Neglecting Your Back-End Could Kill The Growth Of Your Small Business

​With the rapid acceleration of technology, small businesses that rely on legacy IT systems or cumbersome manual processes will be left behind. Small businesses can benefit greatly from relatively small investments in customized apps that support their specific business needs and provide the competitive advantage required to survive and prosper.  

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Small Business Numbers in Australia

  Over the period 2011 to 2015, companies employing between one and four people made up 70% of the number of employing companies in Australia. However, they also had the lowest survival rate, with only 68% of these companies trading in 2011 still in existence in 2015.  

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Source – Australian Bureau of Statistics, 26/02/2016  

Investment in front-end marketing and online promotion 

  Many modern day small businesses start out as sole traders, or husband and wife teams and have great ideas and business plans. They often invest heavily in building their online presence with websites, online stores, social media integration, search engine optimisation and mailing campaigns. Reaching, retaining and growing their customer base are key to revenue generation and growth.  

The neglected back-end

  Equally important to business success are the less glamorous and often neglected back-end systems and processes that keep companies compliant, manage costs, track production timelines, forecast sales and help manage and optimise stock.    These are often comprised of a mix of accounting systems, document templates, Excel workbooks, paperwork and manual processes. Key business information is dispersed, duplicated and unstructured.    The result is that operating the business involves often time-consuming, repetitive processes, which are inherently error-prone and tedious.  

Automate, customize and thrive

  Small businesses can benefit from investing in custom apps, automation and systems, which deliver four key business benefits:

• Information is timely and up to date - allowing for production forecasting, improved resource planning and allocation, directing expenditure, and improving market responsiveness
• Increased efficiency – doing more with existing resources is critical to survive in a world where customers’ options increase almost daily. It also frees staff to focus on more value-adding work
• Improved productivity – when data and systems are organised, productivity improvements follow, along with increased accuracy and job satisfaction
• Improved interactions with customers and suppliers - systems produce outputs that reflect the company’s identity, look professional and are accurate and consistent

Sounds great, why don’t we?

  The main hindrances to small businesses making investment in IT to streamline their core back-end processes are often:  

• Inertia - "this is how we have always done it”

• Cost – “Its too expensive for our needs”
• Specificity of requirements - “we can’t find a system that does everything we want” or, “the systems on the market provide loads of functionality we don’t need”

You can! And it’s not that difficult

  There are an increasing number of systems that can be tailored exactly to each company’s specific needs, and which:  

• Do not necessarily require huge investment
• Are scalable to the size and complexity of the organisation, and can grow with you. Systems may begin as single user, in-house applications, then grow to encompass multiple users, on and off-site accessing systems via mobile devices
• Provide the ability to automate complex and time consuming manual data collection and processing

Small businesses can be, and must be agile

  In my time working for banks, insurance companies, power companies and other such large organisations, antiquated, inflexible yet critical back-end systems were invariably a major cause of complexity and delays in launching new cutting edge systems.    For example an online insurance sales system, while built on the latest technology and processes still has to talk to the old core system, which for historical, technological and even emotional reasons is resistant to change. Small businesses have the ability to bypass or rise above such issues.  

Recent case studies

  This year I’ve worked with a number of companies, all from very different business domains; a heavy machinery distributor; an economic advisory and management consulting firm; and a clothing manufacturer and distributor.    They each faced challenges very specific to their industry, and to the companies themselves. However, once we boil it down, they all wanted something to help them gain a competitive advantage by addressing gaps in their existing core business processes.  

Kobelco Construction Machinery Australia

  This Australian subsidiary wholesales excavators made by their parent company in Japan.    Their monthly process of determining the volume of a number of different excavator models to order from Japan relied on the black-box logic of a legacy forecasting tool, which was both inflexible and did not reflect the business’ current operations.    The system had been inherited by the current team, was a generic, and did not allow for customizations to suit the business such as reduced production and transit times, changing model specifications and mixtures.  

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​ Figure 1: Kobelco Construction Machinery Australia[/caption]   Over a series of meetings we discussed the options available, and arrived at the decision to build a custom app that exactly met the client’s requirements and provided flexibility and scalability.   We created a new forecasting tool using FileMaker Pro as a platform. The logic implemented is transparent and can be adjusted to reflect changes such as reduced construction and shipping lead times and changes in demand for different models arising from changing local economic conditions.    Apart from these functional benefits, the team at Kobelco expressed their satisfaction in having a system that reflects their corporate branding and “looks and feels like ours”.  

