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| Business Process and applications of I.T.
Accounting is a core process which in most companies is already being done with the aid of an I.T. System of some sort. Frequently though the information from this part of the system is only used to control, it is not used to manage. Just about every accounting system ever made is able to help provide information to help you manage. The number of SME's that miss this opportunity is depressingly high. Unless you can measure things in your business and compare the changes in them, there is no way that you will ever be able to establish what works best. From our perspective if you can't measure, then you can't see what we offer is good value. Measuring performance is essential if you are to be able to objectively assess the impact of any change. Information needs to be transparent (you need to be able to see how it is derived) it needs to be simple (one number is better than 10) it needs to relate directly back to a specific part of the process. We can help you to get the information you need out of the data in your existing systems. Typically this can consist of getting additional data into the systems to complete a data set so it can be analysed, determining with you what the things you need to control and how you want to see the information, passing on skills to staff to enable them to be able to prepare the information and in some cases using our specialist skills to create tools for your staff to use to extract information for you. If we didn't sell, there would be no business. Selling is a specialist skill so sales people costs more, yet I see sales staff doing non sales activities all the time. Why buy a valuable skill and then only use it part of the time? This doesn't only apply to sales skills it applies to any specialist skill in the business. We can optimise the use of this resource with systems which allow them to delegate routing tasks to others, that automate tasks, feed sales tasks to sales people and measure their performance. Without advertising our customer base would dwindle away and we would have nothing, but we have a limited budget for advertising so how can we get more out of it? By understanding and measuring what we get back. Different methods of advertising create different returns. Most people already measure the source of new leads, but the number of leads you get per £ is not a full measure. For example Company A splits it's budget between Directory Advertising and Direct Mail. Directory advertising produces more leads per pound than anything else but these leads are normally from people who have also rung two other companies from the Directory, so there is more competition, fewer sales are won and the margin on these sales is lower. Direct mail returns the most expensive leads but there is an excellent conversion ratio and the margins are on target. The headline figure of number of leads per pound could be misleading. Customers are an asset of the business, they know you already it is easy for them to buy from you their accounts department have you on record, but do we make the most of them? How much repeat business do we get from our customers? Do we get the same amount from all of them? How can we get the one off customer to be a regular customer? Is there an additional product or service that we can add on to our existing set up to provide better service to our customer? To increase frequency of purchase? To increase purchase amount? Is there a way we could loose fewer customers? Generally speaking is is less expensive to keep customers happy than it is to find new ones. Providing exceptional customer service need not be expensive, sometimes it is just a matter of being organised, and systems can help you do that. Several small changes can multiply each other to make very big differences on the bottom line. 80% of businesses are small, many are run by people who don't have a lot of experience and who run at barely profitable margins, they are the competition and they tend to push us to running at similar margins, so our profitability is capped or is it? If we can get all our customers to buy 1% more, If we can get our customers to buy 1% more frequently, if we can get 1% more out our advertising, if we can get 1% fewer customer losses. We do not see a 4% change on the bottom line we see much much more. Sales and marketing systems allow us to to measure these, they allow us to target resources better, they help us serve the customer better and use our skills more effectively. Simple Example: A garage servicing cars. By looking at the history of customers it became clear that the majority of customers serviced their cars a week or two late, some were a month or more late. So to improve performance a targeted rolling mail program was started, it mailed customers 4 weeks before they would be predicted to need a service with a provisional booking for one week before the service is predicted to be needed. Customers only had to make one quick phone call to confirm or re-arrange, they saw it as the garage being very helpful. The garage managed to reduce the period between services by 3 weeks. This is the equivalent of a 5% increase in turnover from the same customer base. In practice the results were better, because fewer customers went to other garages for a service. There were also a few customers who rang to cancel service because they had changed cars, some of these customers had assumed that the garage would not service their new make of car, the call provided an opportunity to retain the customer, update their information and predict the new next service date and keep the business. Other customers didn't wnat the appointment because they were going to change their car, this led to leads for the car sales side of the business and retention of customers for servicing their new cars. Small changes can and do have big impacts, measuring and monitoring those changes enables you to maximise your profits without needing