Custom Software Company

Is your software helping or hurting your profitability?

One of the big reasons to invest in technology is to automate tasks that can be done more efficiently and accurately by a machine compared a human. In other words, software handles the mind numbing, highly-repetitive tasks that are so easy to get wrong when human hands get involved.

But what happens if the software becomes part of the problem? What if instead of automating all the redundant tasks and improving accuracy, software ends up becoming the anchor that drags on a company’s growth?

Here are some ways in which your custom software may no longer be adding the productivity lift that was originally intended:

Downtime

The older your software gets, especially custom software, the greater the chances that its age works against it. That can take the form of system downtime, which in economic terms is no joking matter. According to a recent survey by research company IHS, the annual cost of information and communication technology downtime to businesses in North America is a whopping $700 billion. That translates into an average of $1 million in annual losses for mid-market companies. When a company’s legacy software falls behind the times, performance suffers. Even simple patching and updates become a task that can cripple the software until the problem is identified and fixed or the system is restored back to its previous version. Either way, you will find yourself falling further behind and the software will become more vulnerable than ever.

Manual workarounds

I’ve said it before, so now I’m saying it again. A common symptom of software that has failed to keep up with how your company has evolved is the additional cost of manual labor needed to complete your routine business processes. I can’t tell you the number of times I have seen companies hire and pay staff just to plug the holes in their software systems, whether it’s to ensure customer orders are done right or crunch the numbers needed to help make routine business decisions. Throwing manual labor at a problem may very well be the path of least resistance, but it’s certainly not the most profitable one. If a company fails to address the underlying cause of these manual workarounds as it grows, then its margins will continue getting squeezed. Worse yet, its ability to sustain its rapid growth rate could be imperiled.

Missed diagnosis

Many companies regularly miss opportunities to improve their operations, save costs and improve revenues. When a patient is not feeling well and the doctor misses the underlying problem (or worse, diagnoses the wrong problem), then the patient never gets better. Many companies know they have underlying problems but they get so used to them that they just assume it’s a ‘cost of doing business’ when actually it’s a sign of a missed opportunity.

Take Vitamin World, a chain of nearly 400 retail stores, as an example. The parent company knew it had to begin automating more of its business processes if it could hope to improve the overall customer experience, impact its operating costs and, with any luck, accelerate revenue generation. One area it found to improve was how it remodeled stores. The company was able to lower its store downtime from 35 days to 13 days, allowing it to add 22 additional days for revenue generation. They did it by standardizing much of the store remodeling tasks, digitizing paper-based documents like blueprints, and automating the time-consuming notification and review process.

Vitamin World knew it needed to improve its store remodel process that, over time, had probably been easy to ignore until the number got so large it became more and more apparent. If 10-20% of your stores are going through a remodel in a given year and you can recapture 22 additional days of revenue, wouldn’t you want to do something about that, too?

At Clear Measure, we have seen all manner of ways software can hinder a company’s growth and drag profitability down. If you find your company straining against some of these unseen forces and want to break free, why not give us a shout for a free consultation?