Every high-growth business grapples with decisions around the best business system to manage its expanding operations. Proper planning of an integrated business management software system often takes a back seat to short-term revenue acceleration goals. As a consequence, various disparate applications are installed at different points in time in various functional areas, resulting in business process inefficiencies and software integration challenges. But how did these problems arise in the first place, and how can they be avoided?
Architecture of a Typical Siloed Business System
A rapidly growing company can quickly become entangled with a complex application landscape. When starting out, companies first install accounting software such as QuickBooks so that they can manage their bookkeeping.
In the quest to acquire more customers, companies then put in standalone opportunity management systems, along with separate systems for resolving customer support issues. Inventory management, order management and fulfillment systems get addressed with disparate software and spreadsheets.
To further increase top-line revenue, many companies will open new office locations and embrace additional sales channels resulting in more sophisticated processes for ecommerce integration, recurring billing, financial consolidation, amongst others. Additional business software to support these processes can take the form of standalone applications from different vendors, homegrown applications, or a variety of spreadsheet workarounds.
Businesses that evolve their systems over time in this manner can find themselves with a poorly planned architecture that handles short-term tactical needs sub-optimally while holding the company back from scaling efficiently over the long term. This tangled web of siloed business software systems, often referred to as a “software hairball”, inhibits flexibility, productivity, and ultimately slows down the company’s ability to grow.
Business Challenges Caused by Having a Siloed Software System
When high-growth companies have several siloed applications, there are many business challenges that arise. These challenges can become so severe, that they can cripple growth. Here is a summary of the five main issues that can hinder your growth if you run a business with disparate business software systems:
Wasted Employee Productivity: When your company is in growth mode, every employee must be operating at optimal productivity. If your employees are bogged down with inefficient and disjointed processes, it increases errors and takes time away from their more important core duties. Important processes such as order processing, invoicing, expense approvals, and fulfillment, to name a few, can take a lot longer to get completed, and are often erroneous. For instance, your employees may be spending hours manually re-entering order information into the accounting and invoicing system, while other employees pull that same information from your CRM system for their order fulfillment processes and to calculate sales commissions. If any orders are canceled in the meantime, your employees have to sift through mounds of data to reconcile this information again. Such labor-intensive and manual tasks reduce the agility that your company needs to grow.
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