Harnessing better applications to avoid the agony of growing

Small and medium-sized businesses are increasingly likely to use the best software available as they plan further into the future in an attempt to compete with larger companies and reach ambitious growth targets

The name MessageLabs might be familiar from the bottom of emails, where it often appears certifying that the email concerned is free from spam, viruses or other potential security threats. What is less well-known is that MessageLabs is a medium-sized company based in the UK that is successfully taking on larger, usually US-based rivals.

It currently has about 11,000 clients and employs about 350 people in seven offices around the world in addition to its UK base in Gloucester. But, while acknowledging that it is facing increasing competition, it is seeking to become the world leader in its field and hence is aiming for dramatic growth.

John Simpson, senior director, sales consulting at Oracle, says that one of the ways the company is going about this is by installing a customer relationship management (CRM) system. He says CRM is vital because acquiring new customers, looking after existing ones and making sure none are lost is vital for growth. MessageLabs is using it to help it focus on improving sales, marketing and client service by measuring, respectively, leads per member of the marketing team, deals per head of the sales team and tickets per head in the client service team.

It is a sign of how even comparatively small companies are turning to the sort of technology that was once the preserve of the largest corporates in their attempts to become more competitive and to achieve ambitious growth plans. Moreover, high-technology companies are not the only ones recognising the benefits of using increasingly sophisticated software to help them run their operations. Software companies that have traditionally dealt with larger businesses, such as SAP and Microsoft as well as Oracle, are all seeing growing interest from smaller customers as it becomes more widely recognised that installing high-performance technology need not be as expensive as had been thought.

Many companies stick to CRM or some other distinct application, such as finance or human resources management. Indeed, CRM even has its own subset, called sales force automation (SFA), which has as its goal the streamlining of the entire sales process to make businesses more efficient, improve customer interactions, increase customer satisfaction and save time and money.

Paul Fielder, applications sales manager with Explorer, an Oracle partner based in Leeds, says: “SMBs [small and medium-sized businesses] tend to buy software to solve specific problems. This means they end up with a lot of different systems, which makes it very difficult to get business intelligence.”

In addition, each time they upgrade they have to re-engineer all the applications, which is expensive and time-consuming. This, in turn, tempts them not to upgrade so often with the result that their systems become out of date.

Increasingly, though, such businesses are being encouraged to buy software strategically. Accordingly, they are looking for software systems that can grow with them so that they do not have to keep changing as the business develops, adds Fielder.

This is tending to fuel demand for enterprise resource planning, or ERP. This is a business management system that integrates all parts of the business, including manufacturing, sales and marketing. In a manufacturing company, for example, its use can be seen in the handling of an incoming order. As soon as the order comes in, the system would spark an inquiry about whether the necessary parts were in stock and if not order them. Information obtained during the ordering process would allow it to schedule a date for fulfilment of the order and hence a delivery date for the customer.

Because it brings all the operations together, this technology enables costs to be reduced through such areas as cutting waste in inventory, consolidation of purchasing through a single system, speeding up of accounting information and increased salesforce efficiency. It also does away with the need for the same information to be put in different systems. All information only needs to be entered once to be available for all applications.

One factor that is making such comprehensive systems more affordable to smaller companies is the Internet. Web-based applications simplify the implementation process and so reduce the costs. Another is the increasing readiness of large software providers to pre-package some of their offerings.

Explorer’s Fielder, for example, explains how what would once have required a team of consultants to build from the ground up can now be implemented almost out of the box. Oracle’s Accelerator suite, for instance, offers a series of packages focused on particular industry sectors. Businesses can adapt them for their own purposes, but since they reflect best practice in each industry, are generally encouraged to change their processes to suit the package if required. The result, adds Fielder, is that the

system can be installed much more quickly and cheaply and the return on investment realised sooner.

Clive Wells, senior principal mid-market consultant with Oracle, says the approach gives smaller companies access to the sort of technology previously the preserve of large corporates without forcing them to accept a “one size fits all”. He also stresses that, besides delivering efficiencies, ERP systems encourage collaboration and the communication that can be lost as businesses become bigger.

