Here are four basic questions about your business. Can you answer them?
- Which ten customers (by salesperson, if you have them) purchased the most from you last month?
- What did they buy?
- Will these customers purchase again this month?
- What are you doing to try to get them to purchase again?
The first two answers you should be able to get directly from your computer system. The third is a matter of analyzing the data from the first two with the employee that knows the customer best. The last is on you.
How did you do?
I think I’m going to get back to the 80/20 or 90/10 Paradox here, but bear with me.
I’m not sure I understand how companies think about IT anymore. Most of the companies I work with will spend dollars easily on keeping hardware working, but they won’t spend much thought at all on their software.
Let’s put this in perspective. Occasionally, I have a client buy a new computer from BigBoxRetailer and then call me. “You mean it doesn’t include Microsoft Office? I paid $500 for this computer, and it doesn’t include anything to write a letter.”
“Oh, yes,” I tell them, “There’s WordPad if you want to use that. I don’t think you’ll like it, thought.”
I learned a long time ago that it’s important to say what is just obvious to me. Some people don’t realize that Windows is…well…basically useless on its own. It’s like having an iPhone with no apps. You can make calls and do some basic things, but the things that people expect to be able to do with their computers cost extra.
So here’s what puzzles me: computers (meaning Windows + hardware in most cases) are basically useless without software. Yet people replace their computers every 2-3 years without thinking about it and their software almost never. The last statistic I saw suggested that businesses look at new software of the kind that operates their business only ONCE every FIFTEEN years. Asked why, they say it’s too expensive.
That’s like buying a car, keeping the oil changed, and keeping the tires balanced, but letting it sit in the driveway because gas is too expensive.
It just makes no sense to me.
I’ve been thinking lately about how I think about IT (meta-thinking). I’ve realized that it’s different from the way a lot of other people think about IT.
Last night, my son–who is a Sophomore in college–called to say that he was frustrated with some of his friends in the Engineering department. He is interested in math and physics–the foundation for engineering; they keep telling him, “Just look up the formula in a book.” He wants to understand the theory behind the practice; they want to move straight to the practice. He is interested in the “Why?”; they are satisfied with the “What?”
The result of this–in Physics and IT–is that there are people who have a collection of “experience” which makes up their “expertise.” When they run into a problem outside their “experience,” they have to get more “experience” to solve the problem. Because they don’t have a foundation in “Why?” they can’t think theoretically about the problem to solve it. If the problem is a common one, they are in luck. Google will find the answer for them. If the problem is uncommon or subtle, they’re sunk. They will then engage in “scrambling behavior.” Scrambling behavior is trying every solution they can think of until they (hopefully) find one that works. Problem: This is time consuming, expensive, and may not work.
On the other hand, there are those that revel in the “Why?” They understand the theory behind things. Note, though, that I’m not just talking about the technical theory (how the computer works), I’m talking about the business theory as well (how a business works). These folk are true experts because they can solve problems no one else has solved before. They also solve them more economically than others because there is no wasted motion.
Here’s the essence: There are a lot of “What?” folks. They are the ones that asked the professor, “What do I have to do to get an A?” There aren’t many “Why?” folks. They asked the professor, “I know you said this wouldn’t be on the exam, but what do I have to do to understand it?”
Yeah, I know I’m odd.
If the current Health Care legislation’s 1099 filing requirement isn’t changed, in 2012, all businesses will be required to file a 1099 for any business from which they purchase more than $600 of goods or services.
Currently, this requirement applies only to payments to businesses that are not incorporated or Limited Liability Companies (individuals and partnerships). In 2012, it will apply to all business payments.
Businesses that pay with credit cards will not have to report payments made via credit cards, since the credit card companies will report.
There are several attempts to repeal or modify the requirement to exclude certain businesses.
As it stands now, businesses will need to begin turning on the 1099 tracking features of their software packages by the middle of 2011. Since most software packages flag the invoice when entered as subject to 1099 reporting or not subject, in order to have the software track this properly, invoices entered for the last half of 2011 will need to be properly flagged.
Most software uses setup in the Vendor file for this purpose.
Hopefully, Congress will restructure the requirement to make it less of a burden on small business. DGG wanted to warn you early.
When I was a teenager, I worked for a property management company. Horace was my boss, and he did most of the tough work. This day, Horace was mortising a lock into a door.
Horace had this old butcher knife that he’d taken a file and a sharpening stone to. It looked kind of like the witches’ nose in a Shakespeare play. About 3 hours after Horace started the job, he had the lock mortised into the door. It looked OK, and it did work.
About three weeks later, I worked with another guy at the real estate company. He was mortising a lock, too. Before we went to the job, he stopped by the hardware store and bought some little gadget to go on his drill. About 30 minutes after he started, he had the lock mortised into the door. His job was much cleaner; it looked better; it took him only 20% of the time.
