businessfirst

Ideas to help small companies retain their

successful entrepreneurial spirit

produced by

in association with

A4 PAGE PG1 BLACK CYAN MAGENTA YELLOW

 02 businessfirst
contents
Keep the spirit alive
Growing businesses must be wary of
stifling their employees’ creativity
Safe as houses
IT security breaches can be cut
dramatically with the right software
Harnessing better
applications to avoid the
05
agony of growing pains
How businesses can use technology
to help prevent expansion problems
Small firms, big choices
SMEs need finance to grow, but
where should they get it from?
It’s getting easier to talk 09
Call centres were once the preserve
of big companies, but no more
Upgrade without a fuss 10
Investing in technology often
worries small businesses because of
how quickly it can be superseded
Putting people first
Once your business starts to grow,
recruiting staff becomes an issue
The rules of distraction
the red tape imposed on them
The benefits of outsourcing 14
SMEs often struggle to cope with all
Think your business is too small for
outsourcing? Think again
Connecting for success
Why inefficiently sharing data is
about to become a thing of the past
Can customer relationship
management systems
benefit your business? 16
Knowing, understanding and
predicting what your customers
want is vital to the success of any
small to medium-size business –
and CRM is the key
Knowledge is power
10 tips to help small companies
retain their successful,
entrepreneurial spirit
Produced by The Independent in
association with Oracle
Art Direction François Morrow
Project Management Shazmah Yousaf
A4 PAGE PG2
Keeping the spirit alive
Small businesses are entrepreneurial by nature, but as they grow they must retain
their dynamism and be careful not to stifle the creativity of their employees
Running a small to
03
04
medium-sized
08
business isn’t easy,
but it doesn’t have
nterprise is almost universally as-
E
to be difficult. This sociated with small businesses. Re-
search has shown that 95 per cent of all
innovations occur in companies with
fewer than 100 employees, according to
David Hall, a leading consultant on
12
Oracle supplement innovation and entrepreneurship. This,
he says, is a lot to do with the fact that
the culture of such organisations is en-
trepre-neurial. Small businesses en-
courage risk-taking, the breaking of rules
13
addresses all the and opportunism – as opposed to the
command-and-control approach typi-
cal of many larger organisations.
The problem large businesses have is
illustrated by the fact that as many as
15
key issues faced by half of all entrepreneurs are refugees
from larger organisations. For example,
James Davies, founder of Just Good Data,
a start-up seeking to help car manufac-
turers manage their warranty costs bet-
SME owners as
ter through using actuarial methods,
came up with his idea while working as
an actuary in a large insurance compa-
ny, but realised he would have to go
it alone to develop it.
their companies But while many small businesses start
with an entrepreneurial spirit, they can
easily be dragged in the direction of more
established businesses. Hall says: “The
real challenge is to stay entrepreneurial
19
establish and grow but get some discipline.”
One way of doing this is to identify the
entrepreneurs in a business – typically
they account for only a tenth of any
management group, says Hall – and help
them to do what they do best. Andrew
Newland, chief executive of ANGLE, a
company that founds technology busi-
nesses by commercialising intellectual
property discovered by researchers in
universities and elsewhere, takes the ap-
proach of using ANGLE to provide a cen-
tral system providing human resources,
payroll, systems and other administra-
tive roles and allowing the teams in the
businesses to concentrate on “the key de-
velopment actions for the business”. That
BLACK CYAN MAGENTA YELLOW A4 PAGE PG3
David Hall,
a leading
consultant on
innovation and
entrepreneurship
way the entrepre-neurial spirit is pro-
tected from bureaucracy, he says.
At Teamsolve, an Oracle partner that
helps organisations of all sorts install IT
systems, chief executive Mark Bateman
(right) has installed a management team
in recognition that the day-to-day run-
ning of the business is not necessarily his
strong point. By not being tied down by
such matters, he can concentrate on de-
veloping the business by managing key
clients and selling to new ones.
Another part of a business remaining
agile and able to respond to opportuni-
ties is communication. When business-
es start to grow it is harder for the man-
agers to communicate both with each
other and with less senior staff. En-
trepreneurs talk of the critical point in
this process being either when they no
longer know the names of everybody in
the business, or when the managers no
longer all fit in the same room. The re-
sult is that it can be difficult to maintain
the sense of purpose or focus that was
responsible for the company’s initial suc-
cess. Hall advocates dealing with this
through what he describes as “planned
spontaneity”. For example, an advertis-
ing agency could create an area of its of-
fice where its creative staff would want
to meet and so provide a better environ-
ment to communicate and trade ideas.
It is all a balancing act, of course. Not
enough organisation and opportunities are
lost; too much and innovation is stifled.
Doug Richard, the serial entrepreneur
behind the investment research
company Library House among other
businesses, believes being entrepre-
neurial involves being agile, or able to
act quickly; being prepared to work hard-
er than the competition; and having a
“tolerance for ambiguity”, or the readi-
ness to live in a chaotic world. The last
is perhaps crucial in that it means hav-
ing a general plan but not being so fo-
cused that opportunities are passed by.
businessfirst 03
‘We deliver.
Reputation is all
that we’ve got’
Mark Bateman
(left) founded
Teamsolve in
1996 after work-
ing for many years
as an IT specialist
as a consultant
with a large com-
pany.Initially,the
business,which helps organisations
of all sizes plan and implement IT sys-
tems,was just him. But four years ago
he started hiring staff.Since then the
Derby-based business,which is an
Oracle partner,has grown at about 40
per cent a year so that it has a perma-
nent staff of 40 and additional office
in the City of London and is aiming for
sales of £5m next year.
Bateman, 38, says he was not
born an entrepreneur and “never
imagined I’d be in this position”.
Starting the business was more a
case of seeing an opportunity and
deciding it would be a good chal-
lenge to see if he could exploit it.“It’s
about keeping the passion,”he says.
All of Teamsolve’s growth has
been organic, enabling Bateman to
avoid taking outside finance and
keep total control. Nevertheless, the
growth of the business has led him
to take on a management team so
that he can concentrate on selling
the business to key clients.
Indeed, he sees the company’s
focus on customer service as the
key to its success and to keeping it
entrepreneurial.Admitting that the
growth of the business has made it
more difficult to maintain this ethos
because of the resulting reduction in
the number of people who have
worked directly with him, he says
systems and processes have to be
put in place to make sure it happens.
A key decision has been appointing a
customer services manager whose
sole job is to make sure the cus-
tomer is “deliriously happy”.
Bateman believes this focus has
been key in winning the business of
some big clients, such as the banking
group HBOS and the National Health
Service, when competitors have
been much bigger organisations.“We
deliver the right solution to the cus-
tomer on budget,” he says, adding
that Teamsolve has to because “our
reputation is all that we’ve got”.
BLACK CYAN MAGENTA YELLOW
 04 businessfirst
Last year, 18 per cent of businesses suffered IT security breaches, but that figure
could be dramatically reduced with the right software
Keeping the
right people
in the loop
A spin-out from
The Mill, a well-
known London
production house,
Beam TVhas,dur-
ing the six years it
has been in busi-
ness, developed
into a leading dis-
tributor of advertising material.It uses
digital technology to deliver material
between formats and countries.
As a result, it has transformed the
way that advertising campaigns are
developed and distributed. Whereas
previously teams operating in differ-
ent countries had to rely on receiving
tapes sent at great expense by aircraft,
they can now see the material instantly
via the internet. However, these great
savings in cost and time come with the
risk of material that is often commer-
cially sensitive being seen by unau-
thorised people. Systems manager
James Stewart explains that Beam
needs to “make sure that the right peo-
ple can access the right media”.
In its early days,the company used
an open source database,but as it start-
ed to grow it realised it needed some-
thing that was robust yet readily ac-
cessible. It opted for a back-end sys-
tem supplied by Oracle.
