At some point in the growth path of every company, the business owner or senior executives start to get the sense that things aren’t working as smoothly as they used to. The business is starting to struggle under the weight of its own growing size and complexity and they realize that it is probably time to re-evaluate the company business processes and business software infrastructure to support current requirements and future growth plans.
But what are the signs that now is the time?
Sustained growth is expensive and there are always competing objectives for funds, so you don’t want to invest in these changes before you have to. At the same time, you don’t want to wait until the business is on fire before you start making changes.
How do you know that now is the time and not a year from now?
Here are 5 critical signs that your company has reached the point of no return and now is the right time to start making changes:1) Senior management keeps getting blindsided
Your executive team keeps getting blindsided by shortfalls in expected revenue, large unexpected margin fluctuations across projects and roller coaster billable utilization. These are all signs of one thing: what was expected to happen isn’t happening according to plan. Worse yet, senior management isn’t finding out about it until it is too late to do anything to fix it.
The source of this issue can typically be traced back to one cause: silo’d data. A change in one department that might affect 3-4 other departments isn’t getting effectively communicated to all of the affected stakeholders.
Let’s look at a real-world example…Your team is on time and on budget in delivering a project for a customer A. They love the work your team has done so much that they have decided to extend the project to include two additional weeks of deliverables. That’s a good thing, right? Yes, but…
Five other departments just got affected:
1. Sales: The sales team has been promising prospective customer B that their project can be started in a week if they sign right now. By extending customer A’s work, the earliest new start date for customer B is three weeks from now.
2. Project Management: The next project that was supposed to kick off just got delayed by two weeks which means that all of these services resources for the next pending project need to be rescheduled.
3. Procurement: The equipment that was going to be ordered for the next project now needs to be delayed by two weeks in order to avoid tying up cash flow.
4. Admin Invoicing: The invoice that was due to go out to this client has now been delayed by two weeks and is going to include more deliverables.
5. Support: The support agreement that were supposed to “go-live” now needs to be delayed by two weeks.
When departments are impacted by decisions that are not well-communicated, the department staff and the customers can be negatively affected. In a small company, it’s usually not a problem as people yell the news about the two week delay across cubicle partitions, send e-mails, leave voice mails, or tell someone in the lunch room when they see them. But as the company gets larger and the starts running multiple projects concurrently, it is just a matter of time until a change doesn’t get communicated effectively and chaos ensues.
Self-check: If your team is constantly fighting fires and senior management isn’t finding out about it until the singed monthly financial statements land on their desk, then that’s probably a good sign that “visibility into changes” is being hampered by silo’d data.2) Re-keying of data
The truth is that no matter how efficient your business processes and business automation software are, there are always going to be some requirements for the odd Excel spreadsheet, off-line report, or manual process. But, the more times your team is re-keying data and the more spreadsheets they have created with data from multiple systems, the more likely it is that those re-keying efforts are hampering visibility, productivity and accuracy of data.
Common areas of re-keying would be:
• Between the quote and procurement system
• Between quote revisions and opportunity forecast
• Between the quote budget and project management budget
• Between job costing estimates and actuals
The three dangers with re-keying data:
1. inefficiency of re-keying
2. error-prone aspect of re-keying
3. time delays between when data in one system has changed and when that data is updated in the next system it is keyed into.
These delays can also impact departments when two departments are operating off of two different sets of what should be the same set of data.
Self-check: If your team is re-keying the same data more than twice, if time is being spent trying to determine which information is the “current” information and if those disconnects are causing delays in things like invoicing or customer service, then it may be time to consider making changes.3) Redoing work
An often overlooked aspect of a broken business processes is the amount of time employees waste backtracking because the data they used initially wasn’t the “right” data. Typically, this is the result of two or more departments working off different sets of what should be the same data. Good, hardworking employees are basically compensating for a broken business process.
This duplicate time allocation often doesn’t show up on senior management’s radar because employees are basically solving problems before they’re visible to the organization. They are basically identifying the “wrong” data and spending extra time (and frustration) finding, updating and correctly entering “the right data”.
Self-check: Ask your employees: “What percentage of your time do you spend validating the data you’re working on to make sure it’s correct?” You might be shocked at the answer. If it’s more than 10%, then that’s a serious drag on productivity. Every minute that someone spends “redoing” their work is time that could have been spent doing something productive to help the business grow. Doing work twice means getting half the work done correctly.4) Near misses
“Near misses” basically describe something bad that “almost” happened:
• Almost losing money on a project
• Almost quoting at the wrong margin
• Almost ordering or delivering the wrong equipment
• Almost scheduling the services team to be on-site on the wrong date
• Almost forgetting to invoice the customer for a portion of the project
• Almost overlooking a key customer support issue
Usually, the only reason it was an “almost” is because some industrious employee “caught” the pending mistake.
The issue here is that the more frequent the near misses, the more the statistical likelihood that something will eventually slip through the cracks and the “almost” becomes a reality. “Near misses” also often go unnoticed by senior management because operational employees are solving potential issues before they become actual problems.
Self-check: Ask your employees: “How many times in an average month do you “catch” mistakes that would have turned into a major problem?” If it’s more than a couple times, it is too often. Think about how negatively it would affect your business if your employees were not making all of these saves. It may be time to consider some changes.5) Departmental conflicts
Different departments will always have different and sometimes competing objectives:
• The sales team wants to quote more competitively but senior management wants higher margins.
• Project managers want lots of lead time, but the sales team wants to please customers’ aggressive project schedules.
• Procurement wants to place bulk orders but accounting doesn’t want to tie up cash flow.
Although some departmental friction is inevitable, if your departments are constantly in conflict, there may be other issues at play.
A common scenario would be when one department ends up fighting a fire that started in another department and both the fire and the conflict were the result of the right hand not knowing what the left hand was doing.
Some signs that this might be an issue:
• The sales team making timeline commitments to customers that the project implementation team can’t effectively deliver on
• The procurement team having to backtrack and scramble to order “the right products” after initially ordering the wrong products
• The service delivery team being out of sync with procurement for when product will arrive at the customer’s site in order to schedule service delivery
• The invoicing team struggles to get accurate PM feedback on “what’s ready to be invoiced”
• The support team struggles to confirm changes to what products are or are not covered by the service contract
These issues can enflame departmental conflicts and are almost always the result of a change happening in one department that is not effectively communicated to another affected department. It is the lack of company-wide visibility into these changes that is causing the conflict. Subsequently, one department’s objectives are compromised because they were not aware that a change affecting their department had occurred in another department.
Self-check: If your operational departments act more like combatants than collaborators, then it might be time to consider putting business processes and business automation software in place that puts them all back on the same page.
If you’ve outgrown your business processes, it may also be time to implement more scalable business automation software to support new processes.
If you are seeing one or more of the critical signs above show up in your business on a consistent basis, then now might be the time to consider making a change.
There is never a convenient time for putting new business processes and business process automation software in place. It is always going to be disruptive, cost money and require employees to learn how to do things differently.
However, the business processes and business process automation software that got you to 10-15 employees is probably not going to scale to get you to 25, 50, or 100 employees. It is always better to get in front of that problem than wait until it becomes a crisis. Ask one of our Var Office Suite parters’ Promys PSA software to learn how they help your organization improve it’s business processes.