Companies considering investing in new business software have a check-list of questions to examine to determine if the new package is worth the money and that it will help solve problems instead of creating them

By Alan Lung

Some people think of management, business and software as three separate circles with very little connecting them. But the truth is that each is an important cog in the business machine.

Management, as it is widely promoted in Hong Kong, implies teambuilding, TQM, EQ, AQ, MCP, leadership training and change management. Information technology (IT) also has a world of its own: CRM, ERP, OLAP servers, EIS and DNA. Small- and medium-sized enterprises (SMEs) sometimes confuse IT with technical support, but most are smart enough to know that expensive solutions are not inherently better.

At the end of the day, bosses want to know which of their products or services make or lose money, and how do they stay competitive so that they can make more money in the future.

They may say: "Fine! I will invest in management and software, but will my company work smarter and become more productive? And how much more money will I make because of these investments?"

Management before technology
Deciding on what type of information system the company will need to stay competitive is inherently a complex and risky exercise. But most mangers, including owners of SMEs know that they cannot do without software.

Business people naturally think about investment returns and are well aware that expensive business software implementation could bring more problems than it solves. Not knowing how to incorporate data into their new and powerful information systems, companies commonly spend a year implementing multi-million ERP solutions and another year and a half trying to fix all the bugs and business process misfits created by their new systems.

But at the end of the day, implementation of a software solution cannot be delayed until the company is able to use it to its fullest. The scope of the initial installation must be determined and installation carried out. CEOs must not leave it to luck and hope that they will be saved by technology. The more the company knows about management input required for these solutions, the quicker the company will grow into these expensive systems.

Merger of IT and management skills
Too often, implementation of complex e-commerce, CRM (Customer Relationship Management) or ERP (Enterprise Resource Planning) systems are considered as technical changes that affect only the IT department. But in reality, these implementations touch every department within the company, particularly finance and operations.

A group of PricewaterhouseCoopers consultants argues that an IT strategy must be built in the context of a business strategy. From their experience gained from a career of implementing ERP solution for clients, they concluded that the decision to implement ERP solutions must be driven by business consideration, not merely by the desire to stay ahead of competition technically.

ERP solution software will not solve cumbersome business processes and organisational problems. In fact, ERP software tends to highlight these problems, which means companies must have the tools and concepts to analyse business problems before or coincidental with implementing an ERP solution.

From "Here" to "There"
As a supplier of ABM (Activity Based Management) and business analytic software suites, we know that managers have visions and software implementations are supposed to help them get where they want to go. Software ought to replace guessing, back padding and politics in management. Clear, factual and quantitative decision-making data ought to help managers realise their vision.

However, we are also amazed by the lack of awareness of the need to integrate management, IT and business skills.

While IT used to be a mystical subject understood by only a few specialists, using and applying the latest breed of business software now requires less specialised IT knowledge. Knowledge of the business and how to apply these powerful transaction-based systems in business have become more important.

1 SAP, An Executive’s Comprehensive Guide, by Norris, Wright, Hurley, Dunleavy & Gibson

Alan Lung is chairman of the Chamber’s Human Resources Committee, and director & general manager of ABC Technologies Hong Kong.