This uses a system that breaks jobs
down into sessions. Once the system
authenticates the user name and
password of the person seeking to
see the material the session checks
to see who can look at it.
Stewart says that by obtaining the
system through Oracle partner or-
ganisation NCS it has the advantages
of a reliable system without the need
to pay for a full-time database admin-
istrator,which would be too expensive
for a small organisation such as Beam.
A4 PAGE PG4
Safe as houses?
he internet offers many opportuni-
T ties for smaller businesses. In par-
On guard:
Firewalls and
ticular, it enables them to compete with
larger businesses on equal terms because
perimeter
security provide
– in retail, especially – size matters less
in the digital environment than in the
limited protection real world. It also brings many risks,
for businesses however, in that going online can expose
businesses to hackers, viruses and other
hard-to-detect threats.
Such risks have received a lot of at-
tention recently, with individuals con-
stantly being warned about identity fraud
and misuse of credit card numbers, for
example. But there are signs that warn-
ings are often not heeded by small and
medium-sized businesses. Last year, 18
per cent of UK businesses suffered se-
curity breaches and 9 per cent reported
that staff were obtaining or misusing con-
fidential information.
With any such incident capable of cost-
ing smaller companies tens of thousands
of pounds, it is clear that robust solutions
are required urgently. In an effort to counter
such threats the Department of Trade and
Industry’s Global Watch Mission to the
US recently reported on developments
across the Atlantic, and highlighted the
fact that a key part of improving security
is making software less vulnerable.
Threats generally fall into three
groups. Accidental actions stem from
such issues as poor password choices,
accidental or erroneous business trans-
actions, accidental disclosure and erro-
neous or outdated software. Malicious
attacks include viruses and denial of ser-
vice attacks that can bring businesses
to a halt through flooding online opera-
tions with traffic. Online fraud involves
identity theft or data theft.
Many smaller businesses may believe
they are protected from such threats
through having firewalls or other forms
of “perimeter security”. But such tools
only provide limited protection.
Des Powley, solutions director for se-
curity and identity management at Ora-
cle UK, points out that a particular prob-
lem is that “internal threats outweigh ex-
ternal threats”. Moreover, he explains that
the traditional approach of locking things
down is of limited use because “in reality
BLACK CYAN MAGENTA YELLOW
you can’t do business in a locked box”.
The approach being taken by Oracle
software, such as the solutions that are
part of the Fusion Middleware offering,
is to allow employees and individuals or
organisations with which the organisa-
tion is doing business to see information
that is not confidential while controlling
access to more sensitive material.
A particular issue that may not occur
to many smaller businesses concerns
databases. There are regulations con-
cerning access to certain types of data
that can be contravened if certain em-
ployees can see information they should
not. By having a system involving sepa-
ration of data, a business can control ac-
cess to relevant data. The same technol-
ogy can ensure that certain employees
have the level of privileges they need to
carry out their jobs without, for exam-
ple, compromising the organisation’s in-
tellectual capital, says Powley.
Just as it is important to allow em-
ployees to do their jobs properly, it is cru-
cial that they be prevented from doing it
once they leave. The sort of software he
advocates makes it easy to turn off or
adapt employees’ access.
Among the companies seeing the ben-
efit of this sort of approach is Adfero, an
online news agency that grew out of the
old Dehavilland political news service.
Adfero offers customised news services
for companies’ websites so that they en-
hance the service offered to customers
and also make the companies more promi-
nent in internet searches. Technical di-
rector Stewart Snow says the company
has teams of journalists working in Manch-
ester and London’s Docklands and indi-
vidual journalists working in different
cities around the world. Clearly, a flexible
yet secure system is vital, and the com-
pany – which also operates consumer web-
sites, such as www.inthenews.co.uk – is
in the process of moving from Microsoft
to Oracle so that it can be sure its soft-
ware is robust enough to handle all its
databases in a secure manner .
Whatever the business, though,
Powley believes the key is to “address
the real business issues around secu-
rity, not fencing silos”.
businessfirst 05
Harnessing better
he name MessageLabs might be fa-
T miliar from the bottom of emails,
where it often appears certifying that the
email concerned is free from spam, virus-
applications to es or other potential security threats.
What is less well-known is that Message-
Labs is a medium-sized company based
in the UK that is successfully taking on
avoid the agony of larger, usually US-based rivals.
It currently has about 11,000 clients
and employs about 350 people in seven
offices around the world in addition to its
growing pains UK base in Gloucester. But, while ac-
knowledging that it is facing increasing
competition, it is seeking to become the
world leader in its field and hence is aim-
ing for dramatic growth.
Small and medium-sized businesses are increasingly John Simpson, senior director, sales
using the best software available as they plan further consulting at Oracle, says that one of the
into the future in an attempt to compete with larger
ways the company is going about this is
by installing a customer relationship man-
companies and reach ambitious growth targets agement (CRM) system. He says CRM is
vital because acquiring new customers,
looking after existing ones and making
sure none are lost is vital for growth. Mes-
sageLabs is using it to help it focus on im-
proving sales, marketing and client ser-
vice by measuring, respectively, leads per
member of the marketing team, deals per
head of the sales team and tickets per
head in the client service team.
It is a sign of how even comparatively
small companies are turning to the sort
of technology that was once the preserve
of the largest corporates in their attempts
to become more competitive and to
achieve ambitious growth plans. More-
over, high-technology companies are not
the only ones recognising the benefits of
using increasingly sophisticated soft-
ware to help them run their operations.
Software companies that have tradi-
tionally dealt with larger businesses, such
as SAP and Microsoft as well as Oracle,
are all seeing growing interest from small-
er customers as it becomes more wide-
ly recognised that installing high-per-
formance technology need not be as ex-
pensive as had been thought.
Many companies stick to CRM or some
other distinct application, such as finance
or human resources management.
Indeed, CRM even has its own subset,
called sales force automation (SFA),
which has as its goal the streamlining of
the entire sales process to make busi-
nesses more efficient, improve customer
interactions, increase customer satis-
faction and save time and money.
Paul Fielder, applications sales man-
ager with Explorer, an Oracle partner
based in Leeds, says: “SMBs [small and
medium-sized businesses] tend to buy
software to solve specific problems. This
means they end up with a lot of different
systems, which makes it very difficult to
get business intelligence.”
In addition, each time they upgrade
they have to re-engineer all the applica-
tions, which is expensive and time-con-
suming. This, in turn, tempts them not
A4 PAGE PG5 BLACK CYAN MAGENTA YELLOW
 06 businessfirst businessfirst 07

to upgrade so often with the result that

their systems become out of date.
Increasingly, though, such businesses
are being encouraged to buy software strate-
gically. Accordingly, they are looking for
software systems that can grow with them
so that they do not have to keep changing
as the business develops, adds Fielder.
This is tending to fuel demand for en-
terprise resource planning, or ERP. This is
a business management system that inte-
grates all parts of the business, including
manufacturing, sales and marketing. In a
manufacturing company, for example, its
use can be seen in the handling of an in-
coming order. As soon as the order comes
in, the system would spark an inquiry about
whether the necessary parts were in stock
and if not order them. Information obtained
during the ordering process would allow it
to schedule a date for fulfilment of the order
and hence a delivery date for the customer.
Because it brings all the operations to-
gether, this technology enables costs to be
reduced through such areas as cutting
waste in inventory, consolidation of pur-
chasing through a single system, speed-
ing up of accounting information and in-
creased salesforce efficiency. It also does
away with the need for the same informa-
tion to be put in different systems. All in-
formation only needs to be entered once
to be available for all applications.
