THE THREE AGES OF DIGITAL BUSINESS

Adam Prince, VP Product Management, Sage

 

Businesses, like people, grow up. From start-up to funding rounds to mid-market stability, their needs change as they evolve. But how many truly understand how to get the best solutions and processes for their age and stage?

 

You wouldn’t give a toddler the keys to your car; you wouldn’t give an undergraduate a Fisher Price pushcart. The same goes for business solutions – the wrong solution at the wrong time will do more harm than good. Businesses need a partner who will grow with them and help them implement the right technology at the right time – in other words, to continually digitally transform.

 

Digital transformation is often misunderstood as a one-off project – buying a new ERP platform or implementing automated customer contact. We can often imply that we see it as a shortcut to success – buy the right widget and your business will magically unearth a whole new line of customers and revenue. But in reality, it’s an ongoing process that will accompany the business through its whole lifecycle, from start-up to SME and beyond.

 

Having a partner that can help you navigate that progressive change is the key not only to effective digital transformation – but also sustainable business growth. This article gives an overview of the key steps in that journey and the key things businesses should look out for in terms of technology partnership.

 

The first age: new life

The first major step on the way to business growth is, of course, the start-up. Start-ups are born of entrepreneurs or as spin-offs from other companies or education establishments. Start-ups typically have a small number of employees, who are focused on whatever the business is doing, rather than dedicated back-office staff who are experts in accounting or finance. It is no surprise that when it comes to financial processes, they normally follow the advice of a trusted external individual – like their accountant. In their infancy, businesses are guided less by policy and more by personality, so the technology they use needs to be flexible, easy to use and operate on the right scale.

 

For that reason, at this point, start-up companies often adopt systems that focus on the basics of accountancy, which work well for their immediate needs. It’s important to be able to fulfil basic requirements like VAT and national insurance payments at a time when you might not have a full-time finance director and certainly won’t have a sizable finance department. Technology automates this burden – financial software can complete routine tasks, freeing up the young company’s entrepreneurs to focus on bringing in new business and shoring up the revenue stream.

 

The second age: walk before you run

These small-scale, flexible, automated systems work well at the start-up level, but change must come if the business is to continue growing. At this point, the business is what we might term a ‘functional start-up’ – still in its early days, but with enough staff, processes and funding in place to be able to confidently forecast a year or two of growth.

 

After a few years, the business gains a better understanding of what it needs, and so may change accounting software vendor to gain access to specific features and capabilities. However, if the business is not careful to move with a trusted advisor that understands their holistic needs, they often find that marketing promises lack depth and that the features they wanted do not solve the underlying challenges.

 

For example, just because a platform can support more users and comes with a larger selection of features doesn’t necessarily mean it’s the right platform for you. It’s important to add the right capabilities at the right time. Increasing complexity such as tracking sales orders as projects can significantly increase costs leading to confusion and potential disaster.  Businesses at this stage in their growth need an advisor who understands their needs and their industry so that the most appropriate tools and features can be identified and implemented in a way that supports rather than hinders growth.

 

The third age: stability and growth

As start-ups grow into established mid-sized businesses, they will need even more capabilities – for example, to support multi-site deployments, more complex inventory, international sales, outsourced manufacturing and so on. Many need to change accounting software to Business Management Software (BMS) or Enterprise Resource Management (ERP).

 

This is where businesses need to take care to find the solution that meets their need, not just the software. Whilst add-ons may be common in accounting software that supports earlier growth stages, it becomes more critical at this growth stage, as no-single software vendor is likely to be able to provide all the required features.  Even functionally rich software may not help if support and professional services are poor or expensive – and critical functionality gaps can cripple future growth even if support and professional services are outstanding. For example, if a business uses outsourced manufacturing but lacks visibility into external production status or does not integrate into critical supply chains to track the timing of critical deliveries then production lines and sales promises run into major challenges.

 

Having a trusted advisor to support the selection, implementation and then use of business software as businesses grow is not only critical, it is probably the secret to successful business transformation. Technology change is a key part of effective, sustainable business growth – and like any other aspect of that growth, it needs to be done in the most targeted, strategic way possible.

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