Snoitulos Ten

According to a recent Whitepaper on “Six Mistakes Companies Are Making Today…” produced by SAP, businesses react by retrenching and cutting costs but they believe you should invest in business intelligence, preferably in software sold by them. The following 6 business mistakes were culled from this whitepaper and some of my own comments have been introduced as I see them applying or not to most small companies.

Mistake 1: Taking Existing Customers for Granted.
Staying in tune with the needs of your customers can prevent them from being lured away by incentives from competitors. Of course, their solution is via sophisticated data mining using tools (you do not have) to comb through customer data (that does not exist in any format in most small company’s disparate databases). But there are a number of low-cost (ProFusion Survey Manager) and free electronic survey tools that a small company could employ to help them stay in touch with their customers. We also provide Forum, CRM, and low cost help desk applications to allow small companies to get feedback and provide better support for their customers and prospects.

Seriously, I could not agree more and this is one of the reasons, that for 2010, we have kicked off our educational series of Webinars and weekly updates. Like most small companies, we know we should keep providing additional value to our customers, but simply did not move this to the top of the priority list until this year. If you are not receiving our updates and weekly newsletters let us know and we will be sure to add you to the list or look into why you are not receiving your copy. For those of you who prefer not to receive any more email, these items are posted on our website and available 24/7 for your viewing and reading enjoyment. We can help your company kick off these kinds of programs as well using inexpensive tools we provide like ProFusion Mailer, News Manager and low cost webinar software and video services.

Mistake 2: Failing to capitalize on Market Opportunities.
“If you are hampered by difficult-to-use analytic tools that limit your ability to perform in-depth market analysis” your company may be slow to recognize or react to opportunities. But a far more likely scenario for most small companies is that they do not have any of these tools and cannot measure the effectiveness of any of their marketing. What do you do if you have no tools? Fortunately, there are simple methods to help you track the effectiveness of your marketing efforts. Google provides analytic software and most hosting companies like ours also provide Site Statistics software to help you analyze where your website traffic is coming from and what happens once they arrive. But there is no reason to stop there. We can also provide tracking phone numbers and URLs to use in direct mail, newspaper, yellow pages, radio and television advertising. These tracking phone numbers and URLs will help you decide which advertisements are worth the money and whether one ad pulls better than another. Knowledge is King and knowing how effective your marketing spend is will help you determine not only how much to spend but where to spend that does you the most good. These are not areas where “gut feelings” or client’s responses to “How did you hear about us?” should be relied on. “Trust but verify” as President Regan was known for saying.

Mistake 3: Allowing Operational Inefficiencies to Persist.
Here, they are telling me that I must be diligent in my pursuit of reducing waste and eliminating efficiencies. That I can at least understand. They do point out that I should perform a competitive analysis to determine how my gross margins compare to industry averages. Ok, keep in mind that I am a small business with limited and grossly overworked human resources. So help me understand, if I am in the custom website application business and I produce my own tools to ensure a high quality product, should I be comparing myself to others in my industry that are just using some free tools? SAP goes on to tell me in this whitepaper, “that even if my gross margins are better, my expenses may be higher”. Hmmm, so if my competitor is using free tools and operating out of her house, provides little to no customer support, etc. somehow my expenses of hiring employees, having office space, paying insurance and utilities, answering phones, and providing live customer support as a % of sales my expenses need to be as low as my competitors. Whatever happened to just plain providing good value? Is price all the people really care about? I think not. I guess time will tell.

Mistake 4: Letting problems go undiagnosed and uncorrected.
We have created or employ a number of tools to help us produce our products. These include our Project Management System to help us communicate throughout the design/build phases of a project, capturing comments and clarifying concepts all the way to final delivery. Then we provide training videos, support ticket submission and monitoring, and a user forum to allow users to ask questions, pose issues and get assistance from out technical support team as well as from our vast user base. But even with all this, the best teacher is constant use of our own products for creation and modification of our own websites. We are constantly testing new theories and ways of doing things and making improvements along the way. But is this enough? Is it enough to identify and correct problems? I think not. If we are not also looking down the road and building tomorrows products today, then solving today’s problems becomes a moot point as we will not exist to serve our clients tomorrow.

Mistake 5: Driving the Wrong Behavior in the Organization.
SAP’s solution to this problem of goals that are not clearly defined, communicated and measured is software as the method to control these behaviors. I think most small companies very likely do drive the wrong behaviors in their organizations. But in most cases these behaviors are survival driven. We have more work to do than employees to get it done. This is in part in an effort to satisfy Problem 4 while trying to solve the not mentioned Problem 7: Survival. I have certainly been guilty of complaining about client requests because they “don’t get it”. And by “it” we usually mean that our clients do not understand any of our problems. And really do we want to just cater to sympathetic clients or do we need to foster organizations that can thrive on solving client problems? When we stop focusing on client problems and concentrate on helping them understand our problems then I think we clearly are focusing on the wrong behaviors. And I am sure that comes because we assume that our customers have the same level of understanding of our issues as we do. I think it is a better strategy to realize that most of our clients and prospects do not want or need to understand the technology of what is behind our products and services. What is important is that we help them better understand how to use our tools to run their businesses better, more efficiently and profitably.

