Tuesday, September 13, 2011

Software Doesn't Solve Problems, People Do

Having attended a well-run Corporate Performance Management Conference by CFO Magazine, I heard almost every business leader, CFO, and finance executive present talk about being “tool agnostic.” This phrase references the need to define what metrics and data your organizations needs, figure out where it will come from, and then you can find a tool to help you accomplish the task.

This supports a long-time philosophy I’ve always followed: software (the tool) doesn’t solve problems, but people do. I have seen many companies that buy expensive ERP, accounting, project management, and other kinds of software, thinking that the purchase and tool alone would magically fix the much deeper-rooted problems.

For example, a manufacturing company could not close its financial books within 15 days of the end of the month. They recently bought a new accounting system, hoping their flawed processes would somehow correct themselves with new software. No such luck. The expensive purchase only exacerbated their internally-flawed processes.

Here’s another, much more effective example. Another manufacturing company was having issues with its ERP system. It just didn’t do everything they needed it to. The company did everything it could to improve its processes to solve the problem, but the ERP was truly the limitation.

This is where your people come in. You hire smart people to solve problems. Before you buy software, make you and your team have solved the problems. Then, build a process to keep that problem fixed. Then, and only then, do you deploy technology and software to automate the process. From here your team can monitor and tweak your processes as your business adjusts and pivots according to its strategic plan, after which they can update the way they are using technology to automate the process.

Key Take-Away: 
Do not rush out and buy software or other technology until you have analyzed exactly what your needs are and you are confident you have diligently vetted your processes, finding them rock solid. Only then should you invest in the appropriate tools to automate the processes and deliver the results you desire--the most cost effective yet high-impact method to manage and improve your business performance.