Category: Entrepreneur


By Christophe Letellier, CEO of Sage ERP X3

Christophe Letellier

Christophe Letellier

Choosing an ERP system is one of the most strategic decisions for mid-market companies and their CEOs face a significant dilemma. Should I choose a system for today, or for how my company may look in five to ten years? Should I go for a full system or start small with a limited number of functions? Should I try to cover 100-percent of my needs or only aim for a fraction of them? Do I have to cover all my requirements with one single ERP system? Should I go for a comprehensive, full function system requiring a 12-18 month implementation, or for a simpler system with fewer functions that could be implemented in weeks? What balance will get me the best return on my investment?

I could go on and on with questions that are all relevant, but instead I would suggest reversing the thought process.  Rather than trying to solve all your outstanding issues with a new system, which will usually replace something that you are currently using, I would suggest thinking about how to improve what you already have. All of us would like to aim for the best in terms of ERP software, but in doing so we often ignore the ‘better’ solution.

The value of an ERP system lies in its integration across a company and the data gathered when using it. Start with a modern solution that is well integrated and covers 80-85-percent of an organisation’s functional needs. The last mile is by far the most costly and often the one that has the most problematic ROI.

Why look for perfection when 85-percent would help you make a giant leap in efficiency?  Go with as standard a system as you can to start with. Implementation will be significantly reduced, both in terms of cost (three to five times cheaper) and duration (up to ten times faster, in a matter of weeks). A properly integrated system will immediately make your processes more fluid, improve cross-functional collaboration, reduce operating costs; and most importantly, help you understand what you really need for the next step.

I encourage you to have a look at what our customer, Omega Refrigeration, did. They chose to go standard and not only did the company’s ERP system go live in just 44 days, but it started to see benefits just a few weeks after the implementation. Very soon after deployment, Omega Refrigeration was able to plan the expansion of the system.

One of the biggest mistakes often made is attempting to replicate existing business processes within a new system. It implies significant tweaks in the ERP system through customisation. On top of making life miserable for future upgrades, it also changes the way an ERP solution behaves, severely curbing the benefit that is derived from all the best practices that has led to the development of the built-in processes. Performance can also be dramatically reduced and future evolutions will be more difficult to leverage.

Implementing a new ERP system is a great opportunity to re-think processes. We love to think we are different, and guess what, it’s true! But being different doesn’t mean we are totally unique. Step back and try to honestly define what makes you better and more competitive than your competition.  This is what counts at the end of the day, and you will probably end up with two or perhaps three processes that are really distinctive. At most five percent of your system will recognise this difference, not 50-percent.

This past April, I had the privilege of visiting the Marussia F1 Team in Banbury, England, one of Sage ERP X3’s customers.  I spoke to Kevin Lee, their Operations Manager, and he lives by an expression that I often use, ‘walk before you run’. He applies this principle to everything he does to improve the team’s competitiveness in Formula 1.

Lee enacted this principle when he implemented his new ERP system and succeeded:

  • Implementation time – Eight weeks
  • Number of specific developments to address F1 needs – Zero

Go for standard solutions and after a period of usage, say 9 to 12 months, you will be able to make informed decisions on where to channel your investment to differentiate yourself in the market.  Once that is done, make sure you have as many people as possible using your ERP system.  ERP software is not a specialist play and it is certainly not only for accountants or plant managers. Everyone, one way or another, should use the system, starting with you. This is important because your ERP system will be your decision-making tool and based on the collected data, you will run reports, analysis or even simulations.

These activities will really add value if your database truly represents your business. To get there you need to ensure everyone contributes to it – the experienced and the non-technical alike. You can even open your system to those outside of your own organisation who also contribute to your business. Your customers, your partners and your suppliers can definitely enrich your data set, which will help you make better decisions.