to have bigger margins, more customers or better buying. Providing better service to customers may have a direct cost but is may also produce an overall profit. The process of taking orders, quoting, estimating, shipping, tracking, manufacturing, maintaining stock, ordering stock, purchasing and managing the process of fulfilment is a complex and at times difficult process. There are lots of systems that can streamline these processes, provide easy access to information and make the management and control of these much less expensive. This area of business is more diverse than any other and few generalities can be made, it is however, a key area of cost, understanding those costs is key to determining the economics of applying systems to this area. Sometimes, the flexibility and abilities of human being can and do out perform systems. Sometimes there are spin offs from other systems that can help in this area and provide economic aides to fulfilment. There are also many specialist application written for specific industries to tackle fulfilment problems head on. To manage a business you need to understand how it performs, control will prevent silly mistakes, but understanding, questioning and measuring changes or differences is what identifies strengths and weaknesses. Once identified strengths can be applied, weaknesses can be addresses and the measurements system will enable managers to know the level of success and the economics of the different solutions tried to achieve optimum performance. Information needs to be timely, it is no good reacting to information in audited accounts 6 months after the year end and 18 months after the problem started. You need to get information that is timely, that is representative, complete and that is easy to use. We can help you do this, integrating information from multiple sources, payroll, accounts, sales & marketing systems, spreadsheets and so on to give a holistic systems that is practical to use. Control is essential, every resource needs control for example with money, if you don't have money in the bank to pay staff at the end of the month, you business could be in serious difficulty, even if this is a temporary blip. Resources like stock and cash in the bank are frequently managed by use of accounting systems, but what of other, bigger more valuable resources that don't typically get put on the balance sheet of accounts. Staff, Customers, Suppliers and Systems very rarely feature on balance sheets, yet this is really just accounting convention Staff are an asset (okay I can hear some of you saying person X is a liability) but they are. If you replaced a member of staff with a machine that did the same job it would be on the balance sheet, assuming, for a moment, that such a machine existed what would it's value be? Well assuming it was a straight forward replacement, same overall ability an cost, the operating costs of the machine would be equivalent to the salary. A car with an asset value of £ 10,000 costs about £ 200 a month (£ 2,400) a year. So a member of staff at £ 15,000 per year would be the equivalent of a machine costing about four times as much (£ 60,000). So pull out your last audited account multiply your employment costs by four and you will get an idea of how big an asset staff are. But staff are not machines, they do not wear out anything like as quickly and they actually work better the longer you have had them. Staff are also expensive, they cost a lot to recruit, they need pay rises, they can turn around and bite the hand that feeds them, they can leave at the most unexpected times. So you need to take care of them, if they were machines you would service them wouldn't you? Here is a very useful thought, staff are not perfect, they can work better, by imparting additional skills to staff you get multiple additional benefits, first their invisible asset value increases (by a lot more than you spend on imparting skills), secondly as a caring employer you pass on this increase in value by giving them more money, which is neat, because you would have had to give them more anyway this way you are getting something extra back for the increase, thirdly as long as you have a next step for them as long as there is progress for them to make in their skills they are not going to go and work for someone else who will let their development stagnate but give them a little more money, fourthly because they are achieving they are getting recognition, recognition is much more important in motivating staff than money, it is something that keeps staff happy, and keeps them with you. Customers are a huge asset we discuss in the section on selling just how valuable they are and how tapping just a little more from them can make very big differences. Suppliers are , like staff, rarely regarded as an asset, but a good supplier can save a huge amount of time and resource whereas a bad supplier can cause huge headaches. As a customer to your supplier you can help improve your relationship, think about the attribute you would like to see in your top customer and see if you can have those attributes for your suppliers, if you are an easy customer for them then they will go that bit further for you. Saving your suppliers money by using EDI, communicating concisely and effectively, paying bills on time and so on makes you a better customer, earns you better service and improves the most effective selling tool of all Word of Mouth. Professional services like accountants can vary in terms of the quality of service and the level of service, good accountants will offer many of the elements we offer, helping you measure and identify key parts of your business. If you are lucky enough to have this sort of service from your accountant then stick with them, systems need to be measured in order to be "tuned" to give top performance, we want you to be able to objectively evaluate systems and if you can have independent verification then that is even better.
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