The upside is you don’t need to be an IT geek to do it and customers are likely to vote with their feet to do business with you.
International research has found that IT-savvy businesses are 20 per cent more profitable than their competitors. Just as important, they are better positioned to take advantage of future business opportunities. It is also good for the economy.
In his book Waltzing with the Elephant Mark Toomey claims that the improved use of IT could lift Gross National Product by up to 3.1 per cent. Our experience with medium businesses (typically $1 million to $50 million annual turnover) has found that up to 10 per cent of turnover can be trapped within inefficient business systems – that’s $400,000 for a $4 million turnover business. While most of this is in balance sheet items (like excess debtors and stock), the impact on net profit (via reduced cost of sales and expenses, plus increased sales) I believe could be well above the 20 per cent IT-savvy guideline.
Is your IT system rusty?
Mark Toomey talks about how farmers can quickly see the limitations of a rusty old tractor, but businesses can’t see the limitations in rusty old IT systems. Our experience with medium-sized businesses has found that many still use small business software installed to handle Y2K / GST over a decade ago, patched up with isolated systems and spreadsheets. Since then their business may have tripled in size and become far more complex. Some have even cut IT spending and undermined the business’s ability to perform, or thrown money at a huge ERP system hoping it will solve everything, but it rarely does.
In my opinion, far too many medium-sized businesses still have inadequate business systems. It is killing their growth prospects and leaving them badly exposed, even compared with their UK counterparts, whose economy is meant to be in worse shape than ours. Few realise this gap is filled by easy-to-justify and locally developed intelligent business systems.
