Often considered a necessary evil, a few expense lines on a company's budget or the latest shiny gadget, a must-have for the 21st century entrepreneur.
IT in business has a specific purpose: to provide the company tools to run the business efficiently.
So why so many businesses, although having a budget and the necessary resources, have so many IT problems?
This is a story of a company with a 6 digits budget for IT and its founder who wanted to spend even more to buy a new software
Italy, 2004. A medium size wholesaler of food and drinks asked me to manage the implementation of a new software for the business.
The current system was a bit old yet was working fine. 15 admins including 4 people in accounts and 3 in IT were quite happy with it and, since it was implemented three years ago, they managed to get a good knowledge of the application and its features.
Eventually they re-designed some of the workflows to make the best of it. All apart from Operations.
Members of staff in charge of transport and warehouse still used paper and pen to do their work. This because their ex manager, who didn’t trust computers, believed that was the best way to run his department
The consequences of such bad practice were obvious to all:
- Discrepancies between orders and invoices. Both for sales and purchases
- Constant product availability issues and wastages due to mistakes when stock checking
- Mistakes on orders: wrong products delivered to the wrong customers
- No tool to check employees working hours and productivity
The owner and founder decided it was time for a new software for the entire company. After attending an exposition in Germany, he decided his company needed that new, amazing system just released in the market everybody was talking about.
He budgeted 250K Euros for that. The sales person must have been very good at his job… After one month spent getting the requirements, working with all the management team and a few key users, a few details emerged:
- The current system was liked by all the employees who used it and they were concerned about changing
- The software had full capabilities to manage the operations given the correct set-up
- There had been cuts to the personnel due to cost reduction policies and employees were not happy to hear that the company wanted to invest in a new software
I decided to further research the software in use and found out that, filling the gaps and implementing the features for transport and warehouse would have cost a tenth of what budgeted for the new system. New set-up could be done in less than a month
I went to the directors meeting with my slides and started talking about how the new solution would benefit the company, operations included. At the end of the presentation though, members of the board were expecting to see the logo of the new system from Germany.
What they saw instead was one they were familiar with. Their current software!
My proposal was to save precious time and money and work to set-up the current system and not to buy a new expensive one that would have taken almost one year to implement and ten times the money.
The board agreed though the founder was not very convinced.
IT personnel took charge of the technical side of the project installing new terminals and printers. With the support of all admin staff, and some members of the management team, the employees in the warehouse and transport department finally got access to a more modern set of tools.
Eventually, even if the start was a bit slow and it took time to members of staff to learn how to use it, the new features helped lowering mistakes and increase productivity.
The company saved more than 200K and the staff developed a great sense of collaboration by working together to understand the needs of their colleagues and configuring new features of the system they had already knowledge of. Two months later, although later than planned, the new set-up was complete
All the solutions implemented helped the company to reduce waste. Yet no food company can expect to operate on a zero wastage. Therefore, in addition to work towards reducing wastage, food companies must be able to manage the waste
The most valuable tool food companies can use to manage waste is to have a budget. A waste budget.
Usually defined in terms of a percentage of the total inventory value to be measured weekly or monthly. By checking our real wastage figures against the budget, we can spot any problem or trend before it becomes an issue.
Again, the secret is measure it, so it can be managed.
Software and hardware.
It is very common to have an all-or-nothing approach and see a company’s IT either as an unnecessary, superfluous set of toys or the ultimate must-have, a futuristic tool that will do our job while we relax and watch the machines working.
Either ways of looking at technology is wrong and can be the cause of serious business troubles.
When in doubt about buying a new solution or using an existing one, we can alwasy ask our staff. Chances are they know more about it than we do