Because the same system can deliver information in different forms to different people, such technology can enable an entrepreneur to step back from the day-to-day management of the business knowing that the systems are there to allow the middle managers to do their job while also providing him or her with the vital information they need about the progress of the business.

Moreover, the technology now exists to deliver daily business intelligence to organisations, so that executives receive key performance indicators. Such a system is about to be introduced by the Specialist Schools and Academies Trust, which started life in the 1990s as a government body charged with improving standards in secondary schools but has broadened out to become a not-for-profit organisation providing consultancy on education in the UK and overseas (see box). Finance director Colin Kerr says that from the beginning of the new financial year in April all 30 budget holders in the organisation will “come in each day and see high-level traffic lights of their budget areas”.

The mark of a good ERP system, says Wells, is that “it should be able to supply good financial management information in a timely way”. A clear sign of growing pains in a business is the fact that it takes longer and longer to close the accounts. This can be very dangerous because out-of-date management information is no use at all. “It is absolutely critical that management information keeps pace with the pace of growth of the business,” he adds.

Ultimately, though, whether smaller businesses choose to adopt this sort of technology is down to their mindset. Wells says the people running them will want to see a quick return on their investment and they will want the system to be able to grow with them. “Scaleability” is a key word. But they will also be ambitious and keen to use the technology to help them “stay ahead of the game and remain efficient and competitive”. Just like MessageLabs, which – though hardly a household name in its native land – has ambitions to be a global force.

Technology satisfies a need for greater

The Specialist Schools and Academies Trust was set up towards the end of the last Conservative government with the aim of encouraging the setting up of specialist schools and city technology colleges. When Labour came to power in 1997 it became the vehicle for raising secondary education standards through promoting the idea that as many secondary schools as possible should become specialist in at least one subject. With about 90 per cent of the country’s 3,000 secondary schools achieving this status, the organisation decided to broaden its remit and has effectively become a not-for-profit consultancy specialising in education. As well as advising on standards, it runs courses and acts as a network for those involved in education.

Since taking the decision to broaden its services, the trust has grown from an organisation with an income of £12m a year to one doing £50m of business a year. In that three-year period, the staff has trebled in size to about 350 people.

Colin Kerr, who arrived as finance director at that time after spells in the public sector and as FD of a law firm, realised that the existing accounting system would not be sufficient to cope with the growth that would be associated with the development of the organisation.

“If you wanted to do anything you had to work it out separately from the system and tap it in. There was no information about where the money was going,” he says.

His first task was just to get to “where we should have been” with a system that was fit for the purpose of providing accurate monthly accounting information.

Having achieved that reasonably quickly, he and his team set about what he calls the “exciting part”. Taking the view that the way to obtain the sort of information he wanted lay with technology rather than hiring more people, he opted for an Oracle system that could have extra features added on.

Inspired by stories of how the US computer company Cisco Systems has introduced “real-time reporting” he set about obtaining a system whereby he could know about financial commitments being made by members of team as they happened rather than weeks later and could also see instantly what the effect of them would be. “You’ve got to have the right data and today,” he explains.

The trust is currently piloting a system due to be implemented in time for the start of the next financial year in April that will alert each of the organisation’s 30 budget holders to what is happening in their areas in financial terms. Acknowledging that only financial specialists will be interested in reading the full accounts, he is keen to make it easy for them to see if there is a problem through a “high-level traffic lights” system to be delivered by email when they log on at work each morning. Once alerted, the executive will be able to drill down through the information to find out more detail.

“You’ve got to be looking at how to liven it up,” says Kerr, who also explains how the Oracle system has allowed the organisation to rid itself of paper. Invoices are scanned as they arrive and then sent to relevant person for checking. Once he or she clicks on them they are sent for payment.

“We’re getting away from the idea of armies of clerks,” says Kerr. “It’s sharp, it’s quick, it’s about empowering the budget holders.”