I’ll state upfront that I write computer software. That I’ve seen many opportunities for innovation through the smart use of information technology and all levels of Australian business (and Government) is an understatement.
I believe that my discussion piece below is relevant whether you are a client of mine or not. There are many good software developers in Australia.
Choose the IT that best fits where you want to take your business, not where it is today.
Often I’m asked what’s the best way to take advantage of the revolution in information technology?
My response varies, but generally there are three questions to ask;
1. Will the introduction of a new IT device or software programme make my business more productive?
2. How will I measure the productivity?
3. What aspects of the business process will I be changing?
Of course the alternative is to really take a good look at how you can actually improve your business processes. Then when you come to selecting a software programme to meet your needs you can select the programme that comes closest to meeting your needs and perhaps having the developer add functions where they’re missing.
The thing to understand is that like business and life itself, IT is never finished it’s a constant, evolving work-in-progress. You need to partner with an IT company that is continually looking to the future and finding ways to improve productivity where-ever possible.
Understand your key work-flow processes.
If you’re an Australian based business it’s probably time to have a look at how you’re managing your work-flow. Many business owners consider implementing a new invoicing system as all that’s required. That’s only one aspect of evaluating where you can improve the methods and management of your work-flow processes.
With respect to our colleagues in the accounting profession, the primary focus has to be on;
a. How to generate more profitable revenue
b. How to ensure a consistent return on the capital employed in the business.
Often business owners will say, “I need to talk to my accountant about my system”. I’d argue that while the accountants are important, the accounting function of your business is not going to generate revenue for you. (unless of course you’re an accountant or book-keeper).
I’m not saying that the accounting is not important, of course it is, but, the accounting process should not be the driver of the sales and production process. If you’re a mechanic, your clients are not going to care about how you do your accounting, as long as they can get a detailed invoice covering the work you’ve performed they’ll accept what ever you give them. Where it gets interesting for the mechanic, is ensuring that the clients are billed for the work done and the items supplied. If you can review the work history of a motor vehicle your computer programme becomes a valuable tool. This needs to occur without the operator having to spend too much time performing the the administrative function of doing data entry.
As managers it’s important that we can measure the performance of or staff, the return on our inventory and the profitability of our client base.
Complacency leads to extinction
One of the mistakes I think we Australians have made, is a complacent belief that everything will be okay and that we don’t need to innovate.
If we consider the situation of the Australian Motor Vehicle industry and the recent pay rise awarded by General Motors Holden, the immediate question springs to mind, “how can a company relying on Government subsidies be so generous to its work force without some sort of productivity gain?”. My own view is that manufacturing motor vehicles is not a strategic industry and that if we as taxpayers are going to support motor vehicle manufacturers why shouldn’t we support the hundreds of small family owned firms around the country.
I look at the above situation and see it as not viable for taxpayers to subsidise jobs to the tune of $160,000 each forever. What this leads to is a huge transfer of wealth from the rest of us to those participants in that industry. Even worse, it means that there is no incentive for the managers or work-force in that industry to innovate in any meaningful manner.
Constant Innovation to stay ahead of the game
So, back to the beginning of the discussion. If you’re not a vehicle manufacturer or related party then you most likely don’t receive Government handouts to run your business. Which is why you need to innovate. It’s human nature to believe that how we’ve done things is how we should always do things. It’s a denial of the fact that one of the few constants in life is change. The key is to try and be ahead of the game.
This is why many retailers are in difficulty, they’ve failed to recognise that the Internet and IT are disruptive technologies, they change the game.
If you think about what it took to first create your business, it was stepping out and taking a risk. If you’re in a small to medium sized business you actually have a certain advantage. Why? Because unlike major corporations and governments it’s not in your interest to announce multi-hundred million dollar IT investments. Because of the budgetary constraints of smaller enterprises and the fact that the owners are often the business managers, they don’t endanger their businesses with outrageous “chest puffing” boasts when investing in IT.
So, if you’re a smaller enterprise you can innovate by finding the right IT partner. It’s not about being cheap, it’s about being cost-effective. There is no advantage in screwing your IT people on price if they’re not around to support and assist you in twelve months’ time.
Accountants are important but they don’t drive the business
Back to our accounting colleagues. When assessing a computer programme to improve or change your business work-flows the only accounting considerations that the programme supporting your income producing activities needs to provide are;
1. Calculates GST correctly
2. Adds up correctly
3. Categorises the transactions for the general ledger
The advantage of good IT systems is that they can give you the edge over your competition and improve your return on investment/resources deployed.