Integration is key.  Integration means encouraging people in different functions to work together. This will open up a new field of efficiency through collaboration. ERP software will help you organise the social nature of your business and support a better, more natural and organised way of collaborating for greater efficiency, better problem solving, but also to promote innovation.

Before running like Usain Bolt, make sure you can walk.

Five tips to choosing the right ERP system:

  1. ‘Start small’ with a standard solution across your company
  2. Progress quickly within a few weeks,
  3. Learn through experience
  4. Encourage usage across and outside your organisation
  5. Make informed decisions for additional investments that will make you more competitive.

By Anja Hartman, HR Director for Softline VIP, part of the Sage Group Plc.

Anja Hartman-Weitz

Anja Hartman-Weitz

People are at the top of the agenda in many a company with the war for talent intensifying in many business sectors.  It is therefore crucial for the Human Resources (HR) department to recognise the value that it brings in terms of helping the business to compete in finding the right talent.

The future of HR however depends on its business presence.  You need to have the mindset of a business role-player first and then an HR professional to understand the contribution that HR can make to the bigger picture.  It boils down to how well you really know your business and who your clients are, may it be employees, line managers, Exco members, external clients or even investors.  Ask yourself the following questions, to establish whether you understand your business:

  • What are the top three priorities and concerns of your business leaders?
  • Who is your biggest client and why do they use your service or product?
  • Which product/service is the most profitable, and why?
  • What emerging technology trends can influence your business?
  • What socio-economic or political trends might be disruptive to your industry?
  • What is the company’s operating margin?
  • What was the revenue and profit for the previous financial year?

If you are familiar with the needs of the business, your HR practices will reflect that knowledge. The answers to the above questions can help the HR practitioner to achieve business objectives through informed HR desicions.

There are many ways in which HR practices can support business performance.  The principles and philosophies that you implement as an HR professional affect the workplace, the value chain, the company’s value proposition as well as the technology that the company uses.  The people represent the company’s image and its ability to adequately deliver its service or product and it is ultimately your responsibility to shape that image and to align it with the business needs.

The broader HR mandate far exceeds the mere administration of HR technology and policies alone.  The focus has shifted towards the management of talent which includes recruitment, training and development, performance management, talent assessment and succession planning.  As far as the organisation is concerned, HR practices will shape the business structure, rewards, internal communication and process design.

It is crucial that the organisation’s HR strategy underscores that of the business.  HR goals need to be consistent with that of the company’s and need to be designed to make the business strategy happen.  Likewise, HR also needs buy-in from management to mobilise its strategy.

It is therefore necessary to focus on building relationships of trust.  To make an impact in the business the HR professional needs to be confident, have a commercial point of view, be able to speak candidly and influence others. A positive investment in their own personal growth will help any HR professional in this regard.

The key elements to focus on are to create a business presence, to learn the language of your business and to continue with an HR mindset. The ultimate goal is to empower your people and to focus on business results as these are lifelines that keep your business alive.

by Michael Brennan

Sage has been carefully listening to its global market for Sage ERP X3 with regards to feedback and requests on the topic of Financial Reporting and is already making progress on integrating a powerful and flexible reporting technology based on cutting edge BI technology. The Sage ERP X3 core product team in France has embarked on a strategic partnership with our team with the intention of providing a modern Excel-based financial reporting designer and tools.

We have been in the business of offering robust Excel-based business intelligence tools for 11 years and have been working on Sage ERP products since 2005. Sage France’s move to collaborate closely with our team, mainly based in South Africa, is well aligned with Sage Group’s core strategy of consolidating group assets across regions and presents an exciting roadmap of consistent product and service offerings globally.

As global market BI market trends continue to evolve we have been investing heavily in new advanced technologies to power our next generation offerings and are pleased to announce Sage ERP X3 version 7 will include fully integrated financial reporting capabilities based on its next generation In-Memory Database BI Platform codenamed ‘LIME’. This new column based database platform has been engineered from the ground up to cater the needs of tomorrow’s businesses with a core focus on high performance, flexibility and great user experience. The new platform is able to accelerate performance by pre-calculating financial logic and place the results into its in-memory BI database to dramatically improve real-time query performance.