One factor that is making such com- their processes to suit the package if re- but has broadened out to become a not- could know about financial commitments
prehensive systems more affordable to quired. The result, adds Fielder, is that for-profit organisation providing con- being made by members of team as they
smaller companies is the Internet. Web-
based applications simplify the imple-
the system can be installed much more
quickly and cheaply and the return on in-
sultancy on education in the UK and
overseas (see box). Finance director
Technology satisfies a happened rather than weeks later and
could also see instantly what the effect
mentation process and so reduce the costs.
Another is the increasing readiness of
vestment realised sooner.
Clive Wells, senior principal mid-mar-
Colin Kerr says that from the beginning
of the new financial year in April all 30
need for greater speed of them would be.“You’ve got to have the
right data and today,” he explains.
large software providers to pre-package ket consultant with Oracle, says the ap- budget holders in the organisation will The Specialist Schools and Academies rector at that time after spells in the pub- The trust is currently piloting a sys-
some of their offerings. proach gives smaller companies access “come in each day and see high-level Trust was set up towards the end of the lic sector and as FD of a law firm,realised tem due to be implemented in time for
Explorer’s Fielder, for example, explains to the sort of technology previously the traffic lights of their budget areas”. last Conservative government with the that the existing accounting system the start of the next financial year in April
how what would once have required a team preserve of large corporates without forc- The mark of a good ERP system, says aim of encouraging the setting up of would not be sufficient to cope with the that will alert each of the organisation’s
of consultants to build from the ground up ing them to accept a “one size fits all”. He Wells, is that “it should be able to supply specialist schools and city technology growth that would be associated with 30 budget holders to what is happening
can now be implemented almost out of the also stresses that, besides delivering ef- good financial management information colleges.When Labour came to power the development of the organisation. in their areas in financial terms. Ac-
box. Oracle’s Accelerator suite, for instance, ficiencies, ERP systems encourage col- in a timely way”. A clear sign of growing in 1997 it became the vehicle for rais- “If you wanted to do anything you had knowledging that only financial special-
offers a series of packages focused on par- laboration and the communication that pains in a business is the fact that it takes ing secondary education standards to work it out separately from the ists will be interested in reading the full
ticular industry sectors. Businesses can can be lost as businesses become bigger. longer and longer to close the accounts. through promoting the idea that as many system and tap it in. There was no accounts, he is keen to make it easy for
adapt them for their own purposes, but Because the same system can deliver This can be very dangerous because out- secondary schools as possible should information about where the money them to see if there is a problem through
since they reflect best practice in each in- information in different forms to differ- of-date management information is no use become specialist in at least one sub- was going,”he says. a “high-level traffic lights” system to be
dustry, are generally encouraged to change ent people, such technology can enable at all. “It is absolutely critical that man- ject.With about 90 per cent of the coun- His first task was just to get to “where delivered by email when they log on at
an entrepreneur to step back from the agement information keeps pace with the try’s 3,000 secondary schools achiev- we should have been”with a system that work each morning. Once alerted, the
day-to-day management of the business pace of growth of the business,” he adds. ing this status, the organisation decid- was fit for the purpose of providing ac- executive will be able to drill down through
knowing that the systems are there to Ultimately, though, whether smaller ed to broaden its remit and has effec- curate monthly accounting information. the information to find out more detail.
allow the middle managers to do their job businesses choose to adopt this sort of tively become a not-for-profit consul- Having achieved that reasonably “You’ve got to be looking at how to
while also providing him or her with the technology is down to their mindset. Wells tancy specialising in education.As well quickly,he and his team set about what liven it up,”says Kerr, who also explains
vital information they need about the says the people running them will want as advising on standards,it runs cours- he calls the “exciting part”. Taking the how the Oracle system has allowed the
progress of the business. to see a quick return on their investment es and acts as a network for those in- view that the way to obtain the sort of organisation to rid itself of paper. In-
Moreover, the technology now exists and they will want the system to be able volved in education. information he wanted lay with tech- voices are scanned as they arrive and
to deliver daily business intelligence to to grow with them. “Scaleability” is a key Since taking the decision to broad- nology rather than hiring more people, then sent to relevant person for check-
organisations, so that executives re- word. But they will also be ambitious and en its services,the trust has grown from he opted for an Oracle system that could ing. Once he or she clicks on them they
ceive key performance indicators. Such keen to use the technology to help them an organisation with an income of £12m have extra features added on. are sent for payment.
a system is about to be introduced by “stay ahead of the game and remain effi- a year to one doing £50m of business Inspired by stories of how the US com- “We’re getting away from the idea
the Specialist Schools and Academies cient and competitive”. Just like Mes- a year.In that three-year period,the staff puter company Cisco Systems has in- of armies of clerks,” says Kerr. “It’s
Trust, which started life in the 1990s as sageLabs, which – though hardly a house- has trebled in size to about 350 people. troduced “real-time reporting” he set sharp, it’s quick, it’s about empower-
a government body charged with im- hold name in its native land – has ambi- Colin Kerr,who arrived as finance di- about obtaining a system whereby he ing the budget holders.”
Application sales manager Paul Fielder proving standards in secondary schools tions to be a global force.

A4 PAGE PG6 BLACK CYAN MAGENTA YELLOW A4 PAGE PG7 BLACK CYAN MAGENTA YELLOW
 08 businessfirst
he revelation that lending to small
T businesses under the Government’s
Small Firms Loan Guarantee Scheme
nearly halved last year is seen by many
as evidence of the difficulties faced
by new enterprises when seeking the
funds they need to grow.
The scheme, which has been operating
since 1985 and is run by the Department
of Trade & Industry, involves the Gov-
ernment guaranteeing three-quarters of
the value of bank loans to businesses that
are seen as promising but are unable to
obtain finance in the normal way because
they have limited assets. Last year, the
Government underwrote loans worth
£225m, compared with £422m in 2005 and
£481m the year before. The Federation of
Small Businesses has urged a return to
“normal levels” of funding next year.
But others suggest that the real rea-
son for the fall in the number and value
of loans is the availability of finance else-
where. Competition among banks to lend
to a sector that could produce the big
businesses of the future and the arrival
of other sources of funds lead many
observers to believe that the problem is
not as serious as it once was.
Indeed, successful entrepreneurs look-
ing to expand their businesses are in many
cases spoiled for choice in terms of finance
options. All have their advantages and dis-
advantages and it is important that those
running the business understand what
they are trying to achieve.
As entrepreneur Chris Lilly says in his
recent book The Start-Up Survival Guide,
there are “two main sources of funding,
namely equity and debt”. Equity involves
the funder taking a stake in the business.
The most obvious example of this is a com-
A4 PAGE PG8
Small firms,
big choices
Small and medium-sized businesses invariably need finance
in order to grow, but where should they get it from?
Venture pany obtaining a stock market listing –
capital can but this is probably a good while off for
be very most growing businesses.
beneficial Other forms of equity funding are
to small investments by friends and family; invest-
businesses ments by “business angels”, high net-
worth individuals who are prepared to
invest some of their fortunes in businesses;
venture capitalists, which despite their
name are usually not that interested in
investments of less than £1m; and strate-
gic investors, or bigger companies buy-
ing into new technologies or ideas.
Many entrepreneurs are wary of equity
funding because they fear the loss of con-
trol. But, as Lilly points out, even though
this dilution of the founder’s stake may
mean that “you have a smaller stake in
percentage terms, in money terms your
stake will have increased”, because the
value of the company should increase
each time there is a fresh investment.
Moreover, debt is generally more expen-
sive to obtain because it involves a set pro-
BLACK CYAN MAGENTA YELLOW
gramme of repayments with interest. Nor
is it necessarily any easier to obtain. Both
forms of funding require the preparation
of a detailed business plan, which takes
time and can cost money.
Venture capital – or private equity, as
it is increasingly called – is very demand-
ing in terms of management perfor-
mance and returns on investment.
