| Fueling the high growth rate for Retailers,
Manufacturers and Distributors is a flurry of mergers and acquisitions. In today’s
world of mergers and acquisitions, and heavy usage of the Web, companies are facing a new
reality. Software that meets the company’s needs now will not be effective after a
new acquisition takes place, or if sales substantially increase as a result of using the
Web.
While meeting with a prospective client -- a CEO of a large
cleaning supply company -- about purchasing new software, he told me that he was planning
to grow his business by end of the year from 300 million to 500 million dollars by
acquiring competitors he was negotiating with. When I asked him how he planned to
integrate his company’s software with the new companies he was planning to acquire,
his response was: “You hit the nail on its head. The software we are using cannot
support our future acquisition plans. We will have to let the companies we plan to acquire
keep using their current software until we find software that can meet our new needs. Not
having the right software will result in a substantial increase of our operating cost. The
unfortunate part is that we did not have the foresight to think ahead of the fact that our
current software would not be able to support our acquisition plans. Nobody expected that
we would grow at this rate and now we have to pay the price.”
Here are 4 unforeseen business disruptions that are likely
to happen when your business environment changes:
1. Quite often companies engaged in e-commerce, experience
an unexpectedly high volume of sales’ transactions that the current software cannot
handle efficiently, resulting in the need for additional labor and excessive operating
costs.
2. Frequently, the current software cannot provide the
desired analytical information needed, resulting in the downloading of large amounts of
data to spread sheets and more complex data manipulation to get the needed reports.
3. When mergers and acquisitions take place, the number of
users along with the transaction volume will substantially increase, resulting in the
possibility that the current computer system will not be able to handle this sudden
change.
4. The acquired company might not have the same business
practices as the company doing the takeover, resulting in the possibility that the current
software may not be able to handle the new business demands. This can result in multiple
software platforms being used creating higher operating costs and additional complexities
in the computer infrastructure.
When planning future expansion, steps should be
taken to ensure smooth business growth.
Software effectiveness evaluations should be performed the
same way as evaluating old equipment in a factory. When evaluating the current software
functions, the focus should not be on how well the software meets the business needs
today, but whether it can meet the business growth of tomorrow when the company moves to
the “next level.” In today’s business reality, which is changing at
lighting speed, lack of planning can be a very costly proposition.
Nobody likes change, but not facing the fact that a
company’s current software is outdated can result in substantial business disruptions
and expenses down the road. The question that should always be asked is: “if the
business reality changes drastically resulting in an unexpectedly large amount of new
users or volume of data transactions, could the current software be able handle it?” |
