LDC investment director Andrew Hampshire applies his industry knowledge to the debate on what kind of IT system is the right fit.
As an investment director and specialist in change management, Andrew Hampshire of LDC often works with companies that don’t always think about technology as a commercial driver for their business and see it more as something that just has to be there to support the rest of the business.
Part of his job is to open their eyes to the potential cost-saving benefits of replacing tired systems and processes with more innovative and cost-effective models. Below, he outlines some past experiences and suggestions for streamlining your business.
Unlock growth potential
It is important within any business to analyse the use of IT in its core processes and how they contribute to the profitability of the company. This is particularly true where processes and systems are not scalable and so if left unchecked will impact margins as the business grows. I worked in a rapidly expanding division of a large UK bank made up of around 100 staff operating in the turnaround/distressed debt market that was being limited by the significant retyping of data and the use of spreadsheets and word documents as part of the case management data modelling processes.
Through the implementation of a bespoke modelling tool and building a complimentary reporting product, we were able to streamline the business and enable it to increase the rate of expansion. The systems worked in conjunction to reduce manual data input and deal with 80-85 per cent of reporting requirements on an automated basis, reducing the amount of labour-intensive work involved.
The division grew significantly from 100 to 350 staff due, in part, to the economic downturn that ensued. Without these changes, it would not have been able to deal with the sharp expansion of assets due to the laboured processes that were previously in place that lacked the capacity and efficiency to cope with increased reporting volumes.
Identify the right technology
With so many IT systems available, the choice can be overwhelming. In one case I came across, a relatively small business that had more than three different database technologies in place, the business had to employ two to three times the number of staff required to support them due to the level of expertise required. By operating on a smaller number of core platforms, you can afford to trim the number of experts required, which can lead to significant savings.
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The right technology reduces costs and improves efficiency. It can be implemented to improve processes for such diverse tasks within the company as stock management, workflow organisation and database administration. Improving functionality saves staff time, reduces costly errors and increases billable hours.
The key to choosing which system to use is to assess which is the best suited and most productive technology rather than simply investing in the flashiest and most expensive. When making this decision, it is helpful to consider productivity, revenue drivers and outsourcing.
Tailor systems to your business model
I recently worked with a professional services business that billed clients based on hours worked which was its key value driver. The existing systems required a large amount of data input and duplication which led to a disproportionate amount of time spent on admin compared to billable hours. We, therefore, took the decision to implement a single case management tool that could free up around an additional hour a day previously spent on admin. This rise in freed-up chargeable hours resulted in the potential for a significant amount of additional revenue to be generated.
The key with a project like that is to ensure there are ‘complimentary’ projects underway within the business to ensure benefits are delivered. For example, with the business mentioned above, additional billable hours in a day is only useful if there is sufficient work in the pipeline – therefore a sales process review would be appropriate to ensure that the sales team were generating a sufficient amount of additional leads to ensure the extra hours per day were convert into billable hours. As with all change management, ensuring that the business is able to unlock the full potential of the increased efficiency and functionality is crucial to its success. The growth of your business is ultimately dependent on the execution of the opportunities you create.