Private equity firms are typically look-
ing to realise their investments by sell-
ing them on or listing them on the market
within about five years.
But perhaps the greatest advantage
that venture capitalists bring to ambi-
tious entrepreneurs is contacts. In their
book Raising Venture Capital, Rupert
Pearce and Simon Barnes say that, while
novice entrepreneurs tend to see VCs as
“a kind of giant chequebook providing
an endless supply of cash”, their more
sophisticated colleagues see them as “a
giant Rolodex, offering the potential to
broaden their networking range”.
It’s getting
easier to talk
Call centres were once only the preserve of big organisations,
but developments in internet technology have let small to
medium-sized businesses get in on the game
ot so long ago, call centres were the
N sole preserve of large companies.
Only utilities and other big corporate or-
ganisations could afford the buildings,
technology and people required. But the
latest developments in internet technol-
ogy are changing all that.
Daryn Mason, Oracle’s Head of Solu-
tion Consulting for CRM On Demand
in Europe, says there are two key
“threads of benefit” for small and
medium-sized businesses. By far the
biggest is that the total cost of having
such a facility has come down through
the concept of hosted contact centres.
A4 PAGE PG9
This involves businesses sharing the
service via the internet, rather than hav-
ing to own the whole infrastructure and
paying for it on a subscription basis.
Industry statistics suggest this “pay
as you go” approach means that busi-
nesses can have a call centre for as lit-
tle as £75 per user per month. But just
as interesting, says Mason, is the flexi-
bility that the technology gives busi-
nesses. It enables them to deal with a
sudden rise in demand.
Oracle says that early adopters in the
United States, in particular, are attracted
by the “really enticing cost reductions”.
businessfirst 09
Small
businesses can
benefit from
new phone
technology
But an additional attraction is that it can
take just weeks to set up such a centre.
Allied to such developments is the
increasing popularity of VOIP (voice over
internet protocol), which is essentially
the means of making telephone calls over
the internet. Until now, this has largely
been a domestic phenomenon, but its use
– combined with hosted software appli-
cations – is starting to spread into the
business arena as well.
Mason says that VOIP in conjunction
with hosted solutions is starting to be used
in call or contact centres to route calls, so
they go to the most appropriate person,
and offers another convenient way for cus-
tomers to contact their suppliers.
“In a contact centre, most of the traf-
fic might be voice,” he says, “but cus-
tomers could also be using email or
responding via a website. The VOIP tech-
nology offers another way to bring the
call centre closer to its customers.”
But the VOIP technology does not just
apply to call centres. Dave Baxter, head of
small business at mobile operator O 2,
believes that convergence between mobile
networks and land services and between
telephones and computers has been much
talked about, but has largely just been a
concept until now. It will become much
more important this year.
Although smaller businesses tend to be
cautious about technology, the growing
use of this technology among tech-savvy
individuals is expected to drive business
use. At the same time, mobile operators
seeking to exploit their third-generation
(3G) services will promote it.
VOIP can be particularly attractive for
any business where internal telephone
calls are commonplace. Lewis & Hickey,
a UK architects firm and design consul-
tancy specialising in retail fit-outs, says
it’s seen a significant drop in the amount
it’s spending on mobile and landline phone
calls through using the business service
offered by Skype. But it’s not just benefit-
ing from cost savings.
Benoit Mareschal, business develop-
ment director, says: “The ability to talk
with one another has increased enor-
mously.” This is largely because an instant-
chat feature enables users to see when
colleagues are online.
But the firm is also using Skype to carry
out conference calls and video confer-
ences. As chief executive Paul Miele
explains: “The benefits are far greater
than just cost savings.”
BLACK CYAN MAGENTA YELLOW
 10 businessfirst
Upgrade without a fuss
Investing in technology often worries small businesses because of how quickly
it can be superseded, but software providers have come up with a solution
arge companies are generally so con-
L vinced of the benefits of using tech-
nology to help run large parts of their op-
erations that they need little persuading
to upgrade their systems. Smaller busi-
nesses, on the other hand, are often seen
to be more circumspect about such in-
vestments. Although attitudes vary de-
pending upon such factors as the sector
in which the business operates, its scale
and the age and background of those run-
ning it, this caution tends to centre on con-
cerns about the initial cost and fears that
any systems acquired will quickly become
outdated and will have to be replaced as
the business develops.
David Forrest, chief executive of Per-
cipient, an Oracle partner that focuses on
supplying the software company’s appli-
cations to small- and medium-sized busi-
nesses, recognises the phenomenon, but
says that these days the question that needs
to be asked is not whether the business can
actually afford the investment but whether
it can afford not to invest in technology.
Smaller companies started investing in
technology 10 or 15 years ago. Typically,
they had a basic finance package on a Win-
dows platform. They would have updated
that a few times and would probably have
added a customer relationship manage-
ment (CRM) package and might even have
acquired some databases. The result would
have been that different parts of the or-
ganisation would have developed their
technology in isolation – requiring any in-
formation that was needed in more than
one part to be keyed in separately and mak-
ing it difficult to obtain information relat-
ing to the whole business.
Things can reach a point where the
technology is actually impeding the man-
agement of the business rather than help-
ing. Or it could be that the technology is
either overloaded or just crashes – as hap-
pened to Kerrie Keeling, the former banker
who runs the project management and
building trades company, A Woman’s
Touch (see case study).
David Pinches, head of product man-
agement for the mid-market division at
Sage, the software business that focuses
on growing businesses, says companies
typically start to think about changing their
approach to computing when they reach
A4 PAGE PG10
certain points in their development, such
as having several cost centres or oper-
ating several warehouses.
When deciding to upgrade, they are
conscious of obtaining systems that are
easy to use, speedily installed, not too ex-
pensive and capable of being expanded
as they continue to grow.
It is in an effort to capitalise on this last
factor that companies that have tradi-
tionally focused on the largest business-
es, such as SAP and Oracle, are starting
to market their offerings to smaller com-
panies. Their argument is that hosting
applications via the internet rather than
having to install individual servers and
the introduction of pre-configured pack-
ages is bringing “tier one” applications
within the reach of smaller, more cost-
conscious customers.
Sage’s Pinches points out that there is
no truth in the idea that one size fits all.
But Forrest argues that several factors
are helping to make providers such as Or-
acle more attractive to smaller compa-
nies than was previously the case.
In particular, they do not seem so in-
terested in buying specialist services but
will go for more widely- applicable of-
Software
companies and
consultancies are
starting to target
small businesses
BLACK CYAN MAGENTA YELLOW
businessfirst 11
ferings. Also, such services do not cost
as much as they once did because of the
introduction of the preconfigured pack-
ages and the use of partner companies
to implement them is cheaper than the
consultants that used to do the work.
Moreover, many of the systems can be
set up with only the modules required
operating from the outset. As the busi-
ness grows and becomes more complex
more facilities can be added without a
major implementation exercise.
Certainly, if Keeling’s experience
is anything to go by, proprietors of
growing businesses can be pleasantly
surprised by how inexpensive certain as-
pects of upgrading technology can be.
For example, she and her team leaders
have PDAs that they obtained free as part
of Orange’s small business package.
Moreover, she opted for the top-of-the-
range financial controller software pack-
age because she has ambitions to expand
the business from employing 20 people
in the London area to a nationwide pres-
ence and felt she needed something more
robust. “It’s much cheaper than me tak-
ing on my own IT person,” she says of her
decision to go for what she saw as the best.