Expectations on this new offering include report design automation to cater for novice Excel users as well as flexible drag and drop formulas for capable Excel users. This approach allows both types of users to pull financial and analytical ledger data directly out of Sage ERP X3 v7 and arrange it within Excel using their existing Excel skills and save your Excel report securely back to the Sage ERP X3 server. In addition to utilizing cutting edge technology, we are also including major usability and modernization changes to our  report designer tools as we ramp up to deliver on ever increasing market demands for simpler BI and reporting software. This is great news for users who are already using Sage Intelligence Financial Reporting for Sage ERP X3 v6 and v6.5 who can look forward to substantial business value increases when moving to the integrated report designer within Sage ERP X3 which will be available as an option to all users using version 7.

Both French and South African teams are excited about the extent of new business value planned for Sage ERP X3 version 7 as a result of their collaboration and having a dedicated BI team focus on the Excel financial reporting capabilities of Sage ERP X3 allows the French team to ship more value to market each release.

Companies have until 15 January 2013 to compile and electronically submit their annual employment equity returns to the Department of Labour. The deadline for manual reports has already passed.

The easiest and most efficient way for companies to complete the forms is to visit the Department of Labour’s website (www.labour.gov.za) and make use of the Online Services to capture EE reports.

Philip Meyer, technology director at payroll and HR specialist Pastel Payroll, part of the Softline Group and Sage Group plc, says companies should be aware that once submitted, the forms may not be changed or amended in any way. “However guidance on how to correctly complete the forms is available from the Department of Labour’s website.”

Meyer adds that companies need to have a formal employment equity plan in place which provides the base for any EE report and consultation should take place with all relevant stakeholders before the forms are completed. The prescribed reporting forms are the EEA2 and the EEA4. Large employers are obliged to report every 12 months and small employers every second year. Chief executives are required to approve and authorise the EE reports before they are submitted.

“Companies should also note that the EEA2 and EEA4 forms must always be submitted together or the submission will be rejected and returned. Copies of these forms should be retained for the company records and to present to Department of Labour inspectors who may visit the company.”

The report also requires tables relating to numerical goals and targets, which essentially provide the workforce profile that the employer aims to achieve by the end of the next reporting period.

By Gerhard Hartman, Head of the Africa Division at Softline VIP, part of the Sage Group plc.

Gerhard Hartman

Gerhard Hartman

The African continent has enjoyed its best growth decade on record and is currently one of the world’s fastest growing regions, with six of the ten fastest growing economies in the world. It therefore makes business sense for South African firms to look at expanding into Africa and opening branches in other parts of the continent.

Companies expanding into Africa either need to send South African staff into these countries as expatriates or need to open an operating entity in that country that comprises of local staff members. Either way, companies face challenges in expanding into Africa, especially in setting up their auditing, taxation, accounting and payroll systems that are accurate and compliant with the local legislation of that African country.

In response to this trend, and in an attempt to aid local companies with their expansion plans into Africa, Sage VIP Payroll has partnered with BDO Audit – Advisory and Tax services – and Sage Pastel Evaluation to provide local companies with everything they may need to enter a new country of operation, with confidence.

One of Sage VIP Payroll’s main strategic goals is focused around expansion into Africa with the company currently being operational in 24 African countries. The VIP Payroll Africa Division holds offices in Gaborone, Windhoek and Nairobi; with active alliance partnerships in Zimbabwe, Zambia, Malawi, Nigeria, Ghana, DRC, Kenya, Tanzania, Uganda, Angola, Mozambique and Rwanda.

