You're the IT manager in a small business selling
widgets, and your managing director has a problem.
Sales people without access to credit control data are shipping
new products to customers that are behind with their bills. This
means your receivables are rocketing, while your bank balance is in
the red.
To make things worse, the sales department is promising
customers products that are back ordered for weeks, because no one
is checking with the warehouse to discuss inventory. What do you
do?
Integrated software is supposed to solve these problems.
Stitching business functions together in a single suite or set of
well connected packages can eliminate the need to re-key data into
different software applications manually. It can help fulfil
customer orders more effectively while giving executives a deeper
view into day-to-day operations.
But integrated business packages are not right for everyone.
Companies must meet certain criteria if they are to take full
advantage.
Each of the small number of integrated business systems on the
market sits in one of two categories. Bottom-up suppliers offer
simpler tools designed to suit the majority of business needs, with
limited customisation facilities. They are gradually moving these
tools into larger, more complex operations.
Top-down suppliers have either developed fully integrated
packages or acquired and cobbled them together. Such firms
generally offer more customisation capabilities due to their
experience selling to larger businesses, and have expanded into the
small to medium-sized enterprise space.
NetSuite falls into the former category, providing a collection
of business functions for smaller SMEs. Selling a web-based service
rather than on-site software, NetSuite's value proposition is
two-fold.
First, integrating functions into a single package enables firms
to manage their operations more effectively and provides a clearer
day-to-day view of the business. Second, it eliminates the need for
small businesses with little or no IT expertise to worry about
running their own IT infrastructures.
NetSuite's integrated applications platform features a website
front-end that can take e-commerce orders. Because it holds
inventory, pricing and customer data, it is easy for the system to
keep the website up to date with what is in stock, and to enable
customers to track their orders.
Integrating this information with financials provides executives
with a dashboard-like view of operations. It lets them drill down
to find, say, how much revenue is coming from their five largest
customers, whether the number of abandoned shopping baskets has
suddenly increased, or which products are moving most quickly. Key
performance indicators can be represented by speed gauges enabling
them to track receivables, for example, and take action if
necessary.
Medical equipment company Endoscopy moved to NetSuite on 1 April
last year after using a small financial system called Accounting
Office. Financial controller Keith Davis says he has not had time
to set up a web store yet, but he is using NetSuite for accounts
and customer relationship management.
"We needed CRM software because we had no interface between the
customer system and the accounting system, and it meant we were not
being as effective as we might have been in following up
quotations," Davis says.
Now he can follow details of repairs, loan equipment, sales and
shipments, all centred around a single record per customer, rather
than duplicating such records in different applications. "The whole
thing is traceable through just one centre by our sales and admin
people. It makes the customer's transactions transparent to
everyone," he explains.
Nevertheless, hosted systems represent challenges for some
customers who want to keep data inside the firewall. Those who
remember application service provider performance five years ago
might be loath to trust their entire back office operation to
someone else. NetSuite's 99.5% uptime guarantee means it can be
down for 44 hours each year without incurring financial penalties
from customers.
Security is another concern, according to Joel Martin,
vice-president for enterprise software at market researcher IDC.
"Our research shows that when people are asked 'Will you have
financial information hosted over the internet for your employees?'
there's very little uptake compared to just the CRM aspect, where
people like Salesforce.com play."
NetSuite's vice-president of product management, Mini Peiris,
says putting customer data in a highly secured datacentre is
probably more secure than leaving it on an SQL server in the corner
of your office. True, perhaps, but psychologically, customers
understandably prefer to have their data close.
Configurability is another issue. NetSuite's Netflex system lets
you configure dashboards and custom records and fields on web
forms, but is not yet able to fundamentally alter a business'
workflow around different combinations of web forms, for
example.
For more complex customisation, companies like Oracle, SAP and
Microsoft might be more appropriate. Oracle aims its eBusiness
Suite at mid-range firms, while SAP sells Business One and All In
One, SME and mid-range versions of the fully-fledged R/3 system
with its roots in the Fortune 500 market.
Microsoft's proposition centres around its Dynamics range. It is
currently unifying the different products in this family, including
Dynamics GP (an integrated platform with a more standard
configuration available out of the box), Navision (more
customisable), and Axapta (a more scalable alternative to
Navision), which it acquired over a period of years.