Recovery after crash
Kerrie Keeling realised she needed to She discovered a consultancy called Kerrie Keeling
upgrade her technology when her com- Solutios, which operates her website now uses an IT
puter crashed,wiping out all her files.“I (www.awomanstouch.org.uk) and also consultancy
started back in April 2003,just me dec- manages all the business’s communi-
orating. I ran the business from home cations needs. There is a networked e-
with a land line and a PC and a mobile,” mail system linking Keeling with two other
the former banker recalls. people working from home and the land-
By offering a superior service to that line telephones are also networked so
usually provided in the building trade,the that all calls between them are free.
business –AWoman’sTouch – grew quick- In addition,Solutios,which provides
ly,with Keeling adding other trades in re- 24-hour remote support,has organised
sponse to customer demand. However, each team leader to be equipped with
she kept doing the accounts on spread- PDAs that enable them to be e-mailed
sheets on her original PC – until the crash with job specifications.This greatly im-
happened a year and half ago.That prob- proves the level of customer service.
lem – and the inadequate advice on deal- From the start of the new financial
ing with it that she received from the store year in April,the business will also have
that supplied the PC – convinced her that a new accounts system that will provide
she needed to upgrade her technology. the perfect platform for future growth.
A4 PAGE PG11 BLACK CYAN MAGENTA YELLOW
 12 businessfirst businessfirst 13

staff they need to continue to develop.

There’s anecdotal evidence that many
firms curtail their expansion in order to
avoid taking on extra staff.
The rules of distraction
However, it doesn’t have to be that way.
While acknowledging that few small busi- Government red tape
nesses can afford a full-time HR manag-
er, experts in the area advocate, at the
is a fact of life for
very least, putting a senior manager in businesses, but small
charge of ensuring that areas such as
training, health and safety, pay, and staff
to medium-sized
communication and motivation are cov- ones often struggle to
ered. “Personnel issues are too impor-
tant to leave up to chance,” says one.
cope with all the rules
This still means that someone has to and regulations
deal with the details of pay, training and
the rest, but modern technology can help
imposed on them
in this area, just as it does with finance
and other specialist functions. Various
businesses and industry groups have he most frequent complaint made by
begun to offer HR support via the inter-
net on everything from hiring and firing
T owner-managers of small and medi-
um-sized businesses is that they are bur-
policies to payroll services. dened by too much regulation. Rules about
Such developments can undoubtedly employment, health and safety, waste
help make taking on relatively junior peo- disposal and tax – to name a few – are
ple less risky in terms of possible viola- now so plentiful and often so complex

Putting
tions of employment law, but they won’t
help business founders deal with an issue
that can be even more troubling. This
issue is taking on senior people to reduce
the burden on themselves.
The history of entrepreneurial busi-
nesses is littered with examples of com-
that entrepreneurs sometimes feel that
dealing with them can take up as much
time as developing their businesses.
The Government has made much of its
commitment to small business, but – de-
spite the presence of the Small Business
Service and taskforces dedicated to in-

people first
When you start up a business, there’s a multitude of things
to think about but employing staff probably isn’t one of them,
until, of course, your business begins to grow
hen entrepreneurs set themselves
W up in business, employment issues
don’t tend to be topmost in their minds.
Ensuring that there’s a market for their
goods or services, worrying about pro-
duction, or securing finance usually loom
much larger. But it doesn’t take long
before human resources (HR) matters
start to become an issue.
HR issues begin to arise when the busi-
ness’s founders consider taking on their
first employees. Employing somebody is
a big step, not least because you need
the means to pay them every month. But
it’s also an early step in making the busi-
ness more complex.
Indeed, small business lobby groups
complain that recent developments in
employment law are making this area
something of a minefield for small and
growing businesses. The Federation of
Small Businesses (FSB) has revealed
Starting a
business is
one thing, but
large increases in the past two years in
concerns about such areas as age dis-
recruiting is crimination, information and consulta-
quite another tion, treatment of part-time workers,
pensions and retirement.
Employment law is, says Alan Tyrrell,
the FSB’s employment chairman, “vital to
ensure that both employers and employ-
ees know where they stand and to protect
both parties as they carry out their work”.
But, he adds, the complexity of these
laws is placing “an intolerable burden on
smaller firms that are not big enough to
have their own HR department”.
He continues: “The average small busi-
ness owner spends 28 hours a month fill-
ing in government forms.”
This burden is seen as a key disincen-
tive to growing businesses to take on the
panies that have taken on senior person-
nel, only for the founder to be reluctant to
let them do what they were hired to do.
But if they don’t take this step and ac-
knowledge that other people may possess
skills that they, themselves, don’t, they are
less likely to prosper.
Jessica Seaton, who founded the cloth-
ing business Toast with her husband a
decade ago, summed up the dilemma when
she told Accelerator, the new magazine for
entrepreneurs:“You have to delegate if
you’re going to grow, working with oth-
ers rather than thinking you’re the only
one who can do it. It’s a leap of trust.”
vestigation regulation – has done little to
improve the situation. Indeed, last month’s
(21 March) Budget is regarded as typical
in that, in announcing a range of measures
that roughly balance each other out in
terms of the amount of tax received, the
Chancellor, Gordon Brown, has added to
the complexity of the tax regime.
Carol Undy, chairman of the Federa-
tion of Small Businesses, says that the
Chancellor “gives with one hand and
takes with another”. It is a familiar re-
frain, given support this year by Brown’s
decision to reduce the rate of corpora-
tion tax by 2 per cent to 28 per cent while
raising the tax on small businesses by
the same amount, to 22 per cent. As in
the past, the Budget contained propos-
als for adjusting capital allowances and
tax reliefs on different activities.
LexisNexis, the leading provider of in-
formation for tax experts, says that the
size of its Tolley’s Yellow Tax Handbookhas
grown by approximately 70 per cent since
the 2001 General Election. Then, the hand-
book of UK direct tax legislation contained
5,952 pages over two volumes. By last year,
the book ran to four volumes containing
9,806 pages. This year’s Budget is expected
to add at least a further 400 pages.
LexisNexis’s Mike Truman says that
“the Chancellor has persisted with adding
complexity that is likely to puzzle and
frustrate many businesses. This year’s
continued growth in tax legislation gives
real credence to fears that British com-
petitiveness is being damaged by a com-
Smiles better:
But are small
businesses
they have policies and procedures in place
regarding employment and health and safe-
being held back?
plex and lengthy tax code.”
However, it is not just tax that is caus-
ing concern. Increasingly wide-ranging
health and safety rules mean that pro-
prietors have to add to their costs by in-
troducing measures aimed at prevent-
ing accidents or other incidents, even if
they are not likely in their businesses.
Similarly, the rules associated with em-
ploying staff have become so complex and
the ramifications of getting it wrong so se-
rious that many companies say they’re put
off taking on extra people. Such concerns
have fuelled interest in services designed
to keep busy owner-managers who don’t
have the same sort of professional support
enjoyed by large companies up-to-date.
Experts advise companies to ensure that
ty, that they try to keep abreast of legal re-
quirements and register with the correct
authorities. Most importantly, they need to
ensure that they have adequate insurance.
Small business groups do not wish to
give the idea that they are encouraging
members to ride roughshod over their em-
ployees’ rights or to have a lax approach
towards safety. But they do point out that
such regulations, combined with the tax
rules, are hardly evidence of the sort of en-
terprise culture that successive govern-
ments have said they are trying to encour-
age. As Nick Goulding of the Forum of Pri-
vate Business, says of last month’s Budget:
“The changes made for smaller firms will
serve only to further burden them.”

A4 PAGE PG12 BLACK CYAN MAGENTA YELLOW A4 PAGE PG13 BLACK CYAN MAGENTA YELLOW
 14 businessfirst
The benefits of outsourcing
You may think your business is too small for outsourcing but thing again: it can cut
your company’s costs and increase its productivity more than you might imagine
ot so long ago, outsourcing was the Keys to success:
N preserve of the biggest companies.
