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Advisory Insights – Does Your Business Need a Programmer?

We are seeing a trend in our Advisory Services client base toward companies employing programmers to develop customized software applications.  It is not new for businesses to develop customer-facing e-commerce websites and smartphone applications, but the more recent trend is for small- and mid-sized business to hire in-house employees to develop highly customized internal use applications to drive efficiency and reduce costs.

By using in-house resources, businesses can budget for the annual cost of salary and benefits of the programmer and can maintain full control over the pace and scope of the project.  Another benefit is the ability to deal with the inevitable scope changes, rework, and software bugs at a predictable, fixed cost.   The downsides of using in-house programmer(s) are the limitations of the employee’s skill-sets, experiences, speed, and creativity.

Here are 5 questions to help determine if hiring programming expertise (in-house or not) would drive your business to better results:

Is field labor a significant portion of our cost structure?  Many business models require employees to be in the field, performing on-site installation and/or maintenance.  The true cost of these services is well beyond the wages and benefits paid to the field service staff.  Typically, costs include specialized training, vehicles, insurance, supervision, recruiting, and high tech tools.  Furthermore, the available labor force willing and qualified to do this work is shrinking.  As a result, companies are deconstructing and analyzing the tasks performed in the field to discover which tasks could be automated or simplified with appropriate software tools.

As an example, one business was required to take pictures of the equipment they install at remote customer locations.  The company developed a smartphone app that guided the field technician through the process, with descriptive prompts of each picture to be taken and the proper orientation of the picture.   By using the customized application, the business ensured that the technician did not have to remember which pictures to take, no time was expended on unneeded photos, and the technician never had to return to the site because of missed photos.

Is properly managing a unique set of data key to success in my business?  In today’s competitive world, many businesses are creating differentiated product and service offerings in order to stand out in the market.  Alternatively, success in one line of business often leads to developing offerings in related products or services which can be sold to the same customers.   As a result of these trends, businesses find that off-the-shelf software platforms do not fully meet their needs.  By developing a custom application to manage the business’ operations, companies can effectively manage the unique needs of their business and extend their competitive advantages.  Examples might include:

  • A business which starts as a structured cabling contractor may expand to a similar service such as electrical contracting which requires tracking of different environmental conditions
  • A business which sells equipment might also offer maintenance services on not only that equipment, but also on equipment sold by others;
  • A business with complex customer relationships and whose purchasing decisions are made or influenced at a corporate level may benefit from a custom application that handles the additional challenges of invoicing which is sent to a local office or franchisee, and products and services which are delivered to yet a different location.

In each case, these businesses’ models may not fit into standard software solutions or even solutions developed specifically for their industry.  A customized application could drive efficiency and competitive advantage into their business.

Are we relying on spreadsheets to prepare quotations for our products and services? Most accounting and ERP software applications have quoting tools which are integrated with the sales order functionality, but in our experience most companies resort to the flexibility of a spreadsheet to prepare quotes.  Often unknowingly, they do so at great risk. Research indicates that close to 90% of spreadsheets have errors, with about 50% of the spreadsheets containing material errors.  If your business relies on detailed and customized calculations to prepare quotes for new business, you should consider creating an application dedicated to this effort.  Doing so will create a highly customized, standardized, and mathematically sound approach to preparing and analyzing quotations.  With some additional forethought and coding, you can integrate seamlessly with your ERP system to quickly turn quotes into orders.

Is our business model reliant on data received from third parties?  In the E-Commerce world, many businesses receive all of their sales transaction and customer data from third party sources such as web-based shopping cart systems.  While many ERP and accounting systems have some ability to integrate this information into production systems, they often lack the functionality needed to make the business perform at peak efficiency.  Some businesses have elected to create applications to capture the data from third party sales systems and to create tight integration into sales order, production, shipping, and installation processes to make their businesses scalable and efficient.

Would development of a customized, single function application drive higher customer satisfaction or improved quality of life for employees?   Some companies have earned supersized returns on the development of a narrowly focused application that does one thing very well.  Sometimes fixing one specific problem in an elegant and powerful way can wow your customers or fix a nagging, time-consuming task loathed by your employees.  Examples of the latter often include tools to quickly close-out service tickets, record time worked on a project in the field, or automate allocations of expenses across companies, divisions, or departments.

The potential uses for internally developed applications for your business are endless.  Innovation leaders counsel new entrants to experiment with smaller projects performed by third party contractors before committing to an internal resource and the necessary tools to properly equip them.  After working through the development of a couple of tools, you should have a good feel for the challenges and internal time required to join the ranks of the digital innovators.