Business Software Explained.
Business efficiency derives from the handling of data.
While cash is the fuel your business needs to run, data is the lubricant in the motor.
Do you really need separate business software applications for accounts, payroll, stock control, customer management and each of the many different things you do in business administration?
What does software do?
First, just think about what a software application actually does. Accounts software, for instance, takes basic data and sorts it into categories. There are three main categories. Sales, purchases and expenses. These may break down into many sub-categories, but the three always form the core. If a business were to employ an accountant it would be necessary to provide details of every sale, every purchase and every expense during a set period of time. The accountant would then categorise the information according to the rules laid down for the country in which the business operates and produce a set of accounts. Original proof of each transaction would also have to be retained so that all invoices could be audited against the figures shown in the accounts. Lots of manual work there, so the process is expensive.
To reduce the cost many businesses undertake the categorisation of data themselves, just presenting the accountant with a summarised list for sales, one for purchases and one for expenses. This can be achieved using the services of a bookkeeper, or by employees in the business recording transactions in lists, folders or libraries, or by use of a software application.
An accounts software package requires the user to categorise the entries, it then applies some processing to group-up category totals and present a balance sheet report. This is the core of the package.
But, there may be additional modules for the collection of data. Invoicing and sales order processing modules perform the task of accepting data input as the user is creating an invoice for a customer, or accepting an order from a customer and posts the detail directly into the accounts package. In order to do this the invoicing and/or sales order processing software must either come from the same supplier as the accounts software, or be compatible with it.
Most businesses find that while they are happy with what the core accounts package does with the data, they may not be so pleased with how the invoicing module runs, the invoice layout may be wrong, or the method of handling multiple sales may not suit the business.
One method of overcoming this is to take the core accounts package only and add processes such as Invoice creation and sales order entry externally.
Often, this is done using word processing and spreadsheet templates, developed in house, and group them up for a period before passing the totals into the basic accounts package, or sending them to an accountant.
This is perfectly acceptable and requires no more knowledge or experience inside the business than running a multi module accounts package.
However, it has a downside. Spreadsheets and word processor documents tend to get spread across a business IT system. Different versions of the same document may be copied to different machines and different work areas. This can lead to confusion.
This is a problem that is well known to anyone using a business computer system, even extending to those where only one computer is in use.
So, maybe the answer is to deploy all your accounts software as modules from the same supplier.
The drawback here is that it starts to get expensive. Many modules will not fit the business model and will either need to be changed, again expensive, or staff will need to be trained to work in a different way, again expensive.
In addition, once data is entered into a software package it is difficult to access it for other uses.
Sales accounts, for instance, will need a customer list and that data would form the basis of a sales contacts modules.
But, you wouldn’t necessarily want sales personnel to have access to the account package, so the data has to be extracted from one package and entered into another.
This is wasteful, inefficient and has a high risk of error.
Thinking the process through will show you that a well organised electronic filing system is far more valuable than a bunch of unconnected applications, often containing large amounts of duplicated data.
Such a filing system ensures data is available for any software application which needs it. The accounts package can be one that just performs the be a basic core functions.
This makes it less expensive and a far better fit for the business than anything multi module.