What can Technology do for a Small / Medium Sized Business Enterprise?
Small businesses owners are hard-pressed for managing with scarce resources. How can technology ease their stress levels? Information Technology (IT) is often touted as the magic potion that has solutions for almost any business ailment. But IT is a confusing world of jargon, with incomprehensible abbreviations like ERP, CRM, SFA, SCM, EAI, BPM … and so on. How does a small business owner make sense of all this jargon, and what is a practical approach to adopting IT? This is the first article that begins the series to analyze and answer this question.
What is Business?
Before we begin to understand what Information Technology can do for business, let us define what we mean by Business
Definition:
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This system is held together as a cohesive entity by Information. People and resources are able to co-ordinate and perform processes and adhere to policies by using business information.
Information is the glue that binds the Business System
The growth of the business can be measured in terms of revenue generated. To grow the revenue, the business needs skills and resources. The skills and resources can be measured in some units such as number of people, machinery, raw materials etc. We can then consider throughput as the revenue divided by the value of skills and resources. Simply put, it can be considered as revenue generated per unit skill or resource.
As the business grows, the number of skills and resources will keep increasing, and initially the throughput may be maintained. But as the business keeps growing, the throughput is likely to drop.
When the enterprise is small, with a few number of people and resources, sharing business information is easy – processes are easy to track, policies are easy to adhere to. In fact, no significant policies may be defined because individual judgement can be relied upon in a small team. However, as the demand grows and the enterprise grows to satisfy it, the number of people and resources need to be increased, and it becomes gradually more difficult to follow ideal processes, and policies need to be defined clearly so as to ensure quality of deliverables.
The first curve in the graph above represents the growth curve of the business system. The second curve represents the throughput, as a measure of productivity. As the system grows in size, information becomes more difficult to track, resulting in loss of productivity, and thereby reducing the rate of growth. When the throughput starts reducing faster than the revenue, it is the time to change the system.
If Technology is added to Business Information, the ability of the system to Perform is enhanced. However, we need to realize that merely adding technology to the old system, consisting of old processes and old policies will not work. Technology is merely an enabler of new processes and policies that can together deliver enhanced performance.
How does Technology enhance the performance of the Business System?
What does technology really provide? The three basic abilities that technology brings to the business system are:
- Data – re-usable information
- Logic – business workflow model
- Network – virtualizing the enterprise
Data – Re-usable Information
The first ability of technology is to convert information into data. With technology, information can be captured when it is generated, and not when it is required for consumption. For example, each member of the order execution team needs to have instant access to customer requirements without having to ask the sales person, or even worse, the customer.
Logic – Workflow Model
The second ability that technology brings to the Business System is Logic. The processes and policies of the Business System can be codified into programming logic. The following flowchart illustrates a small sample. This kind of a model is called a Workflow Model of the processes and policies. It helps to ensure that the tasks and actions that are part of the process are performed in the correct sequence, by the right people utilizing the right resources. And also ensures that policies are adhered to.
Network – Virtualize the Enterprise
The third ability that Technology brings to a business system is the network. When the enterprise grows to span multiple locations, the information backbone of the enterprise should not break-down and create silos of information at each location or division. Today, technology that can provide world-wide access to a single database source is practical and cost-effective. In addition to integrating data and workflow across multiple locations or divisions of the enterprise, networking can also integrate the enterprise workflow with the extended enterprise – consisting of suppliers, business partners, agents, distributors, and ofcourse, customers.
The IT-enabled Business System
The IT enabled business system consists would ideally consist of :
- Data Management System – to create a set of templates that capture information from all sources in the business system. Utilizing the data management capabilities will require processes to be modified in such a way that the seemingly extra effort of entering information into the Data Management System is built-in. Policies need to be defined where no significant business event escapes the system undocumented. Ofcourse, the technical solution needs to be built in a way that minimizes the pain of having to enter all the information in the system, and be as easy-to-use as possible.
- Workflow Management System – The workflow management system will consist of a model that maps out various tasks and actions that are required to be performed in various scenarious. Policies are converted into rules, responsibilities, roles and permissions. The workflow model, the processes and policies may morph over a period of time, so as to minimize the learning curve for each person and resources.
- Network Integrated Solution – If the workflow involves significant interaction between multiple divisions of the enterprise that are geographically spread apart, then the technical solution and processes need to be suitably networked. Technology needs to be selected that makes databases and workflows across multiple locations seamless and transparent. Systems may need to be tuned and evolved based on the speed and availability of network. In addition, policies need to be defined for integrating external business partners such as suppliers, agents, distributors etc. Customers may also be provided the ability to directly hook in to the workflow of the enterprise, and participate in the solution design and delivery process.
Conclusion
We have seen how technology can use data, logic and networking to enable processes that are designed to deliver enhanced performance. We need to realize that processes and policies need to be re-defined or tuned to take proper advantage of a technological solution.
In the next part of this series, we shall investigate into what are the various options for choosing technologies that can serve an SME.
