Business hell versus profitable growth

  

It is obvious that there is no room to grow.

 

SAP Business ONE is a single package that can cover all of the Islands of Data above and integrate them into one data source for real-time reporting. In the chapters to come, we will showcase how SAP Business ONE is simple. In addition, as outlined above, complexity may surface even in a simple environment if the dots are not connected in the right way. Consequently, the key is not to grow your business because it may grow into a business hell. It is rather a profitable growth. What is profitable growth and how can we get there?

 

What is profitable growth

 

 

Analyzing past and present data based on a real-time integrated system, such as

SAP Business ONE, provides the starting point for profitable growth. SAP Business ONE provides elaborate reporting and analysis functionality to satisfy the changing information needs of the business.

 

It sounds very straightforward. However, it is the key problem in today’s business solutions. In order to get the right reports, the system must be designed to automatically gather the relevant data that will be used for reports.

When designing an integrated system, it is crucial to plan ahead. The most critical step to get started is knowing the design of the Chart of Accounts. It provides the foundation for all of the transactions that will be managed later in the system. Each transaction generates financial data, which flows into the previously designed chart of accounts.

The CoA (Chart of Accounts) design is often overlooked. However, it may also lead to overdesign once attention is given to its design. It is considered a good practice to follow a simple design. In addition, it is worth noting that the CoA is strictly meant for financial data compliance. Therefore, the data collected here is the basis for tax filing. However, an integrated ERP system should also provide an information system for internal controlling.

Consequently, we utilize the CoA that follows a simple design and also implements a controlling system that will collect data for reporting. It is the controlling system that will provide information for all departments on a daily basis.

ERP systems are only as good as the data entered into them. Therefore, the initial design and setup to create the framework that will hold the data is important. The collected data will be in all the right places for further analysis and decision making. SAP Business ONE will provide all of the reporting data in real time.

 

What is real time

The term real time is used in different areas of Information Technology. In production environments, real time describes a guaranteed response time within a given time frame. In the ERP world, real time means that there is no synchronization or separate programming required to obtain all of the information. Every report in the system has access to all the information immediately.

Establish metrics—the cost of no investment

 

Once the information skeleton with the CoA and controlling is implemented, the business is ready for growth. At this point, it will be possible to continuously collect data and make all the right adjustments.

It will be the end of growing for the hell of it, and the starting point of profitable growth. It is important to quantify each potential problem area, and therefore, document the monetary improvement as that is the ultimate goal to streamline the business operation in the most efficient way.

·         The following are some example questions that can be answered with the collected information:

·         How much inventory waste do we have?

·         How many returns do we have? What is the cost of each return?

·         How is picking managed? Is the picking route automated?

·         What happens if my key sales person leaves? Do we have all the contacts’ information and notes?

·         Do we have a sales methodology? Do we have a sales pipeline?

·         Can we plan for material requirements based on received orders?

·         Do we consider common lead times for ordering important parts, or do we just keep excess stock?

·         How many service calls do we get from customers?

·         Who are the most profitable customers?

·         Does our e-commerce store integrate with our inventory?

 

Do we have an automated self-service portal to take care of common customer questions?

The list above is also a reference to sample questions for businesses that are too busy for an integrated system. It clearly shows the potential cost of no investment. It may be worthwhile to calculate the cost of no decision in case you are on the verge of deciding on a new system. The purpose of a new SAP system is to save costs, which will enable a profitable growth.

By assigning a monetary value to each non-efficient process, the business owner will be able to justify the relevant improvements.

With the right reporting data, this change management is a part of the system operation. What is called total quality management in larger companies is a consequential side effect of an integrated system.

Designing “metrics” for your own business

 

The following items summarize the process you can use to design metrics for your own business:

Design Financial Skeleton – This is the CoA design which will hold all of the financial information based on the transactions performed in the system.

Design Controlling Data Skeleton – This is the Data Collection Framework you establish on the actual SAP forms. It is used to collect the information you need for making informed decisions for your business.

Therefore, before we apply this knowledge to our case study in the next chapters, you may want to review your own system and see if you have a CoA and a separate Controlling system that allows collecting data as the system is used.

 

What is prototyping

 

Prototyping is the iterative process of designing a system based on user feedback. In software development, there are similar flavors for this to address the specific user type. These flavors are called rapid prototyping and extreme programming. Extreme programming uses an iterative design approach to gradually add one feature at a time to the initial prototype, and attempts to minimize irreducible complexity.

In the SAP Business ONE project environment, a combined approach has proved to be successful. It has proved important to get users up and running as soon as possible. Therefore, the SAP Implementation guide covers the essential steps to get the system up and running quickly. Users go through this wizard-style interview process and provide the configuration parameters. The system is then ready to be adjusted in the prototyping mode. Therefore, a project starts with a quintessential analysis based on a questionnaire and is followed by a Prototyping phase.

This goes in line with other IT-related project management methodologies. For example, in software development projects, the so-called waterfall model historically gathered a complete set of requirements for a software project. Once complete, the software development process would start. This led to the same problem as described above for the SAP projects. In order to follow this analogy, we may consider the latest software development principles as a guide to where the SAP project management may go.

Extreme programming is a practice to create immediate results for the end user and add features as the user actually works with the quickly assembled solution.

 

The virtual enterprise

  

Another dominant trend is described as virtualization and service orientation. The enterprise of the future is a virtual enterprise. How does SAP address this trend? The virtual enterprise is characterized by disparate entities that work independently, but exchange information to produce integrated services and products. SAP has developed the Enterprise Service Architecture (ESA). This architecture provides a platform for independent systems to produce and consume services on a single integration platform.

Therefore, the future system will allow large-scale SAP systems to be integrated with services produced by other vendors. In turn, this will extend the integrated business workflows further into specialized solutions that address industry-specific requirements.  

Interestingly, the foundation of the ERP system was to overcome disparate, specialized solutions and integrate them into a single system. Today, again the market requirements force businesses to consider specialized solutions for a specific need. However, with the knowledge acquired in previous iterations of this process, the platform for integration is already established as the ESA.

In order to adapt this to the small business owner, we are using the template concept for SAP Business ONE in this book. This way, the entrepreneur will have the toolset to cope with changing market needs and set the foundation for growth.