Software Fragmentation Detrimental to Business

Small- and mid-sized companies tend to have many fragmented business processes. With rapid growth what once was manageable by one person tends to become very difficult over time.

The addition of staff adds fragmentation. Computer applications are purchased to do specific activities. Microsoft Excel becomes the catch-all computer system. The use of Microsoft Access is contemplated.

Inventory is kept on an Excel spreadsheet because there’s not been enough time to figure out how to do it on the computer application that was purchased. Purchases are tracked on another spreadsheet for the same reason. Invoices and accounts receivable are handled on a different computer application than the one used to keep books. Reconciling invoices and receivables to cash received takes more and more time each day. Cash in the bank? That’s a multi-hour process by itself.

Customers? These details are entered into two different computer systems. Vendors are entered into multiple Excel sheets as well as into the accounting system.

Reporting? Information? Excel is used because the applications do not have the data arranged the way it needs to be looked at. Reports are stored on file shares and various PCs around the company. It’s important to know who to call or where to look for information because it is kept in so many places.

Sound familiar?

I’ve walked into companies with millions in annual sales and found these situations. Some companies have invested hundreds of thousands of dollars on computers, applications, technology consulting and full-time IT people that facilitate the whole operation. In most cases, the company is considering hiring another programmer. The tendency is to dig the hole deeper.

When business processes and information are in a fragmented state, typically money is being wasted. What should small- and mid-sized business do?

My advice to each of them is the same: “Stop doing anything new on a computer and please don’t hire anyone else.”  Sometimes they hear me, sometimes they don’t.

It is important to understand that computer applications are really just containers holding support for business transactions as well as business data. Business applications have a “way” they want to do things and arrange things. Some support many more business processes than others.

Most businesses already own one of the many available business applications such as Quickbooks, Peachtree, Microsoft Dynamics, or MAS200. Yet, many of the businesses will still have fragmented processes and reporting issues after spending serious money buying, implementing and running these systems.

Why is that?

The problems tend to lie in the understanding and approach taken regarding business processes.

It is important to document how a business is arranged both physically and conceptually, identify important business data and metrics, understand the flow of business transactions and determine what reporting or visibility is needed.

A complete inventory should be made of all reports generated and used in the business. These reports should be stacked up and individually reviewed.

Existing business processes should be identified and documented in detail. This is typically described as the “as-is state.”

New information structure along with new or better processes and reports should be identified.

Most businesses either skip this work or get stuck. There’s little time and little appreciation for documentation. Staff is resistant. The business has little expertise in business process identification and design. Staff may feel threatened if poor processes under their direction are exposed.

Either status quo is maintained, a poor software selection is made or perfectly good software is poorly or incompletely implemented. Excess cost structure, slow business pace and ever-growing frustration results.

Solid coaching on the proper approach along with a strong commitment on the part of ownership, management and staff can lead to streamlined business processes along with more accurate and timely management information. With hard work and on-going diligence, the fragmentation problem can be kept in check. 

Steve Hankins is CEO and co-founder of Accio.US, a technology company providing advisory and management services for small- to medium-sized businesses. He may be reached at [email protected].