It really hurts me to see people doing IT tasks with butcher knife tools because they don’t know about the gadgets that exist to make the job easier, faster, and better.
Helping clients figure out what gadgets they need is what Data Guidance Group does.
The cost of changing software is high.Before you decide to throw away what you’re using now, be sure you evaluate what you can do to get more from your existing software.
And if you’re pretty happy with your software, our experience shows that you can always get a little more benefit from it.
Here’s a list of my top 10 things you can do to get more from your software:
- Review the training, users manual, or help text. Every time I take the time to read a book about software that I think I know, I learn something new. Most of the time, it’s something I can use immediately.
- Talk to an expert about how you do things with your software. Everyone has habits. That’s true of the way we use software as well. Often there are several ways to do something with a piece of software. Are you sure you chose the best one? Ask someone that knows your software well to take a look at how you are doing common tasks. You’ll probably get a dozen suggestions that improve your productivity.
- Make a list of 10 pieces of information you wish you had. Figure out how to get them from your software.
- Make a list of 5 things employees in your business should be doing. Find out how to measure them with your software.
- Look at the things you are doing with Excel and ACCESS. For each one, ask yourself these questions: Am I doing these because of a limitation in my software? How much time does it take me to do these things manually? Is it possible that I missed something in the software that could help me?
- Start a list of the things you wish your software could do. Do a Google search for keywords and see if you can find free or nearly free software to do those things.
- Examine the processes you are using in your business. For each one, ask, “Why do we do this in this way?” If you don’t know the answer, or (especially) if the answer is, “That’s the way we’ve always done it,” then try to redesign the process to make it more efficient. Use software to support the redesign
- If you manage inventory, ask yourself how you are currently estimating what inventory to purchase. If you don’t have a standard way of doing it, research possible ways to manage inventory. Hint: All purchasing is based on some estimate of what you expect to sell. Most of these estimates are based on average sales. Average sales isn’t the best way to estimate.
- If you’re in manufacturing, look at how you determine what the cost of your product is for pricing. Is it accurate? What does this say about the price of your product? What if you had to (or wanted to) reduce the price by 10%? Would you be able to do it and still make a profit?
- Keep your software (reasonably) up to date. Examine the features of every new version and ask, “Should I update?” Be sure you are making the decision based on business data, not just to avoid investing in the upgrade
That’s the list. Hope it helps!
I realized recently that saying, “We work with business software,” is really saying more than I thought. I’ll say more in the next post, but for now let’s talk about the software business.
Here’s my thinking: The software business is about delivering software that works. “Mr. Business Owner,” the software business says, “here’s your software. It works pretty much almost all of the time. We’re done. Have a good time.” You did read the disclaimer on the card that came with the software, didn’t you?
Hint: you can just skip the legalese stuff below…
Here’s an excerpt from Cisco’s license agreement (comes up 4th when I Google “software license agreement.” I’m not picking on Cisco…all of them sound this way):
DISCLAIMER. EXCEPT AS SPECIFIED IN THIS WARRANTY, ALL EXPRESS OR IMPLIED CONDITIONS, REPRESENTATIONS, AND WARRANTIES INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OR ARISING FROM A COURSE OF DEALING, USAGE, OR TRADE PRACTICE, ARE HEREBY EXCLUDED TO THE EXTENT ALLOWED BY APPLICABLE LAW.
IN NO EVENT WILL CISCO OR ITS SUPPLIERS BE LIABLE FOR ANY LOST REVENUE, PROFIT, OR DATA, OR FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL, OR PUNITIVE DAMAGES HOWEVER CAUSED AND REGARDLESS OF THE THEORY OF LIABILITY ARISING OUT OF THE USE OF OR INABILITY TO USE THE SOFTWARE EVEN IF CISCO OR ITS SUPPLIERS HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. In no event shall Cisco’s or its suppliers’ liability to Customer, whether in contract, tort (including negligence), or otherwise, exceed the price paid by Customer.
Let me translate, roughly, and I’m not a lawyer so don’t think this is anything other than a humorous translation (except that it’s too true to be funny):
IF THIS SOFTWARE WORKS, BE HAPPY. IF IT DOESN’T, YOU’RE ON YOUR OWN.
You’ll notice that there’s nothing about helping your business grow. Nothing about solving business issues. Nothing about how this software will make you happy to get up in the morning.
Only the idea that if the software works, it’s good. If it doesn’t work, “In no event shall Cisco’s or its suppliers’ liability to Customer, whether in contract, tort (including negligence), or otherwise, exceed the price paid by Customer.”
Damned if it do and damned if it don’t!
Did you want to make money with the software you buy? That’s business software, not the software business. And that’s the next post.