Home Blog Increasing Your Company’s Value with a Cloud ERP Solution

Increasing Your Company’s Value with a Cloud ERP Solution

Geoff Ashley | November 9, 2021

Can a cloud ERP solution actually add to the value of your company? Yes, it can, and Acumatica’s Geoff Ashley explains how.

Success in business is not hard. Anyone can succeed—even in a pandemic. Success is not hard, but it is DELIBERATE.

There are a finite number of things that we need to do to be successful. Most of us, if pressed, could probably come up with ten things we really need to do—this week—to be successful. And then when we look back at our week, we find that we still have ten things we need to do. Being deliberate means doing the things you absolutely must do to succeed.

One of those things is utilizing a cloud ERP business solution. A cloud-based ERP solution gives you the information you need to engage in the initiatives, programs, and activities necessary to succeed, survive, or thrive.

Increasing company value with a cloud ERP solution

COVID-19 is a great example of “success is not hard”. Think about the manufacturer in New Hampshire that was shut down and going out of business. They quickly retooled their entire shop floor and began producing PPE equipment. In just a few months, they were one of the largest producers in the industry. But it was not just retooling their machines. They had to source new raw materials at a time when the supply chain was decimated. They had to establish routes to market. They had to retrain a work force.

Fortunately, their business management solution was “business resilient”.

It was able to give them the information they needed, track the progress they were making, predict and forecast, budget and report…all the things they needed to have visibility into in order to create a completely new strategy.

Their company valuation went through the roof. If you’re thinking about selling your company, you must think about what the value of your company is. You must also think about what the value of your company is – without you in it.

Potential buyers will want to know how much of your success is repeatable (deliberate). If you leave, can the company continue to be as successful as it was? Do you have your processes well defined? How do you prove it?

Your cloud ERP software is the proof. Your ERP solution can demonstrate that the company, the processes, the systems, have delivered value over time. You can show historical progress and demonstrate future outcomes. Your business management solution will demonstrate trends. You can prove that you have sustainability. It clearly reports on profitability. Your business management solution even demonstrates discipline. You set a budget and you exceed it. You track inventory successfully. You track profitability—by customer, by inventory item, by vendor and by department.

And as recent history has proven, your ERP solution can also demonstrate that your company is “future proof”. As more and more companies move into the cloud, organizations with software-as-a-service (SaaS) ERP solutions are able to remain up and running through floods, hurricanes, fires, tornados, and global pandemics.

As a potential buyer, if I can see that the company can survive without you in it, I can offer more for a predictable result. Above all else, your business management solution can give you perspective.

The power of perspective

Perspective is critical as it can dramatically reset your entire view of your business and even your definition of success.

How is that possible?

Let’s say you have set a goal of 10% growth in revenue year-over-year. And at the end of the year, you determine that your company has grown by 12%. Time for a celebration, right? What if someone were to tell you that companies in your industry are growing, on average, by 20% year-over-year. All of a sudden you see you are in the bottom quartile in your industry. This will significantly impact the valuation of your company.

Figure 1: Gaining a Perspective of Your Company

Perspective is gained in many ways. One way is by ensuring you have access to data about your industry.

Many associations publish industry survey data that clearly states what the key performance indicators (KPI’s) for the industry are. KPI’s are essential if you want to run a highly profitable and successful company. KPI’s are specific to an industry.

For example, you might want to track revenue growth, net profit margin, gross profit margin, days sales outstanding, number of customers gained (or retained), inventory turns, etc. The list can be very long, which is why you must have a system that can track them.

To successfully track KPI’s, you also must understand what needs to be tracked for each KPI. You need to set targets (outcomes), you need to track current results against desired outcomes, you need to understand what to do with the results you obtain, and you need to be able to view the status of each of your KPI’s at any time. But most important of all, you need this information delivered to the people responsible for the results.

Every employee should have their own set of dashboards that reflect their role. KPI’s can keep employees focused on the things most important to them. Instead of a strategic dashboard like the one above, a salesperson wants to only see the information that she needs to do her job and earn her commission.

Figure 2: Example of a Salesperson Perspective

Having an appropriate perspective, and then managing to that expectation, is the key to the first two points in this article. If you want to be deliberate in your success, and if you want the company to survive without you in it, you need to manage to an appropriate perspective—and then hold people accountable.

The level closest to the customer

I delivered a workshop to 300 distribution and manufacturing key executives. One of the exercises was to determine the single most important focus of every company. In other words, what one thing has the biggest impact on your success? Trying to get 300 business leaders to agree on anything was a daunting task, but we eventually came up with that one thing:

Push decision-making to the level closest to the customer.

