. All three are critical for success.

There are two other elements that you will see on a stool and these are important as well.

• The first is the goal. The goal is to have a place to sit. The seat describes the goal of the project. This goal is a business goal, not a technical one. See yesterday's post for examples of the business goal. It's important that the goal be well understood and repeated regularly. Try sitting on a stool without a seat, if you don't understand. I have seen many stools without a proper seat.
• The second is support. Ever seen a stool without supports between the legs? Doesn't last for long does it? As with the stool, you need support between the legs (Software to people and process, process to people).

The most important thing is Focus. In real estate, they say there are three things that are important: Location, location, location. In IT projects, it's: Focus, focus, focus.

What is Business Value from Information Technology?

I've made a number of posts to this BLOG talking about getting business value from Information Technology. In discussions with different people, I have found many different interpretations. I've often commented on the fact that many IT projects have failed to deliver business value, and often get lost in "successful technology implementations". In these cases, the operation was a success, but the patient died.

In order to clarify, I want to describe business value in terms that might be better understood. Business Value can be measured by:

• Cash Flow
• Sales
• Cost of Sales
• Cost of Administration

It's that simple. There are many aspects of each of these, but if you have enough cash to manage your business, you have adequate sales, and your costs are in line so that you can make a profit, you are OK.

When you take on a technology project, you are trying to drive improvement in one of those elements. If not, why are you doing it? You may be doing something to reduce waste, improve quality, reduce inventory, improve productivity, but the real goal is to improve one of these four items. If your expenditure in technology or other services doesn't return value here, then it is a failure.

An assignment with a client recently, outlined the following problem:

• The company had installed software a year ago yet was not using it effectively.
• They took too long to issue invoices - weeks, sometimes months.
• They had opportunities to grow the business, but were restricted due to cash flow.

The focus of our actions was on improved cash flow. Within three months, we were able to get the software operational, tracking business from order to cash, and significantly improving cash flow. With improved cash flow, the business can now invest in equipment that will provide growth in sales.

The world is not static. The business was constantly changing while this activity took place. Traditional methods of measuring benefits would not have been possible. What was obvious, is that the order to cash cycle was improved, allowing the business to invest in growth. The improved cash flow was measurable.

Bringing the world of Information Technology, Business and Health together

I attended a set of seminars at BITNET (Business and Information Technology Network) yesterday. The presentations were focused on Health Care and its use of technology, and the progress (or lack thereof) that was being made.

A lot of interesting presentations, especially if you are in the Health Care field. But what does it have to do with Small Business? Part of the presentation included the efforts of McMaster University in bringing together three part of the University to develop this area. They have created a structure that brings their Business School, the Health program and their Information Technology program to address the issues.

What a concept!

Much of my BLOG has talked about bringing business and technology together to provide business value and measure success, not by projects or successful technology implementations, but by successful business outcomes.

With McMaster's program, they have brought the needs (the Health Care industry) for information and decision support together with the tools (information Technology) and the Business Management into one group. They have the opportunity to bring business reality to the Health Care needs and Information Technology.

I have seen too many situations where needs are defined as all of the things that I'd like to have, and the solutions developed by an "I can do that" attitude. The results are often a complex technical solution that does little to solve the business problem at too high a cost.

Small Businesses don't need a large, complex organization to develop solutions. They do need technology. They do need to understand the business processes they are addressing and the business outcomes to be delivered. And, they need to keep control of costs. Too often software is installed and business results aren't delivered.

In the Health Care industry, MacMaster is trying to solve that, and I applaud them.

BITNET is expecting to post the presentations on their website. If you want to check them out, see BITNET. For McMaster's eHealth program see eHealth.

Computer Training and Support - Return on Investment (ROI)

Many businesses look at training as an expense to be cut whenever times are difficult. They also look at computer support in the same way. They don't get support unless they have no other alternative.

This article that I found talks about these two "expenses" as something that should be looked at as an investment. Although much of the content is worthwhile, the challenge is to show that benefit. Some of the recommendations in terms of in house support is something that I disagree with.

