Every day, executives at small and midsize companies make critical business decisions based on uncoordinated information from a variety of sources: opinions from peers and colleagues; a personal sense of intuition or business judgment; or data derived internally or externally to the organization.
This is particularly worrisome given the lack of confidence in the data available to decision makers. Case in point: according to a 2010 Forbes Insights survey of over 200 business and IT executives, 61 percent of respondents indicated that their business processes suffered from inconsistent or flawed information.
In other words, executives simply do not have the relevant information—or the data quality—required to make the best decisions in a timely manner.
Why Do Small and Midsize Companies Need Data Visibility?
Small and midsize companies everywhere are inundated with waves of data—about products, competitors, suppliers, and customers. This information explosion is not the only problem facing companies when it comes to data management. There’s also a tendency for employees to create and maintain files on local drives rather than shared databases, effectively creating “micro-silos” of data.
These data silos are preventing departments within small and midsize companies from making the best decisions—and in some cases causing them to make decisions which hurt the organization as a whole. Most enterprise data is buried in spreadsheets and isolated information silos that have evolved over time—all undoubtedly serving critical short-term needs, but ultimately slowing the pace of decision-making to a crawl.
The perception of executives, though, is that most of the data needed to make decisions is available “in the computer system,” or at least locked away until the moment is right for it to be accessed and used.
But what if your enterprise system has not been structured to track and report this information? What if this information or metric is not even defined? For instance, does everyone in your sales department agree on what constitutes a qualified lead? Does marketing agree with sales? Until a data query is defined, formulated, and tracked, that data is certainly not available to executives “in the system.”
The Three Keys to Better Data-driven Decisions
Organizations that successfully negotiate the parameters for data visibility derive three key benefits in critical strategic areas of business decision-making:
Alignment of business activities with corporate strategy
Optimal resource allocation and use
Reduction in the overall organizational strain of regulatory compliance
1. Alignment of business activities with corporate strategy
Business activity alignment is the ability to take your theories and put them into practice—in essence, translating the strategic plan into tactical steps.
Business benefits include more clearly defined executive roles, a balance of cost and investment, better interdepartmental coordination, and a 360-degree view of customers for better customer experiences as well as marketing and sales efforts.
Typically, however, different parts of the organization develop metrics specific to themselves and their purposes—resulting in a lack of consistency in reporting and an inability to aggregate data to senior management. A lack of consistent definitions and metrics makes it particularly difficult for management to determine which way alignment needs to shift, if at all.
The result of strict alignment of activities with corporate strategy is that individual departments are no longer paying lip service to the business plan; instead, it serves as a coherent action plan, with all cogs working toward the same objective instead of grinding the machine to a halt.
The Three Keys to Better Data-driven Decisions
How integrated enterprise software supports alignment: By providing analysis and reporting tools to create a centralized, unified view of all the company’s critical information, an integrated software solution can provide the visibility necessary to ensure that departmental activities are in line with the overall corporate strategy.
2. Optimal resource allocation and use
Enterprise-wide resource visibility ensures that you have the right people, investments, and assets aimed at the right activities. Lack of visibility into corporate resources, on the other hand, makes it difficult to assess current strengths and weaknesses and to map resource allocation accordingly.
For instance, how are you balancing your cash flow? Are you paying others before you get paid? Similarly, your sales force may be strong collectively, but do you have the right people handling your most profitable accounts and territories? Do you know which accounts and territories those are? If you don’t have the right resources targeted at the right activities, you could be expending high-impact resources on low-impact activities.
You may be collecting large amounts of data, but if it’s not available in time to make the best decisions, you may be falling prey to the garbage-in-garbage-out maxim. Small and midsize companies must find a way to quickly identify and locate resources in line with (potentially conflicting) needs, in order to ensure that the right resources are deployed and engaged in the right areas.