Mistake 6: Failing to offer transparency for Stakeholders.
SAP responds with “Most organizations find they do not have the information, processes, and tools needed by their managers to make informed, responsive decisions.” Welcome to my world large business. I am forced to make decisions everyday that potentially affect the lives of each of my employees, their families and our customers. And I must do this with limited information – either in the form of historical data or future projections. SAP suggests that “the global economic crisis is leading business stakeholder and governments to demand greater transparency into company finances, decision and operations…” Where is the corresponding transparency in our elected officials who cry indignation and put out nice sound bites while my US Congressional Representative is making $174,000 or more per year. And our transparent government officials get to participate in the FEHBP (Federal Employee Health Benefits Program) where up to 75% of the premium is paid and there are no waiting or pre-condition clauses while millions of Americans cannot afford any medical insurance. Where is that transparency when the CEOs of large companies survive major blunders with golden parachutes worth millions? Or Wall Street bankers continue enormous cash bonuses after the American taxpayer has just paid dearly for their mistakes?

I do not believe that small companies are guilty of this mistake. Maybe to some degree we do not display all the company’s dirty laundry publicly, but I am not convinced that this is a bad thing. I think that Small business owners are by nature optimistic and believe in the American ideals of working hard and doing not just things right but the right things, will allow a company to survive and prosper. Where we do need to be transparent is in providing a venue for our clients to communicate with us about what they like and dislike in dealing with us. Tools exist for us to allow our clients to communicate with us. We produce a testimonials module to our application. There are places to go rate companies like LocalLoop. And public Forum, Support Ticket and other software tools can be utilized to foster a cohesive 2 way conversation between consumer and business to provide for improvements in services and products and better understand exactly what our customers want and need from us.

SAP concludes that in tough economic times companies must invest in information technology in order to keep “from just reacting to economic challenges and instead position themselves for future competitive advantage.” They even provide the following self test and scoring.

See how you do. We failed miserably, yet somehow I feel we have a good handle on where our business is going and the value we provide our clients. What are your thoughts?

Business Intelligence Self-Assessment
Improve Your Organization’s Decision Making and Performance

1. How quickly can your organization identify top customers based on size, profitability, and potential for growth?

A. We can access this information at any time for any customer. We can easily produce a list of top customers across multiple criteria – for example, by region or product line.
B. We can pull customer information into a spreadsheet and analyze it across basic dimensions.
C. Even basic customer information is hard to access – and even harder to analyze.

2. A senior marketing manager comes to your CEO with a proposal to introduce a new product line. How does your organization determine whether the plan is feasible?

A. We would run a scenario analysis and project costs, revenues, risks, and return outcomes across a range of economic assumptions.
B. We would analyze the proposal, but it would take some effort to pull together the needed data and perform the appropriate analysis.
C. We are more apt to move forward based on gut instinct.

3. Your company’s overtime has increased by 17% in the last month. How quickly and easily can your organization pinpoint the cause and address the problem?

A. My company can identify affected employees and departments immediately and go to work solving the problem within a few days.
B. We can gather information, but it would take a while to compile and sort the data.
C. We wouldn’t know where to begin.

4. Days sales outstanding has increased by five days in the last two months. Can your organization determine the root cause?

A. Yes; within a few days my company could analyze operational and administrative components that might be contributing to the increase.
B. Maybe; we could gather information from separate applications for customer, financial, and operational data, but it would require some effort to analyze the data and identify root causes.
C. Doubtful; this would be a difficult undertaking for my company.

5. Customer satisfaction scores have dropped – specific to your call center. Your COO wants to review the metrics in place for call center reps. Can this information be readily provided?

A. Yes; we have a dashboard that tracks call center employee activity, including length on call, call resolution, and other metrics.
B. A summary of key metrics is posted in a common area where each employee can see it; however, we don’t track metrics on an individual or departmental basis.
C. Unfortunately, we have yet to define and implement metrics in this area.

6. Investors want to see the ROI of your three largest investments from last year. How quickly can your organization give them an accurate response?

A. In about four hours we could provide a complete report with clear, attractive visuals that would make it easy for investors to compare projects on several levels
B. Each project has its own spreadsheet; within a few days we could create a comparison report.
C. One of our financial analysts would have to go through our financials line by line to pull out the pertinent information and create a spreadsheet to calculate ROI for each investment.

Score your Organization

Add up your score, then use it to find where your organization fits below.

• 0 points for each “A” answer
• 1 point for each “B” answer
• 2 points for each “C” answer

0-3: Information is a strategic asset.
Your organization is using business intelligence to optimize decision making in key areas. Look for additional opportunities to use business intelligence to uncover value and drive improvements. Consider advanced planning tools that can help close the gap between strategy and execution. Expand the use of sophisticated what-if analyses to model the operational and financial impact of multiple scenarios on revenue, costs, and cash flow.

4-8: Take it further.
Apply business intelligence in more areas to address untapped opportunities to improve decision making and performance. Seek out opportunities to use analytics and visualization tools to develop clear insights into specific areas of your business. Using these insights, inform the right decisions to drive operational efficiencies or grow revenues.

9-12: Information-challenged.
Your organization could experience significant top-line growth and bottom-line benefits from using business intelligence. Begin with solutions designed to integrate and cleanse data. Use this single source of accurate data to create enterprise reports and fuel ad hoc reporting and analysis.