International organisations, such as An-
External IT
support can be
cheaper than
dersen Consulting (Accenture), set up ded- inhouse
icated services that enabled large busi-
nesses to have information technology,
payroll and other “back-office” functions
managed by teams of specialists.
However, the arrival of the internet has
given smaller businesses the opportunity to
gain from the concept. Increasing numbers
of growing businesses are, for example, avoid-
ing employing full-time HR managers by ob-
taining advice and services via the net.
A typical case is API Group, a producer
of specialist packaging and security prod-
ucts used by consumer goods companies
to help their products stand out on the
shelf. Now a UK-listed company, API has
grown into an international business with
1,000 employees and an annual turnover
of £120m. By the time Iain Anderson be-
came director of information systems in
2002, the company’s IT operations had
also grown spectacularly. The IT budget
was running at 2.5 per cent of turnover
and there were 25 full-time employees.
Now, the team is half the size and the bud-
get is less than 1 per cent of turnover.
A4 PAGE PG14
Anderson says this has been achieved
through a restructuring that “focused on
what was important to the organisation”.
He and his colleagues started by making
infrastructure changes that involved mov-
ing the architecture of the IT systems out
to BT. Then they made Dell the standard
supplier of computer hardware, making
use of the company’s support to do away
with the need for support personnel on site.
But perhaps the most far-reaching
change Anderson has made has been to
implement Oracle On-Demand, which
involves outsourcing hosting and man-
agement of hardware, software and ap-
plications of IT systems. There was ini-
tial scepticism on the part of the board,
but the advantages have been so great
that any opposition has been overcome.
Moving to this approach has contributed
greatly to reducing the IT headcount, cut
the cost of hiring and training IT support
and reduced IT operating costs by 40 per
cent. Moreover, having the system sup-
ported by a remote hosting centre has
proved cheaper than the company setting
up its own disaster recovery plan.
Among the associated benefits is the
fact that users of the system enjoy high-
BLACK CYAN MAGENTA YELLOW
er service levels than before – making
them more productive. The ease with
which the system can be updated and up-
graded to accommodate more users is
also a great benefit, adds Anderson.
Above all, the changes mean the busi-
ness can focus on its core manufacturing
operations instead of worrying about IT.
This backs up research, which show
that firms that outsource aspects of their
operations tend to be more profitable
than those that do not. This is partly be-
cause such businesses are probably more
likely to analyse and seek to make as ef-
ficient as possible all aspects of their busi-
ness. But it is also true that by outsourc-
ing activities such as finance, HR and IT,
companies are able to gain access to high-
er levels of expertise than might be avail-
able in-house and also save costs.
The practice is not without its risks.
Again, research indicates that business-
es engaging in outsourcing need to ensure
that the providers are meeting their needs,
the costs are appropriate and that there
are adequate controls. After all, if some-
thing goes wrong, it is the reputation of the
company outsourcing rather than the ser-
vice provider that’s likely to be affected.
Connecting for success
Inefficiently sharing data within a company is about to become a thing of the past
thanks to middleware – and the only people who won’t benefit are your competitors
hese days, just about every compa-
T ny makes at least some use of tech-
nology to help it run its business. Com-
puter software that is simultaneously be-
coming increasingly advanced and af-
fordable is transforming such functions
as finance and human resources – mak-
ing them more efficient and effective.
But many organisations – even large
and supposedly sophisticated ones – are
still not enjoying the real benefits of in-
formation technology because their com-
puter systems are organised along func-
tional lines and do not allow data to be
transferred from one part of the business
to another. We have all come across in-
stances of this – for example, when our
bank invites us to take out an insurance
policy that we already have because
customers are seen in terms of accounts
rather than as people or when we are
dealing with a call centre and are told
they cannot deal with a query because
they do not have access to the data.
By contrast, one of the key factors be-
hind the great success of the supermar-
ket group Tesco has been its use of
information technology, particularly the
data this enables it to gather about its
customers through its Clubcard.
Most companies using even rudimen-
tary information technology systems hold
a lot of information about their business
– the trick is finding it and making it avail-
able to the people who need it. There is no
shortage of rawmaterial. In his recent book,
Where Value Hides, Stuart E. Jackson of
LEK Consulting writes: “Executives today
are positively bombarded by statistics,
data, analyses and opinions. In fact, most
of the senior executives I work with tell
me they get too much information.”
The trick is in turning the raw mate-
rial into something useful. Consultants
constantly talk about the time that is
wasted in management meetings because
what they are discussing is either with-
out value or outdated.
This is where “middleware” comes in.
This is the name given to the software
A4 PAGE PG15
that has been developed to link the var-
ious applications, such as customer re-
lationship management and supply-chain
management. This process, known as en-
terprise application integration, is de-
signed to make organisations work more
effectively by doing away with the “in-
formation silos” that hamper the trans-
fer of information between departments
and the “information bottlenecks” that
require employees to intervene by either
keying in data or making decisions.
Organisations have been aware of the
limitations of computer systems that do
not allow data to be transferred between
departments for some time. But hither-
to the only ways around it have been the
time-consuming and expensive writing
of special programmes to create links be-
tween the systems and similarly costly
customisation of systems.
Recently, though, new systems have
been devised that make it much easier for
organisations to bring their different tech-
nologies together and so start to see the
gains that technology promises. Gavin
Dimmock, director of Fusion Middleware
for Oracle UK and Ireland, says that in-
terest in these developments is such that
in the past six years the division has grown
to be a significant part of the company’s
revenues and its fastest growing business.
Pointing out that the market is being
driven by the desire of all sorts of cus-
tomers to link different technologies or
business processes, he adds: “The busi-
ness challenges are exactly the same
whether it is a business in the top ten of
the FTSE 100 or an SMB [small or medi-
um-sized business].”
After all, the issue of linking an inter-
net retail site to the company’s financial
system and procurement department is
pretty much the same whether the busi-
ness concerned is a start-up or an in-
ternationally-known name. As Dimmock
says, it is “just a difference of scale”.
However, the recent heavy mergers and
acquisitions activity has given an added
boost to the market because the merging
businessfirst 15
Come companies will often have entirely different
together: systems that will need to be integrated and
Middleware also because of the pressure to produce cost
links up a efficiencies in order to justify the deals.
company’s At the same time, the arrival of Service
many Oriented Architecture, the name given to
departments loosely linked services supporting business
processes is helping businesses develop their
technological capabilities without wasting
their investments in earlier applications. As
such an approach is open rather than tied
to a particular technology, it is relatively easy
for it to be upgraded and developed at less
cost – to the benefit of the business concerned.
The real advantages come later, though,
as businesses become much more effec-
tive at serving customers – who are likely
to be impressed by a more seamless link
between, say, the call centre and the
engineers department – and efficient at
monitoring operations.
Increasingly, the businesses that are
better than their rivals at delivering more
information that is accurate and timely
to the managers making the decisions will
be the successful ones.
Oracle’s
middleware is
integration
made easy
Oracle partner NCS (www.ncsltd.
com) is based in London’s Dock-
lands and works extensively with the
financial institutions nearby on en-
suring that their technology needs
are met. Business development
manager Bob Dunsby says the pres-
ence of Oracle’s Business Process
Execution Language (BPEL) over the
past couple of years has helped
boost demand for applications inte-
gration because it makes the whole
process much easier.
Financial institutions have been
particularly eager to adopt it be-
cause – having the money to invest
and the manpower to do the work re-
quired – they tend to be in the van-
guard of such developments.
Dunsby says BPEL offers addi-
tional advantages over the tradi-
tional middleware packages be-
cause it is maintained by Oracle and
is much quicker to implement.
Learn more about the latest middle-
ware solutions at the Oracle IT Fu-
sion conference on Wednesday 11
NCS business July 2007 being held at the Emi-
development rates Stadium. Register at www.ora-
manager Bob cle-itfusion-conference.com
Dunsby
BLACK CYAN MAGENTA YELLOW
 16 businessfirst
Can customer relationship
management systems
benefit your business?