It was an “aha” moment for most in the room.

The pandemic has made this business imperative even more important because almost overnight, businesses had to deal with a very distributed workforce, including people working from their dining room table while trying to home school their children and keeping the dogs from barking during a phone call with a client.

Regardless of the circumstances, your employees must be able to provide customers, prospective customers, vendors, other employees and every other stakeholder, reliable, accurate and timely information. They have to have access to the data to make informed decisions. The data must be accurate and timely, or the customer will go somewhere else.

In fact, if your customers or prospective customers do not receive a stellar experience when dealing with your company, they can find another alternative in six (6) seconds or less. This is the reality of our new business paradigm. Delivering a stellar experience each and every time is essential. Giving your people the tools they need, the data they need, and the access they require may be the most important foundation you can provide. This above all else is the prerequisite for a connected business. Without the foundation, the value of your business decreases and the amount of investment someone is willing to make also decreases.

But let’s get back to that “single most important thing”. What is the level closest to the customer? The level closest to the customer is…the customer!

If you understand and accept that your customers will easily find an alternative, then you can quickly see that your customers desire (and require) customer self-service.

What kind of self-service experience are you giving your customers today?

The way customers buy has changed

Customers and prospective customers today require the ability to self-serve. They want access to your company 24×7, they need accurate information, and they require the ability to gain access to your systems on the device of their choosing. It is that simple.

Your business management solution needs to allow customers access to their account. They need to be able to check their A/R status. Pay a bill. Question a charge. They need to research the items they may wish to purchase or the service they need to receive. They want videos. They want content. They want to see what others are saying about you and your products.

IDC reported in January of 2021 that up to 70% of a purchasing decision is made BEFORE the customer or prospect ever speaks with a human. If so, then a lack of customer/prospect self-service capabilities means you’re losing customers before you even know they are considering buying from you.

What kind of experience are you offering your customers and prospects? It is a key question, and your answer significantly impacts your ability to grow your company over time. Which in turn significantly impacts the value of your company today.

Business in the cloud

Everyone has heard of the cloud at this point, but it is essential that your business management solution takes advantage of all that this represents. The world is changing too quickly to be left behind on a legacy solution that cannot deliver all that your stakeholders, in their many forms, require.

During Acumatica Summit 2021, we announced that we provided a 99.996% uptime to our customers in 2020. We had zero successful cyber-attacks. We had two successful product updates. This is all possible because of the cloud, and it is simply not possible any other way. Not operating in the cloud is not an option. The failure to move to the cloud has significant impact on the perceived value of a company.

Your customers view you as not being competitive, your competitors use this against you, and your investors, stockholders or key stakeholders will evaluate or re-evaluate their continued investments as a result of your vulnerability. COVID-19 was a wake-up call to the world. Companies that were (are) on cloud-based business management solutions weathered the storm much better than those that were not.

Your business management solution must be able to connect to your people no matter where they are as well as to other businesses or other sources of data. Your business solution must also be available 24×7 and easy to use. Your customers expect it.

It is that simple.

Future-proof businesses for success

There is so much more we could discuss regarding the need for visibility into your business. The need for an appropriate perspective. The need to empower your people. The need for remote collaboration, business resilience, and being connected to the world. But most importantly, the need to deliver a stellar experience to your customers.

The pandemic did not cause any of the issues we face today. All of them were occurring already. COVID-19 just accelerated the need to deal with all of these issues. According to McKinsey, COVID has accelerated the digital transformation requirements for business by seven years or more. The way customers consume our products and services has changed dramatically. And it is not likely to ever go back to the way it was. Expectations have changed and companies are now expected to provide a new and increasingly hands-off experience.

But we still need to find customers. We still need to manage sales cycles. We still need to differentiate our company from the competition. We still need to obtain raw materials or inventory. We still need to deliver customer service (in some form).

The pandemic taught us something that is now being taught in business schools around the world: Business owners and executives can’t use the “I didn’t see that one coming” excuse anymore.

We now have to expect the unexpected. We now have to anticipate global pandemics, natural disasters, and more. That is the point. We need to create “future proof” businesses. This is what potential investors want to see, this is what customers demand, and this is what employees need in order to stay with your company.

Success is not hard… but it is deliberate!

Contact our Acumatica experts today, and they’ll answer your questions about how Acumatica’s cloud-based ERP solution can help you become deliberately successful.

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Former Vice President, Partner Strategy & Programs at Acumatica
Categories: Costs & Benefits

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