Tag Archive: Grow business


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.

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.

By Steven Cohen, managing director, Softline Pastel Accounting

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Steven Cohen, MD Softline Pastel Accounting

Softline Pastel, as I’m sure you know is an ardent supporter of the development of SMEs and like all businesses we started out small. The company, which was founded in 1989 in Johannesburg, is now a leading developer of accounting and business software supplying 52 countries including 18 in Africa. The past 22 years haven’t all been plain sailing and I believe it’s worth sharing some of our mistakes and successes to highlight the fact that entrepreneurship isn’t always easy but it’s certainly rewarding.

We started out as three partners and two employees. Our strategy was to grow the business organically but also incorporate some acquisitive growth by using cash to buy smaller businesses with strong synergies. This way we slowly acquired new customers and from there, more employees.

Organic growth is slower than acquisitive expansion but is less risky in the long term as it comes from within the company and the management team can form strategic goals from which to guide the enterprise. This method also gives the company a chance to test its own business model while relying on independent finances. Purchasing other businesses has its merits, particularly in terms of gaining new customers and revenue quickly but it may come with challenges including shareholders that you don’t want. Integrating two businesses also involves streamlining different cultures, systems and work ethics into one entity with common values and goals – not always an easy task.

Naturally, we’ve made mistakes along the way but what’s important is what we’ve learned from them. During our growth phase we were constantly fraught with anxiety about the next move and about our overheads. We realised early on that running a business is stressful, but it’s imperative not to let this strangle your ideas. Think big, keep your feet on the ground and work on your emotional intelligence to be able to treat mistakes as growth opportunities! At the end of the day you’re an entrepreneur because of your willingness to take risks.

One of the worst mistakes entrepreneurs make is to become so absorbed in their business ideas that they forget to monitor day to day finances. Don’t underestimate the importance of tracking your cash flow and accounting balances all the time; financial statements are going to be your business’s lifeblood and should never be disregarded. In fact, entrepreneurs, it’s imperative that you know your financial terminology to ensure that you understand the nitty gritty of your business. And apart from balancing the books, I really recommend the use of information systems to help you track and report your daily operations – this just gives such insight into the overall state of your business.

When it comes to hiring employees, I’ve learned that it’s better to pay more money for a good person with the right overall fit for your organisation including the appropriate work ethic, rather than a person who is just good on paper. Business owners may be tempted to pay top dollar for the most knowledgeable and skilled employee without taking note of whether their work ethic and other cultural traits fit in with the business.

When managing new recruits, lead by example and let your staff make a few mistakes along the way. Make them love coming to work by giving them responsibility and keeping them informed and educated. It’s also really important to recognise the ones who go the extra mile.

And don’t forget your most valued asset: your customers. Looking after them will build your credibility so keep your promises and always get back to people. But don’t just rely on the customers you have – always work to increase the size of your customer-base.

While addressing your weaknesses is important, don’t forget to remember what you’re doing right. In our start up phase there were a number of things that I can say were right. We managed to sell our value proposition confidently and always remained ahead of our competitors and industry challenges. To do this we read, read and read but always drew our own conclusions and then shared this information with employees.

At the end of the day, invest for sustainability because your business needs to outlive you. Keep on moving forward as procrastination is the enemy of progress and lastly, give back to the community: it makes you feel good and you are growing your future customers.