How integrated enterprise software supports resource allocation: By seamlessly combining sales, customer, financial, and operational data, a single integrated software system makes it possible for management to make better-informed decisions in deploying the right people, investments, plant, equipment, and assets for the right activities at the right time. Real-time visibility into data also provides a means to verify and justify results, as well as full confidence that your company is leveraging the right data at the right time to make better, faster resource allocation decisions.
3. Reduction in the overall organizational strain of regulatory compliance
Small and midsize companies face a deluge of requirements and standards from government agencies, customers, suppliers, and industry groups. Thus, they require full visibility into these requirements, as well as into the resources they’re deploying to meet them.
The three business compliance issues which most commonly arise center on reporting, auditing, and brand image. Additional compliance efforts may be directed at meeting industry terms, standards, and guidelines, and requirements. Failure to meet standards for quality, environmental impact, or social responsibility could damage an organization’s brand in the marketplace.
The primary challenge, of course, is that with limited resources and infrastructure, compliance often places an inequitable burden on small and midsize companies. Indeed, many organizations struggle to keep their head above water in their effort to find the resources to complete the necessary paperwork—to say nothing of the auditing processes necessary to avoid the heavy penalties of non-compliance, such as fines, work interruptions, and seizure of assets. Many industries, in addition to government authorities, impose standards and reporting requirements. Thus, small and midsize companies need the capacity to back up their claims (with respect to country of origin, “green” compliance, etc.) with a complete, accurate view of information in a timely fashion.
If you have the proper systems in place for tracking and reporting, it’s possible to leverage compliance as a driver for improvement, rather than an organizational burden. Such improvements include credible financial statements, high quality products and services, and (in some industries such as pharmaceuticals) shortened product development lifecycles.
How integrated enterprise software supports standards and compliance: By capturing and enforcing industry standards and compliance requirements in your company’s technology infrastructure, an integrated system can provide real-time information, allowing management to track performance and make adjustments more rapidly.
How Can Integrated Software Help Your Organization Make Better Decisions?
With an integrated IT system, small and medium companies can respond quickly and effectively to changes in the market. You can jump-start the process by following three steps.
Step 1 – Assess your current business environment and IT infrastructure
Management should perform a health check of its business activities and IT infrastructure. They need to understand where the organization is, where it needs to go, and what software solutions are needed to get there. Management also needs to be able to access real-time data to ensure that departmental activities are in line with corporate objectives. Management should look for its ERP software solution to help the organization
extract the relevant business information to provide an overview of current business health;
provide the necessary analytics and reporting tools to conduct a gap analysis to determine what the company is doing and what it needs to do; and
create a framework to document a performance plan and review, including desired results, measures, and standards.
Step 2 – Establish a common set of metrics across your company
The use of different metrics, terms, and standards can impair your organization’s ability to communicate effectively and meet compliance requirements. More importantly, it can hamper management’s ability to aggregate data to create a unified view of all the company’s critical business information. Management should look to IT to help the organization
• get buy-in from internal and external stakeholders on what to measure and how to measure it;
• develop key performance indicators (KPIs) across your company that can assist management in making informed business decisions; and
• use an integrated software solution to provide quick access to the right data, tailored to the appropriate stakeholders’ needs.
Step 3 – Execute the plan
Management should determine what needs to be done and then deploy the right resources to the right activities. Here, IT serves as the engine to analyze and report all business opportunities and activities and give management the overall visibility to allocate resources in the most effective manner. Specifically, IT should put in place and utilize an integrated software solution to help the organization
capture and organize relevant data so it can be quickly and easily accessed whenever needed;
unlock key business information so that management can make informed decisions regarding the effective allocation and utilization of resources and investments; and
create a collaborative environment to monitor, manage, and analyze progress against corporate goals.
For small and midsize companies, high-quality data can be a powerful competitive tool—or it can bog your company down. Organizations that successfully use an ERP software solution to align all activities with their business objectives will be in a position to access the right information at the right time, allowing for better, faster decisions.
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