It can be difficult, if not impossible to weight the value of having relevant information to manage your business and how the lack of this information could have serious negative effects on your profitability. Many older systems have very poor reporting and alerting capabilities forcing companies to utilize third party applications to try to make sense of the information. Sometimes this can be done with relative ease while other times it can be accomplished with a lot of time, effort, and money but even then things can be missed.
Low-end accounting systems are notorious for having poor reporting and alerting capabilities. That’s why there are so many apps written around reporting for these types of entry-level accounting systems. Even midmarket products have their limitations. Most come with some out-of-the-box reporting, some basic dashboards, and some canned alerts but these are generalized and often do not apply to every business without serious thought and some minor (or major) changes to the report or the alert.
Consider that many business applications provide sales analysis reports. These are good in that they can provide a picture of what’s been sold compared to last month, last period, or even to last year at this time for seasonal products and services. However, they normally won’t tell you which products specifically are starting to trend up (or down) or if those changes were impacted by a promotion, increased marketing, attendance at a trade show, or if they were simply a result of a bluebird order from one customer.
- There are many ways that poor business insights and analytics can affect your business. Here are just a few:
- Historically strong customer starting to buy less product or service from you.
- Inventory levels for critical components will be exhausted causing shortages for planned production or customer shipments.
- Increase in customer returns for a product or products shipped via a specific carrier.
- Lost sales due to consistently late shipments to customers.
- Continual overruns on project estimates for service projects.
Another problem with business analytics may have nothing at all to do with reporting or alerts but rather the data itself. Companies that don’t have good data or access to the data in disparate, stand-alone systems, may not be able to react in time to correct big problems from happening. It could be something as simple as a manufacturing system adding a third shift to meet demand without updating the human resource system to add another shift for that day or period of time. It’s hard to do the work if there’s no one there to do it. Likewise, you may have missed setting up a single field of data in your software that is used to calculate things like forecasted demand. Without this simple information you have no insight into what your demand really looks like and you have to overstock and overload resources to ensure you can get the work done in time or face the harsh reality of stock-outs and late shipments.
Companies invest thousands of dollars on some types of analytics – such as the ROI for a trade show or the ROI for optimizing their website for search engine results. But then they spend so little time or money understanding why they’re losing customers, why orders are wrong, why there is so much rework or scrap, or why costs are so high.
Good analytics and real-time business alerts based on good data can give you the information you need to take your business to the next level. Poor analytics based on bad or outdated information can turn your balance sheet from black to red in a hurry. It’s vital that you understand all the options available to you within your current business applications and determine if they have the capacity to provide what you need or if there are other options available on the market. In a worst-case scenario you may even need to replace your software with a new application that has more functionality around business intelligence.
Some of the leaders in the accounting and ERP market are providing cutting edge insights into the data. For example, Sage Intacct has an absolutely amazing dashboard that is updated in real-time and can be tailored easily with drill-downs to get at the underlying detail. Sage 100cloud has an optional module called Sage Alerts which allows you to build your own custom alerts on any of the data in the application. And Epicor ERP has similar features with the bonus of what they call Social Enterprise – a way for any user to follow and be updated when things happen to transactions in the system. For example, a salesperson can “follow” their order once it’s booked in the accounting system. They will then be notified automatically when the order is invoiced, when the product is shipped, if the order has been placed on backorder, if the account has been placed on credit hold, and when the commission for the order has been calculated and added to their paycheck. This is all stuff we’ve been dreaming about and it’s finally a reality in most modern-day systems.
Again, figuring out the lost revenue and true cost of poor business intelligence can be difficult or impossible to determine but there is no doubt that every business has room to improve on analytics being careful not to go too far as to get lost in a sea of overwhelming data but far enough that they can reap the benefits by reducing costs, increasing profits, and improving the overall customer experience.Read more here.