Mobility - Complete Intelligence Ltd.

  Complete Intelligence provides global economic and advisory services to governments, private sector entities, the financial sector, and strategic consulting to businesses across industry sectors. They have a wealth of international trade flow data and a trade equilibrium model for the world as a whole.   In this case the problem was not so much legacy systems, rather to find a way to unlock and bring to life their extremely valuable data in a way that was visually impressive and engaging for potential clients. By utilising the FileMaker Go application, we were able to put together a prototype for iOS mobile devices in less than two days.   Instead of rows and columns of raw data, the team and Complete Intelligence now has a dynamic, interactive, mobile app that provides visually engaging data in which customers can immediately identify meaningful trends and patterns.   Figure 2: iOS Data Presentation Tool built for Complete Intelligence

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Starcorp Textiles Australia

  Starcorp Textiles produces clothing garments for some of Australia’s leading retailers. They began as a husband and wife team operating out of their garage, producing a few clothing articles - then rapidly grew. The systems they used to track their complex production processes and inventory management also grew, but in scale only. What was needed was transformational change.  

Forecasting and order management

  Keeping track of sales volumes was a very manual process, taking multiple days each week. When the company began operations, updating and keeping track of such information was manageable.    A few products and the relevant sales figures downloaded from their customers’ systems and managed in a few Excel workbooks. But as the business took off, the number of products, variations and volumes increased.    The few spreadsheets became many, and keeping track of all this information became increasingly challenging. Often, due to more business critical tasks, updating the systems fell behind. Without up to date information, forecasting production requirements and pre-empting customer needs was based on gut feeling rather than accurate and precise information.    There was a certain amount of inertia and change resistance, as the same process had been in place for several years, but eventually the team realized there must be a better way.  

The solution

  We developed a number of automation processes in Excel VBA, to process the large amounts of data received each week, flag exceptions and any errors.    The team is now able to maintain up to date information with a few mouse clicks, and so has an accurate picture of current stock, sales and the information required to forecast and plan production.    Processes that used to take several days are now run in a matter of minutes, reducing tedious manual work, ensuring accuracy and freeing up staff to do more productive and interesting tasks.  

Complex Production Processes

  The second challenge was at the other end of the business – production. The development of each clothing product involves many sub-processes such as producing size samples, advertising samples, color and fabric testing, packaging and safety testing, among others.    Most of these processes involve input from the company itself, their suppliers and approval either by customers or the company. Critically, each step must be complete prior to shipping.    This results in numerous (up to 10 at times) critical paths or checkpoints for each order. And if that is not complex enough, the timelines and steps for each sub-process vary depending on the many different product types.    Managing these numerous processes, and the multiple variations across product lines and types was previously performed using an Excel-based tracker (and a great deal of human expertise). However, due to the sheer volume of orders and complex variations, the team were constantly fire fighting to complete all the steps required to get the orders from factory to warehouse and on to customers on time.  

OOB? (Out of the box)?

  The team investigated several possible solutions to improve this business critical tracking process. However, to paraphrase the company founder – we spoke to many system providers, but none could meet our specific needs. And they tended to offer up loads of functionality we didn’t want or need.  

Enter the custom app!

  We developed a basic prototype or proof of concept which demonstrated how a custom app could dramatically improve the current system and processes. After a walk through the team decided to proceed with this approach. The development process was very much RAD (Rapid Application Development) and agile, with multiple iterations and changes and improvements to the original vision incorporated.   The result is a totally customised app, integrating the multiple interdependent timelines, with built-in alerts and automated reporting. At any point in time the system provides an accurate picture of the status of each order, highlights when activities are approaching their due date or are overdue, and provides reports for communication with both customers and suppliers. The benefits to the business are best described by the team themselves;    “Our new production tool will increase our efficiency, create transparency across departments and ensure our suppliers are up to date on our expectations. This gives us a leading edge in our industry and sets us up for growth without increasing resources.” – Kelly Barrett. Design and Development Director  

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The above examples demonstrate how with the right approach and willingness to embrace change, SMEs can overcome the common obstacles of inertia, cost and specificity of business requirements to improve their IT systems. With relatively small investments in their systems and processes, small businesses can set themselves apart from the competition and thrive.