By: Clive Longbottom, Head of Research, Quocirca
Published: 3rd July 2009
Copyright Quocirca © 2009
We often hear about what is happening with the largest enterprises in the UK—those who are seen as making up the main part of "UK, plc". However, there are few organisations with more than 1,000 employees, and even though they do make up around one third of the UK's GDP, they are also far more distributed, with divisions, groups and even sub-companies headquartered in many different places, often to minimise the payment of taxes to the UK's coffers.
Under the level of the large organisation comes the mid-market. For the purposes of this article, we'll define this as those companies that employ between 100 and 999 people. According to the National Statistics Office, there are around 17,000 organisations that fall into this category, and again, they make up around one third of the UK's GDP. As many of these organisations will be semi-private organisations, let's call them "UK, Ltd".
Quocirca has just carried out research for IBM, looking at how the mid-market deals with its data, and how it manages core financial processes and reporting. The findings show that much could be done by the mid-market to improve effectiveness and efficiencies, and Quocirca believes that if small changes could be made on a consistent basis across a broad group of the mid-market, the UK finances would benefit from many billions of pounds in improved revenues, margins and therefore tax payments.
As a starter, the research shows that the mid-market is highly pragmatic in how it obtains technology. This should not be a surprise, but it does put paid to the perception that the mid-market is a pure Microsoft stomping ground. The vast majority of organisations have multiple different databases from different vendors, and are struggling in how best to pull these together.
More to the point when it comes to how they struggle is the fact that they tend to have high amounts of business-important data held in spreadsheets—with many of these spreadsheets stored locally to the originator on their PC. Such an approach minimises the capability for such data to be shared, and the majority of respondents felt that spreadsheet issues, combined with lack of access to all data sources, meant that they had little faith in the data being presented to them and that their decision making capability was therefore impacted.
To get around this, nearly one quarter of respondents used email as their prime means of sharing data. Not only does this lead to inefficiencies around data storage, with multiple copies of the same file being held in various in and out boxes, but it also means that no-one can be sure whether the version of the data they are looking at is the latest version or not.
Few respondents had moved to a fully automated business process model—the majority were working with large parts of their processes still be carried out in a manual, and often ad hoc, basis. Indeed, many said that their processes had not changes for a long time—something that is hard to believe when the markets have been changing so much, and that mid-sized organisations must have high degrees of flexibility to be able to respond to such changes.
Just imagine—if each mid-sized organisation could move to a full shared data model, could apply business intelligence constructs to this through being able to aggregate and report on multiple different data sources, and then to use such knowledge to measure performance against key performance indicators (KPIs) and make the small changes that are continuously needed to ensure that an organisation meets its goals.
If through better management of and reporting on data, combined with the use of reasonable performance management, the revenues of mid-market organisation could be improved by just 1% and profitability by the same amount, the impact on the 33% of the 2008 £1.41 trillion UK GDP at a performance and tax payable level could well help in bailing the whole of the UK from the current financial mess that we are in.
However, the greatest issue with the mid-market—inertia—may well be the one thing that stops this from happening. Although the research showed a reasonable understanding of the term "business intelligence", it is still seen as being too expensive and complex for use in the mid market. "Performance management" was seen as being mainly around staff appraisals, not around monitoring the financial performance of the business itself. Business processes are seen as something where money can be saved by doing everything manually—and so introducing considerable errors and the need for extra time in dealing with these.
Come on, UK Ltd! Relatively small changes can bring great rewards—not only for you as an individual, not only for your business, but also for the UK as a whole. And if anything needs help at the moment, it's the overall economy.
Quocirca's report on the research underpinning this blog item is available for free download.
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