Knowing, understanding and predicting what your customers want – and will want in the
future – is vital to the success of small to medium-sized enterprises – and CRM is the key
A4 PAGE PG16
ny business is highly dependent on
A its customers. Traditionally, smaller
businesses were thought to be better able
to understand their customers’ needs,
simply because their size made it easier.
If you’re a corner shop, say, it’s much
more straightforward to serve your local
customers than if you’re a supermarket
chain. You know what your customers
want because you see them on an almost
daily basis and can speak to them face-
to-face, rather than having to organise sur-
veys and questionnaires. There’s also a
much shorter chain between the person
dealing with the customers and the one
making the decisions. Indeed, they are
often one and the same person.
It’s this knowledge and understanding
of customers that big companies were
trying to replicate when they started to
invest in customer relationship man-
agement (CRM) a few years ago. The con-
cept is essentially a fancy management
consultant way of talking about getting
to know customers better and using that
knowledge to serve them better.
Because developments in technology
made the collection of data like this rel-
atively straightforward for large organ-
isations, such as banks and supermarkets,
the concept became bound up with in-
formation technology. But, as Business
Link, the government-supported advice
network for small to medium-sized en-
terprises (SMEs), points out: “It is more
of a business philosophy than a techni-
cal solution to assist in dealing with cus-
tomers effectively and efficiently”.
That said, while CRM can’t be seen
purely in terms of technology, it also
can’t be successfully introduced into an
organisation without at least some
technology. After all, only technology
enables one of the key aspects of CRM:
BLACK CYAN MAGENTA YELLOW A4 PAGE PG17
The right call:
Sales staff can
use CRM
systems to
boost sales
the integration of all the means by which
companies communicate with their
customers (telephone, e-mail and the
internet) in writing.
Even basic attempts to find out more
about customers and their needs should
help companies serve their customers
– and it may be that many small busi-
nesses feel this is all they can do.
In the early days of CRM, the lack of
sophistication led to financial services
companies being offered services they
already had with the same supplier, for
example. Similarly, companies that were
analysing their customers on where
they lived, rather than on what they spent
their money on, would find themselves
offering gardening products to people
who lived in gardenless flats.
Things have moved on markedly
since then. And there are signs that the
companies that are using the more so-
phisticated developments in CRM tech-
nology are seeing more benefits than
those that settle for the more basic data
collection approach. In particular, busi-
ness analytics applications, which enable
organisations to analyse customers’
past behaviour with a view to anticipating
future trends, are becoming especially
popular with forward-thinking executives.
In their new book, Competing on An-
alytics: The New Science of Winning,
Thomas H Davenport and Jeanne G Har-
ris write: “Many companies in a variety
of industries are enhancing their CRM
and SCM [supply chain management]
capabilities with predictive analytics, and
they are enjoying market leading growth
and performance as a result.”
The authors point out that there are
certain challenges to this. In particular,
companies need to be prepared to
break down boundaries between ac-
businessfirst 17
tivities that had once been kept segre-
gated, namely CRM-type processes such
as sales and marketing, and SCM pro-
cesses, such as procurement and logis-
tics. The idea is that businesses align
supply and demand more accurately
and so make themselves more responsive.
Many companies produce statistics
along the lines of average revenue per cus-
tomer and average order size. But those
that are using analytics go further. They
might, for example, use predictive mod-
elling to identify the most profitable cus-
tomers – or the least profitable. Utilities
went down this route several years ago
when they introduced different prices for
different customers.
Alternatively, they might integrate
data they have generated themselves with
that gathered elsewhere to build up a bet-
ter picture of their market. Or they might
test different situations in their supply
chains to identify in advance potential
hold-ups and other problems. They
might also analyse historical sales and
pricing trends, as this enables them to
set prices that maximise their yields from
each transaction. They might also use ex-
periments to test the effect of advertis-
ing and other marketing activity.
The good news is that what was once
the preserve of large corporations is now
available to growing businesses. CRM sys-
tems, like other aspects of technology,
have been available in outsourced form
via the internet for some time. While pos-
sibly not as cheap as buying an off-the-
shelf solution, this is a good way of
obtaining the application quickly and also
avoids having to have an extensive in-
house technology team.
A form of this is the on-demand solu-
tion offered by Oracle. Daryn Mason
(pictured top left on p18), European head
of solution consulting for Oracle CRM On
Demand, says: “The software is extremely
low cost. For the first time, organisations
can afford to implement [this technology]
without a large upfront capital expense.
It’s a message that the market is waking
up to. The cost per user is comparable to
an average mobile phone bill.”
This has certainly been the experience
of Netstore (see case study). Marketing
director Alan Edwards negotiated a
competitive cost per user per month deal
for the company. And the fact that the
Oracle On Demand system is easily
scaleable meant he didn’t have to sign
up for too many users in anticipation of
growth, but could just expand the user
base as the business developed and
other operations were acquired.
Oracle’s Mason says a particular ben-
efit of the analytics approach to CRM is
that it enables businesses to better pre-
dict demand. Many SMEs are now trad-
ing over the internet and seeing for
BLACK CYAN MAGENTA YELLOW
 18 businessfirst
themselves the truth in the maxim that
the Web makes everybody the same size.
But they can run into trouble if they sud-
denly experience a rush for their prod-
uct or service and can’t fulfil it.
“Even if there’s over demand, you can
use analytics to show which customers
should be better served,” Mason says,
adding that he and his colleagues talk of
using the technology to turn “victims of
success” into “victors of success”.
He agrees with Davenport and Har-
ris that obtaining the real benefits re-
quires breaking out of traditional
thinking. Pointing out that even opera-
tional and analytical CRM were often in
“separate silos”, he says: “You had peo-
ple in the field collecting information and
then it was sucked out and the analysis
took place. There was some level of in-
sight, but it didn’t give you the ability to
go straight from insight to action. It did-
n’t allow you to drill down and go to the
root cause of the problem.”
“Insights” is the word of the moment
in consulting circles. Everybody seems to
want that extra little bit of information
that gives them an advantage over its ri-
vals. Much has been made in recent years
of how, for example, Tesco seems able to
anticipate warm weekends and get the
right amounts of beer and barbecue sup-
plies into its stores while its rivals sell out.
It’s largely down to analysis.
Similarly, the internet search engine
Google has, in part, been successful
with advertisers because of analytics. It
uses algorithms that are constantly
analysing such things as the efficacy of
keywords, placement on the page, the cre-
ative material and so on.
Nor is such thinking restricted to
web-based advertising. Davenport and
Harris quote Sir Martin Sorrell, chief
executive of the advertising and mar-
keting group WPP, as saying: “There is
no doubt in my mind that scientific
analysis, including econometrics, is one
of the most important areas in the mar-
keting-services industry”.
A4 PAGE PG18
Netstore: CRM in action
Netstore, a UK-based provider of
managed information technology
services and security for organisa-
tions that have outsourced their IT,
used to be a typical small business.
“We were very reactive and did
things day-to-day,” acknowledges
marketing director Alan Edwards
(pictured above right).
Then, two years ago, it took the
decision to take customer relation-
ship management (CRM) seriously,
“as part of the process of growing
up”, as Edwards puts it. Until then,
the company, which had been
growing rapidly through acquisi-
tion, had relied on a system that
was not well used, partly because it
was difficult to use. Most salespeo-
ple had their own independent
spreadsheets, which made it diffi-
cult to see the business as a whole
and so to forecast.
Netstore decided to go for an on-
demand system because it didn’t
have the high initial costs tradition-
ally associated with such systems
and because the company could
use it and expand it when required.
