Thursday, November 4, 2010

Why Small Businesses Must Invest in Softwares (CRM, ERP etc. )

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A few months back, I read an industry report (Forrester?) that IT expenditure by businesses on an average is around 4-5% of their total expenditure. For Financial Services its around 7% and for Manufacturing companies, it is around 3%. (I can't remember how much of this is cap-ex) With this kind of investment, no wonder companies are looking at the future to consolidate their brand and competitive advantage.
For most Indian companies, the investment in IT tends to be less than 0.5%. This is something business managers and owners need to reflect upon.
Meeting customers, we get the feeling that IT has a big impact on the brand value of the company. These days, customers are constantly looking at signs that show that they are working with a progressive company. Customers like getting as much information online and want a company's website to be interactive. Some reasons for impacting brand value are:
  1. IT makes the company efficient. No one wants to buy from a company that is inefficient.
  2. IT enables better customer service. With increased communication and data capture, customers are more aware of the status of their purchases and service requests
  3. IT makes companies less bureaucratic = Fewer followups, less hassle
  4. IT makes employees more accountable. Customers know that employees are tracked a lot more and hence more tuned towards their requirements
  5. IT shows that the company is constantly innovating. By having better IT service than your competitors you should to the customer that you are more innovative and constantly looking to tailor your offerings.
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A few months back, I read an industry report (Forrester?) that IT expenditure by businesses on an average is around 4-5% of their total expenditure. For Financial Services its around 7% and for Manufacturing companies, it is around 3%. (I can't remember how much of this is cap-ex) With this kind of investment, no wonder companies are looking at the future to consolidate their brand and competitive advantage.
For most Indian companies, the investment in IT tends to be less than 0.5%. This is something business managers and owners need to reflect upon.

Meeting customers, we get the feeling that IT has a big impact on the brand value of the company. These days, customers are constantly looking at signs that show that they are working with a progressive company. Customers like getting as much information online and want a company's website to be interactive. Some reasons for impacting brand value are:
  1. IT makes the company efficient. No one wants to buy from a company that is inefficient.
  2. IT enables better customer service. With increased communication and data capture, customers are more aware of the status of their purchases and service requests
  3. IT makes companies less bureaucratic = Fewer followups, less hassle
  4. IT makes employees more accountable. Customers know that employees are tracked a lot more and hence more tuned towards their requirements
  5. IT shows that the company is constantly innovating. By having better IT service than your competitors you should to the customer that you are more innovative and constantly looking to tailor your offerings.
Larger corporates are enjoying the benefits of IT to scale their businesses. SMEs do not understand software and probably do not have a mindset to invest in their growth. Hopefully the scenario changes faster.

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