Information technology can be an effective way to make your company more productive and profitable -- especially if you're competing with low-wage countries like China and India.
Whether it's integrating your processes, enhancing your marketing abilities with a customer database, better managing receivables or improving supply chain management, the right technology can dramatically improve how you run your business. Although it sometimes requires a significant investment, the long-term advantages usually far outweigh the initial costs.
Some typical applications
The best way to improve your business performance is to examine internal processes that are managed separately and find a way of bringing them together into a single management system. Internal processes that can often be blended in this way include payroll, accounting, customer relationships, inventory control, production control and communications with employees and clients. A number of tools are commonly used to achieve this:
- Enterprise Resources Planning (ERP) and accounting systems
- Supply chain management
- Customer relationship management
- Web 2.0
- Database management
ERP and accounting systems
Enterprise resource planning enables companies to break down traditional business silos, replacing them with tightly integrated structures that encompass internal processes, human resources, technology and organization strategy. Company activities that are typically covered by such a system include accounting, sales/marketing/client management, purchasing management, production management, costing, inventory control and human resources management.
Supply chain management
The supply chain refers to all of the steps involved in getting a product or service to your customer. Apart from making sure that your own company is operating efficiently, you also have to ensure that your entire supply chain, including outside suppliers, is also performing optimally. Supply chain software helps you automate your processes and track information about orders and deliveries. This helps you forecast supply and demand more accurately and ensure that your inventory can cover client orders. Other benefits include reducing errors by automating transactions, speeding up deliveries to customers and tracking their orders, reducing warehouse space requirements through improved inventory control and decreasing administrative costs by introducing automated systems.
Customer relationship management
Another term often used in e-business is customer relationship management or CRM. CRM uses technology to improve your insights into customer needs and behaviour as well as the management of your relationships with clients. Some companies use it to create personalized call centres where technology recognizes incoming phone numbers and automatically calls up customer information for the representative taking the call. A CRM system can also allow travelling sales and repair personnel to use mobile wireless transfers to pull up information on customers.
Benefits include an improved ability to anticipate clients' needs based on historic trends, targeted marketing that reaches specific audiences and increased sales through better client relationships.
Even if CRM technology is not within your budget, you can put some of its basic principles into practice. For example, in most businesses, entrepreneurs deal with customers using a variety of means including email, faxes, phone calls and letters. Putting this information together can help you improve customer service by tracking on a spreadsheet your dealings with customers (who said what to whom and when), for example, or by identifying top clients so that you can offer them special promotions. This information can also be used to customize products to suit the needs of customers or to target certain types of clients with specialized newsletters.
Web 2.0 is a term used to describe a whole array of interactive web technologies, including networking, blogs, podcasts and online social networks. Businesses can tap into these technologies to communicate with customers and partners or to collaborate internally.
Peer-to-peer networking, or P2P
Business owners can use this tool to share files with other companies and suppliers so as to improve their supply chain and procurement processes. A company and its supplier can communicate using web services, for example, updating each other's inventory and catalogues, which can then be integrated with their respective ERP systems. This type of integration cuts costs, increases productivity and reduces human error.
Podcasts or video recordings
Entrepreneurs can use this medium to communicate with employees, customers or prospective customers and promote new products or features.
RSS (Really Simple Syndication)
This enables customers to subscribe to online news, blogs or podcasts in order to receive up-to-date information on developments within your business.
Social networking systems
These can be set up internally to enable employees to exchange information, skills and knowledge. Such networks can be used to design, develop and make innovations to your business's products and processes.
Databases allow information such as customer mailing lists to be managed in a systematic and controlled way. Relational database management systems can electronically link various aspects of your business, linking a customer with a specific product or service that they regularly purchase, for example. In turn, your business can better keep track of customer behaviour and ensure that targeted marketing reaches such clients. This type of tool allows you to get closer to your customers by better understanding their needs. It also helps you process information such as client sales patterns, analyze data in ways that can shed light on a specific aspect of your business such as marketing techniques and spend less time managing your data.
The best choice of database management software depends on the complexity of your business.
Before you invest in any of these technologies, do a careful assessment of what's available on the market to determine which is best suited for your company. (Most of the time, you should be able to find an industry-specific solution.) You can do that by subscribing to specialized sources such as electronic journals, databases or research services, attending trade shows frequented by software vendors and networking with organizations in your industry that have already tried and tested new innovations. Finding out what your competitors are doing can also help narrow your search for solutions specific to your industry. The web and universities that publish studies evaluating technological innovations are also good sources of information. Simply type "technology watch" in any search engine and you will find a wealth of information on the latest trends.
All of these tools are readily available today and affordable for small and medium-sized businesses. Each product and vendor has its strengths and weaknesses. Some systems provide rich industry-specific functionality, but lack fundamental accounting features. Others provide a broader feature set that can be customized to meet the needs of different manufacturing methods and industry requirements.
When you make your decision about your software application, you need to consider your expected growth, the viability of the vendor, the stability and functionality of the product and the availability of third-party add-on solutions. Other key considerations include the total cost of ownership and the potential return on such an investment.
Content in this section is provided in partnership with the Business Development Bank of Canada. BDC provides entrepreneurs with financing, venture capital and consulting services. To find out more go to BDC.ca.