Also, because the company didn’t
have a large IT team, the system
meant it wouldn’t have to staff up or
take the expensive route of using a
provider’s consultants.
Having examined the market,
Edwards and his colleagues
opted to acquire a system from
Siebel, the market leader in CRM
and then still independent, but
now part of Oracle.
“The service they had was simi-
lar to that of others, but there was
BLACK CYAN MAGENTA YELLOW
one area where they stood out,” ex-
plains Edwards. “That was in its his-
toric analytic capability. The data is
kept in a warehouse and is a poten-
tially powerful business indicator to
get historic analysis.”
Netstore initially signed up for 25
to 30 seats to cover the immediate
sales force, but since them it has ac-
quired three companies. This was
when the investment in an on-de-
mand service really paid off, as cus-
tomer data was easily transferred
from various databases to a single
system. Indeed, the speed with which
different sales teams have been
brought together has been a great
help in integrating the new business-
es. “It underpins a large plank of our
growth strategy,” says Edwards.
As well as acquiring businesses,
Netstore is keen to grow organically,
and here the fact that the sales
team has knowledge about their
customers and potential customers
at their fingertips is a great help.
Netstore currently has 85 li-
censed users and has just bought a
further 20 seats. It sees a consoli-
dated CRM system as being so
valuable to the business that users
are increasingly not just among the
sales team but also drawn from the
commercial and financial teams.
A key benefit of the system is
that users only need a minimum of
training to be able to use it. The
fact that it can be accessed easily
and from anywhere makes staff
much more inclined to use it than
they were the old system, which, of
course, makes it more valuable.
Knowledge is power
10 tips to help small companies retain their successful entrepreneurial,
spirit, while at the same time taking on the bigger beasts of business
ome businesses are content to stay
S small. Many are so-called lifestyle en-
terprises, where the proprietors have
made a conscious decision to stay small
in the interests of work/life balance, but
most – aware that in the current business
climate it is impossible to stand still – are
intent on becoming bigger. The obstacle
they face is to retain that entrepreneuri-
al spirit while becoming large enough to
take on the bigger beasts. Here are a few
tips to help them succeed.
1. STAY ENTREPRENEURIAL BUT
GET SOME DISCIPLINE
Identify the entrepreneurs – typically
they account for only a tenth of any man-
agement group – and help them to do
what they do best. Andrew Newland, chief
executive of ANGLE, a company that sets
up technology businesses by commer-
cialising intellectual property discovered
by researchers in universities and else-
where, uses ANGLE to provide a central
system that organises human resources,
payroll and other administrative roles,
and allows the teams in the businesses
to concentrate on “the key development
actions for the business”. That way the
entrepreneurial spirit is protected from
bureaucracy, he says.
2. PROMOTE
COMMUNICATION
It’s all very well an entrepreneur being
creative and flexible, but if he or she can-
not communicate this to the staff, the
business will suffer. When businesses
start to get bigger it is harder for the
managers to communicate with col-
leagues. Entrepreneurs talk of the crit-
ical point when they no longer know the
names of everybody in the business or
when the managers no longer all fit in
the same room. The result is that it can
be difficult to maintain the focus that
was responsible for the company’s ini-
tial success. In an effort to encourage
this sort of communication, many cre-
ative businesses have in-house coffee
bars and lounging areas, in the hope that
people will chat and trade ideas.
3. MAKE PROPER USE
OF TECHNOLOGY
The internet has made it much easier
for start-up businesses to reach their
market. On the internet, everybody is
the same size. This is not strictly true
because it is often still possible to get
some idea of a company’s size from its
website, but it is correct in the sense
that the internet enables small busi-
nesses to obtain the sort of national and
global reach that would have been im-
possible just a few years ago.
A4 PAGE PG19
4. MAKE SURE THAT
TECHNOLOGY GROWS
WITH THE BUSINESS
The sort of computing power that was once
only affordable to the largest companies
is now available to smaller businesses. Until
recently, smaller companies were largely
served in this area by other small busi-
nesses that took the technology offered by
the largest providers and scaled it down.
Now, the largest providers are targeting
the growing business market. Generally
small businesses are wary of spending too
much on information technology. This can
lead to them adopting limited solutions
that can actually impede the growth of the
business. For example, a business may in-
stall a payroll system because it wants to
deal with the complications of tax. But if
it later wants to introduce a system for
handling employee benefits it may find that
it has trouble linking the two. Taking a
modular approach, so that it adds differ-
ent aspects of the same system as it needs
them, could be a better approach.
5. MANAGE CUSTOMERS
– AND SYSTEMS
One of the clearest examples of needing
to take a more holistic approach to tech-
nology is customer relationship manage-
ment (CRM). Recently, many businesses
have invested in CRM systems without
getting any real benefit. This is because
the systems might be effective at giving
sales teams information about customers,
but they do not always link that data to the
rest of the business. Consequently, the
marketing department might have one
set of data and the production another set,
with the result that there is no real con-
nection between supply and demand. The
trick is to be able to obtain all the data
through one system or different systems
that are linked by technology known as
“middleware”, so that managers have a
timely and accurate picture of what is hap-
pening in the business.
6. GET PROPER PROTECTION
Businesses need to realise that, in an in-
creasingly sophisticated world, just hav-
ing firewalls and anti-virus software is
not enough. When investing in technol-
ogy they need to look just as closely at
the security aspects as the benefits. They
need to think of threats from within as
much as those from outside the business.
7. BE SMARTABOUT MONEY
Another factor that has levelled the play-
ing field between small businesses and
larger ones is access to capital. Competi-
tion from new entrants has led high street
banks to re-examine their attitudes to
small businesses, while the establishment
businessfirst 19
of specialist funds and the arrivals of a breed
of investor prepared to take a chance on
start-ups has meant that finance is more
available than it used to be. The issue now
is for those running small and growing busi-
nesses to decide which sort of approach
they want to take to funding their business
dreams. On a basic level, they can decide
between debt, whereby they typically bor-
row from the bank, and equity, whereby
they give away a stake in the business in re-
turn for an investment in the business.
8. FOCUS ON STRENGTHS AND
OUTSOURCE THE REST
One of the great benefits of being a small
business is that the proprietor can con-
centrate on a small niche in the market and
seek to gain an advantage over larger ri-
vals by offering superior customer service
or a very specialist product or service. The
problems start to come as the business
starts to get bigger and the proprietor be-
comes distracted by the more bureaucratic
aspects of being in business. Many en-
trepreneurs deal with this by appointing
a management team to run the business
leaving them free to deal with key cus-
tomers and win new business – in other
words to focus on what got the business
going in the first place. This is effectively
outsourcing the running of the business
to an internal team. Thanks to the inter-
net, small businesses can outsource to
somebody who is likely to be much better
at it than they are. Though they should be
aware of outsourcing something that is
central to what they do, this can be both
cost-effective and successful in keeping
management focused.
9.KEEPUPTO DATE ON REGULATION
Small businesses habitually complain about
the amount of regulation with which they
have to deal, particularly in relation to health
and safety, and employment. Again, thanks
to the internet, much of the worry can be
eliminated by handing over responsibility
to specialist providers.
10. HAVE A“TOLERANCE
FOR AMBIGUITY”
In the end, entrepreneurs thrive by living
on their wits. “A tolerance for ambiguity”
is a phrase that Doug Richard, the serial
entrepreneur behind the investment re-
search company Library House, uses to de-
scribe a readiness to live in a chaotic world.
It involves having a general plan about where
the business wants to go but being prepared
to seize opportunities as they arise.
This attitude, allied with an ability to act
quickly and a readiness to work harder than
the competition, is probably what distin-
guishes the successful entrepreneur from
the person with a good idea.
BLACK CYAN MAGENTA YELLOW
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A4 PAGE PG20 BLACK CYAN MAGENTA YELLOW