It will unify them around a single code base in an initiative
called Project Green, eventually replacing them with a single
product by 2008. Microsoft CRM 3.0 is still an add-on that must be
deployed separately to Dynamics GP (formerly Great Plains).
At the Authentic Food Company, a food manufacturer with a £21m
turnover, data was duplicated across different systems before it
moved to an integrated suite. This caused production
inefficiencies, says business controller Parminder Basran. "We had
a situation where the name of product would be entered 12 or 15
times on different systems," he says.
Product names would be generated within its technical
specification software, and again in sales. Marketing would do the
same, while accounts and shop floor labelling systems would
duplicate the data yet again.
In a bid to better integrate its processes, the company examined
products including Microsoft's Navision, but eventually opted for
SAP's Business One. The development and deployment project, costing
over £100,000, has brought significant changes to the way the
company does business, says Basran. It now uses ASAP as a central
data repository, driving systems including labelling and recipe
generation from a single application. "That data is also pulled out
for product information sheets on the marketing side," says
Basran.
Other benefits include better supply chain integration. Some 80%
of Basran's customers now use electronic data interchange links to
feed data into his system. Each of the 200 stock-keeping units in
his business is now set up as a bill of materials so that he knows
what to order, week on week.
Finally, integrated CRM enables sales people to examine
customers, suppliers and leads. Telephone calls, meetings and
contact information, along with financial data such as invoices and
credit notes, can all be accessed by different business
departments.
"Previously, CRM was everyone's individual contacts folder,"
says Basran. "There was no central place to hold activity
reports."
Nevertheless, things are not perfect. As a cut-down version of
SAP's R/3, there are some product limitations. "The main issue
arises when we get into manufacturing resource planning," says
Basran, complaining that in Business One the function does not
handle line scheduling.
"We will only ever get to the stage where the system will tell
us what we need to make via the master production schedule." R/3
would describe which line it should be made on, and how long it
will take to make. Instead, the company uses spreadsheets to
schedule its five production lines manually.
The challenges when implementing integrated systems are not
merely technical, however. "NetSuite is extremely data hungry.
Because it can handle lots of data, getting it into the system and
keeping the whole thing up to date takes a fair amount of time,"
says Davis. Companies must have the discipline to "feed" the
systems with the right data, which in turn means getting
cooperation from staff.
Basran took a different approach to many companies when deciding
which supplier to use for his integrated system - he asked them to
present to his users. "In any business, if you are trying to
implement any process change, you need the users' buy-in," he says.
"We wanted them to feel listened to."
Users liked the drill-down and reporting features in Business
One, plus the ability to change the user interface. These
represented a different set of criteria than that of the IT
department, which was more interested in improving back-end process
efficiency.
Ultimately, the value of integrated systems lies in reducing
logistical pressure on companies dealing in high-volume products
and services for whom automation can yield rewards.
If you are in the business of selling high-value, low-volume
goods, keeping track of financials, customer relationships and
inventory may not be such a huge challenge. You might decide that
the investment needed to customise and deploy an integrated system
simply is not right for your company.
On the other hand, if fragmented back-office functions and
volatile financials and inventory are making your business opaque
to senior executives, it might be worth trying to join the dots
together.
Case study: in harmony at Ministry of Sound
The Ministry of Sound nightclub has been using Microsoft's
Dynamics GP (Great Plains) and CRM packages to unite elements of
its business. CTO and head of operations, James Bacchus, says the
system has helped its digital sales, tours and events departments
to automate the sales process.
"Previously the sales people would create a billing request in
Excel, send that to accounts, and someone would have to re-key it
into the finance system to generate invoices," he says. "Now, they
can raise a sales order within CRM and that will transfer into
Great Plains and an invoice will be created from that."
The system has also made the sales process more structured, says
Bacchus. Previously, sales people would use Excel for sales
planning. "Now details of opportunities are entered into the CRM
system and sales people can run off the opportunity pipeline report
so that they can see what revenue they expect when," he says.
The company used a third party consultancy to integrate CRM 3.0
and Great Plains - something that had to be done with a bundled
version of Microsoft's Biztalk software. The cost of the eight-seat
project was under £10,000, he says, half of which was consultancy
fees.