First let's look at training. A lot of the article talks about measuring the value of training. This is one of the BIG issues and is the primary reason why training is often cut when it is needed the most. How do you measure the value of training. The article talks about how much people have learned. Is this measurable? The real issue is that training is of little measurable value unless it returns something to the business. Generally, we know and understand very little about the capabilities of the software that we buy. There is plenty of opportunity to use much more of the software. But whether we know how to use it, whether we use it, and whether we get business value from it is the important question. If we start with the end in mind (getting business value), then we can get a return on our training investment. If we become more productive, if we get information we didn't have before, if we are able to increase revenues, then we have created value. This is how we get ROI! Training does not provide value! The results that we achieve by the training is what is important. You canlook at the article to see how you can make it happen.

The second area referenced is support. The article recommends that every small business find themselves a good computer support company. If the support company is proactive (fixes problems before they happen), then what you gain is increased productivity because you don't sit around with failing equipment. You also will get better performance and response time. You get better technical skills and don't spend your time on trying to hire capable computer technicians. Unless someone deals with computer support every day, they aren't good enough. Your son or the neighbour's son, who is great at games and social networking is not good at maintaining a stable environment. This savings will far exceed the cost of preventative maintenance.

However, I disagree with a few recommendations related to what should be done in house vs outourced. For inhouse support:

1. I agree that staff should maintain a list of all day-to-day problems. This is necessary to identify whether adequate support is provided and whether it is getting better.
2. I disagree with running of tape backups should be done in house. In house staff are focused on day-to-day production. They don't understand the implications of backup and recovery. When something goes wrong, they invariably do the wrong thing. I have seen many cases where backup fails and they are "too busy" to take care of it, or have a problem with testing recovery, but don't get it fixed. We now have remote backup services that can be monitored and managed by a supplier.
3. I disagree with handling all first level Microsoft/Desktop issues. Many problems are created by staff trying to fix problems. If the problems require fixes, they are installed improperly and your supplier doesn't know what was done. If the questions require a how to, the scope of the solution is based on the skills and knowledge of the person answering the question. The training portion of the article describes the problem here. Most of our staff don't have a good understanding of the software being used. So look for expertise and measure the results.
4. I disagree that strategic planning should be done by the outsourcer. This is a business issue! The business may not have the technical skills to define the technology strategy and they will need support for this. But they must define the business strategy. Their supplier can help them to identify the technology that will help to deliver it.
5. I disagree that the outsourer should develop the Disaster Prevention and Recovery plan. This is a business issue! Business recovery involves much more than technology. Only the business managers understand what is needed. The supplier can help to develop solutions.

The two issues identified are valid as well as a lot of their responses and recommendations. If you want to see the full article, check

Why IT Training and Support Makes Business Sense

Business Analytics and Business Process

Business analytics is a fancy name for getting information about your business. Most small businesses (the size is dependent on who you talk to) will probably not want to talk about business analytics because these projects typically have a big price tag. But whether they are big projects or not isn't the issue. The issue is whether there is value in getting information about your business to allow you to better understand your customers, your costs, etc.

Most small business owners think they understand their business, and they do, to a point. What is surprising are the things that they don't see. As a business grows, things change and from the owner's standpoint, they still look the same. One of the first things that I do when I start an assignment, is to look at data that is already being captured in a company. I also interview staff to get the personal perspective. I invariably find things that surprise owners and managers. Through the interviews, I also find out why this is happenning and what may have caused the change. This helps me to provide advice to the owners and managers on how to address the issues that I found. This isn't even close to what business analytics is doing, but the concept is the same. There is no way that a small business could afford the cost associated with something of significant depth.

Why did I title the article business analytics and business process? Because I found an article that talks about the failure or success of business analytics is based on an understanding of business process. If you don't have a detailed understanding of your business process, you can't get good data and you can't get a good analysis of that data. Bad data means poor decisions.

If you develop good business processes, ensure that your software supports your business process to give you good data, you can analyze that data to help you make good decisions.