Beware the 'it does it all' sales pitch!

Have you ever had a sales person come to you and offer you a product that is so good that it does everything you could ever want it to?  It will reduce present workloads, relieve stress and makes everyone's life a lot more pleasant.  I have.

This type of sales pitch is standard among the modern IT companies who come 'bringing IT solutions' that are 'guaranteed to save you time and money'.

Bollocks!

I have yet to see an IT system for standard processes that really saves a lot of money and makes life easier.  So I might be a little narrow in my experience but I have yet to be convinced that real gains in productivity and time can be made.

Case in point number 1.

1.   Finance systems.  A good finance system should do a few things and do them well.  Pay the bills, tell users about financial performance and do budgets.  The amount of data that requires entering does not decrease.

What I have seen happen is an initial reduction of finance office staff with a view that there should be less work BUT this is not true!  All the invoices still need to be entered, the budget figures need entering and someone has to do manual reconciliations.

Case in point number 2.

2.   Student management systems (SMS).  Basically a SMS is a giant database that captures and records the data relating to students in an academic institution.  The program is only as good as the information that is entered into it.  So there have to be operators who actually have to enter the data.  Like the financial system the amount of data that has to be typed in does not decrease.  Even with automated systems registrars and back office people are still required to check the data and make sure it is correct.

Here's what I think.  When a new IT system is introduced what happens is the labor (people) required to operate the system are simply shuffled around.  That is the tasks are moved from one office to another and few real gains are made.  More IT professionals are needed to make sure the system works and is maintained, more input staff are required at the coal face (or wherever they may sit) to actually input the data and the only real 'savings' produced are on paper for the department for whom the systems have changed.

I have no issue with no systems and room for improvement.  I absolutely agree that changes must be made in order to keep up with ever changing technology.

My beef is with the way these 'do it all' systems get sold to the customers.  So when I hear a new system is being implemented that is going to save time, money and reduce the workforce – please excuse me if I roll my eyes and sigh.  No – I don’t believe your over-hyped sales pitch.

Book Review - Peak Performance

In business, as in life, you evolve or die.  Interestingly one of the two big sources of evolution as far as marketing is concerned are - the rise of social media and the emphasis on sustainability.

In the book Sustainable Peak Performance by Mike Pratt and Helga Pratt companies that have embraced true change and real sustainability go under the spotlight.  companies such as The Body Shop, Dilmah Teas and Putamayo are all examined.

This book is about more than how to catch the fad wave of appearance sustainability  This book is about how do companies affect real change to the environment and their employees while remaining financially viable?  Is being sustainable and reasonable really possible?  And if so how?

With easy to read language, detailed research and a broad understanding of business practice this book certainly lays some excellent foundations for those interested in moving ahead.

In brief sustainability comes from the leaders and must be infused within company culture and practices if sustainability is going to be truly practised.

This book comes highly recommended and gets 4 stars from me.

Build or Lease? Advice for small businesses.

One question that occurs quite often in business is - do we buy or do we lease?  There is no quick or easy answer tothis question.  In the same way there are very few times when one business will be in the same position as another.

It is my belief that as a business grows so do the complexities and the advantages and disadvantages of owning property come into their own as the business phases change.  Here's my very basic view on the purchasing of fixed assets -

1. Establishment.  Keep it lean and mean.  I would tend to keep cash flow available rather than tieing up up those funds in assets. 
2. Growth period.  Okay so maybe a few fixed assets like computers and the like would be handy now.  But I would still urge caution against tieing yourself into long term lease agreements or contracts.  Keep them short and sharp.  It may cost you moe in the short term but it will save you money in the long term.
3. Expansion.  Invest in people.  Rent a premises and invest in stock and people.  The time for assets will come.  Now woud be a good time to look at leasing a vehicle.  (Don't buy).  Leasing a vehicle will allow you to keep up to date and all the servicing costs are already built into the price so there won't be any surprises in the need for repairs.
4. Maturity.  This is the time to look at purchasing a small scale property.  Don't take on any grandiose building schemes or pans at this stage unless you get super good interest rates or you can rent out excess space that you don't require.

When you hit the fourth stage - it's time to call in the experts and strategise onhow you will take your business to the next level. 

In summary - keep cash available for you to use when you need it, invest in people before buildings, lease don't buy as much as possible.

Being Accountable

Quote "The finance person in a company of any size plays a crucial role in supporting management and their decision making." (Source: David Irving, unlimited.co.nz, Feb 08).

The finance person is a critical cog in the wheel to ensure the smooth running of an organisation. They may not always have all the right answers but they should be providing all the right data.

Knowing how accountants get their data isn't as important as understanding what the data says and applying it.

Here is an extract - "The monthly accounts are a more comprehensive picture of the company performance, covering all costs in revenues and any other activities. Quarterly reviews typically capture seasonal fluctuations where monthly numbers are too arbitrary a period. Ice cream sales may be crucial in the first quarter of the calendar year while soup sales lead the way during the winter months. Annual accounts, of course, have a very traditional layout but need to be written in a form that give value to the reader when comparing this year to previous years and seeing the consequences of any changes resulting from management decisions made during the year."

These are basic principles that can be the making or the breaking of a business, organisation or group.

Note - Interestingly the article was originally published in February of 2008 - just 5 months before the start of the global financial crisis.