Companies in Africa are starting to realise the importance of automation and how VIP Payroll can help them make more informed decisions, creating more efficient environments for company growth and return on investment. Salaries continue to be one of the biggest expenses in any organisation while the market for employment is becoming more competitive, making HR an essential part of any company’s strategic advantage. VIP Payroll provides an integrated solution for any size business to manage salary payments and HR strategies effectively. The system enables statutory compliance with authorities in African countries and local support is provided through alliance partners in the country of operation.

BDO has a large amount of experience servicing multi-national companies from across the globe. The organisation aids companies to build a country specific business model for operations in Africa. BDO also has contacts and alliance partners in every country in Africa, except Somalia, making it the best business to partner with when expanding into Africa. BDO’s three phase process includes advising companies on the implications of doing business in another African country, implementation of licensing, permits, registrations and applications in that country, and setting up compliance and business controls for payroll, auditing and accounting.

Common mistakes that companies make when expanding into Africa include not having sufficient knowledge of the country and a lack of operational planning. Preparation is essential as is a solid understanding of the local tax laws and company legislation. Companies also need to educate themselves on the foreign exchange regime, economic environment, legal system and the foreign company processes in each country.  This is where BDO is able to aid companies with relevant information that will adequately prepare them for their new venture.

Pastel Evolution has been operational in Africa since 2001 and has offices in South Africa and Kenya. The organisation has over 2500 corporate customers in Africa and over 70 business partners on the continent, as well as 15 project implementation consultants and 50 call centre support staff. Pastel Evolution empowers business management through finance, inventory management, relationship management, payroll and business intelligence. These systems streamline business processes and enable employees to make informed decisions.

Many companies make the mistake of purchasing systems for accounting, HR, payroll and auditing to be used in their new African venture, that do not offer the in-country support that is needed to implement the software, nor is it compliant with the local legislation.

VIP, BDO and Pastel have a support base of local partners that are more than able to provide tried and tested advice in addition to on-site support to African businesses. All VIP, BDO and Pastel software is customised to comply with local legislation, which effectively takes the hassle out of setting up branches in other countries.

Hard Facts about Africa

  • The 1 billion people that live on the African continent comprises 14% of the global population, half of which are under the age of 35 and nearly half live in cities.
  • The African economy of $1,6-trillion is expected to grow to 2,6-trillion by 2020.
  • Since 2009, Angola, Nigeria, Ghana, Zambia and DRC have been top investment destinations.
  • In 2012 Ghana is expected to show the strongest GDP growth, with Nigeria in fourth position.
  • New investment destinations also include Equatorial Guinea, Guinea, Madagascar, Gabon, Cameroon, Mozambique, Liberia and the Congo.
  • The main sectors for investment in Africa include mining, construction, property development, retail, supplier services to the oil, gas and mobile telephone industries, ICT, security, agriculture, tourism and hospitality.

Doesn’t it make absolute sense to invest in Africa?

In September 2011, Softline launched the Sage Business Index in South Africa. Softline joined the Sage Group plc eight years ago and while the group had run the Index a year prior, South Africa did not participate. The Sage Business Index surveys small businesses across Europe, North America, South Africa and Asia, aims to reveal a definitive landscape for small businesses confidence, concerns and challenges on a bi-annual basis.

With the 2012 annual Sage Business Index fast approaching, we took a quick step back to review the results of the half year research conducted in March this year. Polling over 10 000 businesses across four continents, the Index showed that while confidence in the global economic outlook continued to decline, the outlook for local market conditions and businesses was improving. Interestingly, South Africans were slightly more pessimistic than their global counterparts about the outlook for the global economy, with a 1.21 decrease in the Index score, compared to the .52 decrease of the global sample at the time.

In March, CEO of Softline and Sage AAMEA (Africa, Asia, Middle East and Australia), Ivan Epstein said that it was encouraging to see that once again, businesses in South Africa were more confident about their own prospects. He went on to say that companies are focussed on the day-to-day challenge of maintaining and improving their businesses, and Government should do all they can to harness and help the entrepreneurial spirit that already exists.

