How many fantastic small companies are hitting a glass ceiling? Fear of overextending in a tough economy is actively constraining the expansion of some great business ideas into a broader market. A small distribution or wholesale organisation faces the same challenges and business needs as the larger competitor – from real-time performance information and integrated e-commerce to just in time stock management and mobile workers.
Yet most organisations face the unpalatable choice: stay small with current technology or risk the business on a major investment to access the technology and innovation required to take the next step. It doesn’t have to be this way. IT vendors do not have to dole out features and functionality on an ‘ability to pay’ basis.
Today’s cloud and consumption based computing can help to provide the features and functionalities traditionally available only to the largest organisations, but at a fraction of the price. The market is changing and it is time for small businesses to demand scalable, flexible, affordable enterprise class technologies from day one.
There are many challenges to starting a new business, but today technology is not one of them. Entry level finance, customer relationship management, even web sites are accessible and affordable. For perhaps no more than £15,000 a new business can be up and running. So far so good.
It is 18 months down the line, however, when the business is expanding and it needs to take the next step that the problems arise. Extending the functionality of the web site to offer true e-commerce; creating a fully integrated solution to provide end to end visibility and streamline processes; achieving real-time reporting – to acquire this level of technology solution will cost upwards of £150,000. End of discussion. Few organisations can justify that sort of budget, however positive the outlook.
Yet since these entry level solutions are inadequate to support a growing business, the business cannot expand. Not only do these systems lack functionality, any organisation reliant upon different CRM, warehousing, finance and e-commerce systems is going to struggle to scale effectively. Costs will increase, efficiency decrease and, critically, the business will lack the real-time, end to end information required to track performance and grasp new opportunities.
So how can a small business compete against large organisations with large IT budgets? How can a small or medium sized distributor leverage strong customer support and a clear business vision to rise from innovative newcomer through the ranks to FTSE 100 status? The key is to fight back against the constraints of current IT pricing models.
Right now the IT industry is dictating the terms. Organisations have little choice but to gradually – and expensively – work their way up through a tier of solutions, finally attaining the functionality and features of the enterprise class solution. The only alternative is to take the risk of opting for multiple different solutions and embarking upon expensive and time consuming integration in the hope of eventually achieving some kind of end to end solution.
Either approach is fundamentally flawed. Enterprise-class features are as relevant to the smaller organisation as the large; but the pricing model means that they are out of reach to all but the largest companies. So how can the small or medium sized distributor deliver not only web based ordering 24×7 but attain a fully integrated e-commerce system that provides real-time stock information and a choice of delivery options. Or ensure the solution can automatically provide each customer with customised pricing based on both contracts and manufacturer promotions?
As the business grows, how can real-time credit checking be used for online orders to minimise the risk of bad debts? Or ensure out of stock situations are avoided by automatic placement of orders direct with the supplier? How can the business embrace hand held devices or RFID to improve warehouse operations and stay competitive in both pricing and performance?
Breaking The Chain
In a highly competitive marketplace where price is low, and margins lower, competitive position demands innovation as well as good customer service. The ability to drive cost out of the business by streamlining processes and reducing the administrative overhead is key. And that can only be achieved through the effective use of innovative and integrated IT solutions.
It is time for the small business to take a different approach. Rather than waste money on incrementally stepping up through the range of IT solutions on offer, gratefully accepting the additional bits of functionality reluctantly doled out by the IT vendors, they should go enterprise class from day one. Many smaller organisations see cloud-based solutions as the answer to the SME software struggle.
While the cloud enables businesses to to exploit complex, sophisticated software at a fraction of the capital outlay or monthly subscription charge, it is important that the cloud is not seen as the be all and end all. Organisations require choice, the flexibility to have software hosted in the cloud, in-house or a combination of both. With enterprise class functionality now available at a small proportion of the price of typical SME options, it is possible to plan for growth from day one in a way which meets each organisation’s specific requirements.
There is no need to delay expansion due to technology limitations: the same solution should scale from one user to thousands. It should have the functionality in place from the outset that enables the business to operate effectively, adopt streamlined processes and embrace innovation as and when required – such as providing sales staff with tablet access to real-time stock information.
Breaking into a new market will always be a challenge. Larger organisations already have an edge, with economies of scale, track record, an established customer base and supplier support. Add in technology innovation that delivers real-time insight, facilitates even greater efficiencies to undercut the smaller competition, and enables new levels of customer service and delivery and the challenge becomes insurmountable.
But smaller organisations are agile and innovative. And with access to the right technology, smaller businesses should and could have an edge. The key is to gain access to that enterprise class solution and avoid being fobbed off with the inadequate and disconnected entry level options that the industry deems worthy of the smaller business. With a fully functional solution from day one, the glass ceiling is removed. Finally, business growth is dependent upon market opportunities and economic viability – not the vagaries of IT vendor strategies.