Wednesday, June 23, 2010

The Efficiency Impact of Insufficient Business Software Usage

Today, software is a given in business. Whether information is your business or you simply need information about your business, software gets you the information you need. So why then do so many businesses reduce their operational effectiveness by trying to get by with fewer software licenses than they really need?

Lack of available software for the knowledge workers in your organization has severe, often hidden, business consequences. While managers may think they are helping their business by limiting the number of software licenses to “just those who really need it,” they may instead be reducing operational effectiveness to the detriment of their business. Insufficient access to software adds to the cost of poor quality (COPQ) in a business.

Consider these consequences of insufficient software:

Improper Training and Acculturation. In many organizations, the employee on-boarding process does not include early access to needed software. As a result, initial training programs miss the mark or teach less efficient behaviors than those possible when the correct software applications are available. Poorly trained employees can deliver poor customer service, engage in a higher number of clerical errors, and negatively affect employee morale.

Initial Period of Inefficiency. When licenses are not available for new employees, even beyond their initial training period, economic loss occurs during the waiting period to get on “the system.” Until then, payroll is spent on less efficient employees and bad work habits are further instilled.

Improper Outsourcing and In-Sourcing. When a particular knowledge worker who could do a job, does not do a job because they do not have access to the software, they are forced to refer the task to someone else. This can result in costly external outsourcing. When another firm is needed to do a job that could be done if the right software were available to that person, extra costs and delays occur. Frequently, referring a task out to another worker means referring to another employee. These referrals create delay, introduce greater opportunity for miscommunication, and are inherently inefficient because of unnecessary communications surrounding, the request and the review process.

Duplicate Work. Some companies maintain two separate software applications to perform essentially the same task, because they do not have sufficient software licenses for all workers to use one system. Some workers are on the old system while others are on the new system. Quite often, in these organizations, there is an employee who spends hours every week re-entering data or running batch jobs to synchronize systems – all of which could be avoided by working on one system only.

Bottlenecks. When only a few of those who need access actually have access to certain business software, bottlenecks occur. Important business activities are delayed needlessly because the process is dependent on a limited number of persons who have access to the appropriate application. Some workers may be sharing a license, which means only one worker has access to the software at any given time. The waiting time for the available license creates need for communication, adds delays and creates bottlenecks.

Overstaffing. When a particular software application is incorrectly labeled as a specialty and specific knowledge workers are hired to operate the software, the result is overstaffing. Increased specialized staff requirements can often be avoided by simply increasing the availability of software and training more workers on the use of the software. Sometimes these overstaffing inefficiencies can also be necessitated due to overly restrictive user rights management within an application. The user may have a license but does not have the user rights needed to perform the task. The economic impact is the same.

Reduced Employee Morale. In today’s world of social media, rich applications, real-time integration and software mashups, lack of software access can be extremely frustrating to employees and result in reduced employee morale and higher turnover.

Lack of Interdepartmental Enrichment. Is there a negative cost when salespeople are unaware of customer service issues because they are “not on the system” that keeps track of customer service problems and solutions? Absolutely. Extending software and information access beyond traditional departmental boundaries can enhance business processes. When the engineering team can directly access the customer support system, they may be able to propose immediate solutions or even detect product defects earlier than if they do not have access and must rely on monthly reports or other means of information sharing.

Inefficient Business Processes. Perhaps the bottom line of failing to use software or using the wrong software is the cost of an inefficient business process. Most organizations go through initial training on a “how-to” use a software application. Entry-level instruction typically covers the performance of basic tasks. Without more advanced training and training on “when-to” and “why-to” use software, processes are executed ad-hoc or without full benefit of the efficiency built into the software system. Software underuse has severe economic consequences across all departmental functions in an organization: administration, finance, engineering, production, marketing, sales, distribution, service and operations.

Competitive Weakness. Organizations that underuse software and skimp on the number of licenses available fall prey to competitors that operate at maximum productivity and software-enhanced efficiency. Organizations running without a sufficient number of software licenses will fall behind in innovation, time-to-market, market share, production capacity, customer satisfaction and top and bottom line financial performance.

Insistence on expensive formal ROI studies and usage reports can incur a long and usually hidden list of business costs that can be easily avoided by simply taking a more aggressive view towards the availability and use of software. Software that works is worth every penny of its licensing cost. Cloud computing does not eliminate the problem, in fact, it exacerbates it. When software is viewed as an operating expense rather than a capital expenditure, artificial pressures increase to limit usage. Smart business people will make certain they have enough software licenses available for all of their users including sufficient licenses for future growth. How many licenses do you need?

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