Epstein said that he was interested in researching the impact of increasing fuel prices on local sentiment. With this week’s additional price hike, it’s clear that business and consumers alike are facing challenges.

The Index scores in March 2012 and September 2011 were as follows:

March ’12 September 11
Index Scores Global SA Global SA
Global economic confidence 43.95 44.71 44.47 45.92
Country Economic Confidence 47.26 46.11 47.11 44.10
Business Outlook 58.86 64.44 57.88 62.58

(Below 50 is decline/less confident above 50 is improvement/more confident, 50 is no different)*

The results in March 2012 also outlined that while local confidence was increasing and the rate of decline in global confidence slowing, there were still a number of challenges facing businesses. Rising inflation and the increasing cost of fuel, energy and raw materials topped the list with all countries citing this as their top concern – with 58% of local businesses listing this as their number one concern. Over a third of South African businesses noted instability or uncertainty in the local economic market as a worry, and a similar proportion (34%) said the same of reduced cash flow in the supply chain.

In anticipation of the upcoming Index, Epstein says that the Index has proven itself as a vital tool for Softline and Sage in the region to take stock of the challenges and worries affecting customers. “I hope that the upcoming results show us that the sentiment amongst businesses remain stable given the current economic climate.”

SARS - SME companies should brace themselves for the interim PAYE reconciliation that is due from 01 September 2012 to 31 October 2012. Employers are required to fully reconcile and submit their employee tax certificates and EMP501 reconciliation for the period 01 March to 31 August 2012, by the end of October 2012.

Employers need to make use of the new SARS e@syFile software release, e@syFile V 6.1.0. to successfully submit their interim PAYE reconciliations. If they don’t, they will not be able to transfer their data electronically as the new software release will not recognise the old format.

“Companies have no choice,” says Philip Meyer, technology director of payroll and HR software developer Softline Pastel Payroll, part of the Softline Group and Sage Group plc.

Legislation dictates that each and every employee in a company must be registered on the SARS database with their own tax number. Therefore individual income tax reference numbers must be reflected in the interim PAYE reconciliation. If one or more tax certificates do not include the tax reference number, companies will receive an error notification in e@syFile and with effect from 01 September 2012 companies will be penalised.

“New legislation that took effect in March this year means that medical aid contributions are no longer allowed as a tax deduction for employees under the age of 65. The medical aid capped amounts have also been replaced with Medical Aid tax credits. If companies did not make use of the medical aid tax credit method, their submission will be rejected and they will be required to manually recapture the details on e@syFile”, adds Meyer.

A new IT3(a) reason code for tax certificates has been introduced by SARS for non-deduction of PAYE  and must be applied on interim tax certificates. Code 08 will indicate a zero PAYE liability due to medical aid tax credits applied. There are also new source codes for fringe benefits and tax deductions that must be applied to interim tax certificates, replacing the consolidated values SARS required prior to the 2012 tax year. Most automated payroll software systems already cater for these codes.

Companies can receive step-by-step assistance from a SARS Contact Centre agent with Help-You-eFile. Help-You-eFile is a new service innovation from SARS which gives companies access to SARS Contact Centre agents online.

For a smooth interim PAYE reconciliation, opt for a reputable payroll software solution that can automate the reconciliation process for the company. Some automated payroll software providers require that users only load their employees’ information and payslips. Therefore no manual calculations are requires and companies can simply upload the file to e@syFile.

For further assistance with the interim PAYE reconciliation season, companies can attend the SARS interim submissions seminar, hosted by Softline Pastel Payroll.  Make contact on +27 11 304 4390 or go to seminars@pastel.co.za

The National Small Business Chamber (NSBC) alongside official sponsor Nedbank, has been promoting the concept of Small Business Friday. The initiative, which culminates on Friday the 7th of September, aims to promote and support small business throughout South Africa.  Literature on the official website states that the future of the SA economy and the solution to unemployment lies in assisting small business to grow and thrive.

This concept has been close to our hearts since the inception of Softline, and as such, we will be supporting Small Business Friday during the course of next week through the posting of helpful tips, hints and advice for small business owners.

As a starting point, we’d like to point out a few opportunities for small business to gain recognition in SA through several awards taking place at the moment. The first of which is the Small Business Awards run by Softline Pastel and 567 Cape Talk. The following was taken from the official press release issued by the awards organisers:

The small business sector in South Africa has the potential to make a significant contribution to economic growth and employment. It is through innovation that better service and increased employment becomes a natural consequence. The annual Small Business Awards in partnership with 567 Cape Talk and Softline Pastel, focuses on supporting and fostering this entrepreneurial culture and have done so since 2008. Entries for the 2012 nominations have now opened.

Once again, consumers are asked to nominate businesses that have provided them with excellent service. From the hundreds of businesses that are nominated, 30 are selected and the business owners are interviewed on either the Kieno Kammies breakfast or the John Maytham drive shows on 567 Cape Talk.

So chat to your customers, let them know about the awards, and then hold thumbs for a nomination. Check out the site at visit www.sba.capetalk.co.za/ for more. Good luck!

The second award to highlight is the National Small Business Champion Awards.  This award aims to recognise the tireless journey of small business success and provides business owners recognition for their outstanding achievements.

The website for the awards  is http://www.nsbc.org.za/index.php?nav=champions and it lists the following criteria for entry:

All service, commercial or industrial companies that manufacture or sell a product or service. Such companies are not allowed to be:

  • Members or affiliated members of a listed group on a national or international stock exchange
  • A government or semi-government enterprise
  • An enterprise in whom government is a stakeholder

Visit the site and get your entry in!

We hope to see you on the blog next week for small business tips and hints. Have a great weekend!

Saving to grow?

by Rob Wilkie, CFO Softline and Sage AAMEA

Rob Wilkie

Rob Wilkie

I read a few interesting statistics in a MoneyWeb article posted in June ‘12.

  • South Africa has a net saving to GDP ratio of 16.5% mostly thanks to savings by our large corporates. This implies that small businesses (like households) have saved negative amounts, borrowing more than they save and earn.
  • In China the ratio is 50% and in India it is over 30%. With the exception of South Africa, the level of savings in BRICS countries is trending upwards.

Three primary reasons are commonly given for why saving levels in South Africa are so low.

  • An emerging middle class previously without access to consumer goods and financial services are borrowing for consumption instead of saving in order to bridge the lifestyle gap.
  • The state offers a small pension reducing the incentive to save for retirement. In China there is no state pension and the Chinese therefore have no choice but to save for retirement.
  • Interest rates are at a 30 year low. Being lower than the inflation rate, the real return of putting your money in the bank is negative.

Savings are important when a business needs to accelerate growth; they are the most important and reliable source of investment to boost growth. The alternative to savings as a source of investment is borrowings; this source however is costly and less reliable.

In 2008 when the global financial crises hit, the SA government was forced to borrow in order to support the economic downturn through government spending and infrastructure investment. The result was a budget deficit (previously a healthy budget surplus) and accumulated debt on the country’s balance sheet (debt as a % of GDP increased from 25% to 40%).  The implication has been a deterioration in our fiscal environment and outlook which in turn has precipitated a downward revision to SA’s credit rating and a threat to government borrowing costs. The country needs to invest more to boost growth, but ratings agencies have made it clear that they don’t want to see SA taking on further debt. It therefore has no choice now but to boost domestic savings as a source of investment.

The same applies to businesses who have borrowed excessively in order to boost their historic growth. In the existing climate banks are hesitant to lend further and many now face a cash crunch in a slowing economic cycle. It is precisely at this time that businesses need to invest in order to sustain and protect their earnings growth, however without a savings treasure chest or the capacity to borrow further they are forced into survival mode and will likely lose their competitive edge.