Rapid growth of technology is swiftly influencing operational processes of SMEs in the UAE 

TECH SAVVY: Raju Ramesh, Finesse Co-Founder and CEO.

TECH SAVVY: Raju Ramesh, Finesse Co-Founder and CEO.

A GRADUAL SHIFT in the thinking process of management teams at small and medium business has been taking shape in the recent past, thanks to the rapid growth of technology. One factor in particular that has guided this shift has primarily come due to the success of Apple as a mobile device, whether as a Phone or a Tablet.

Most business owners possess one of them and in many cases both of them. What this has done is to make them understand that the Internet and the Cloud is something to which they can extend technology solutions for their businesses.

Their private and personal data and documents are already now on Apple’s cloud and they have access to it irrespective of whether they are using a phone, iPad, or a computer at any time.

Efficiency at low cost

The second factor that’s influencing the shift has been the lessons learnt from the recession. Business owners now understand the benefits of productivity and efficiency at a low fixed cost. The third aspect is due to the fact that most entrepreneurs are now dealing with higher volumes of information than they did a couple of years ago.

A combination of these factors is starting to make organisations to rethink about the gains that could be realised as a result of embracing a ‘Business Process Outsourcing’ route. Suddenly it is not just about an outsource provider coming in to do the accounting grind, but entrepreneurs are seeking ways of how they can get more out of the entire outsourcing process, including increased process efficiency, better management control as well as a safety net for legal and regulatory compliance, where applicable.

It is safe to predict that the shift in how services are provided will happen faster at the level of small and medium-sized business models. This is because larger enterprises face issues of security, compliance and most often sheer bureaucracy that they have to confront to accomplish the same efficiency level.

CAPEX investments

The change in thinking process poses a few challenges for providers of traditional accounting services at these businesses. Suddenly they find themselves providing only one part of a multi-part solution. The entry barrier for a pure play technology player to come in and offer a composite solution is very low.

Even though the available option may not be the ideal solution, what will happen is that the customer is lost by the current provider. In the customer’s opinion the available combined option is something that is at least a couple of points better than what he was getting before.

So what are we talking about here?

Most small businesses have not made great CAPEX investments in software applications yet. Even if they have, they have addressed the problem partially.

There are quite a few companies offering services like invoicing, payroll, accounting, manufacturing and fleet or asset tracking at a few dollars a month. These providers are able to provide value because the infrastructure they use is common across multiple customers. This is called multi-tenanting in technology language.

It translates to operating expenditure as almost all of these providers have their own servers and data centres along with ongoing management and support services all of which is part of a monthly fee. The efficiency gain element looks well within reach for these companies.

New flexibility

The accounting service providers have not seen the real dimension of the threat yet. That threat is going to come from nimble service companies that are starting to provide these applications alongside accounting and advisory services combined with all of the above.

Suddenly customers can opt to see a management dashboard on their mobile phone or tablet, get notifications to manage any event or take advantage of new flexibility they never enjoyed in the past unless they invested in technology CAPEX.

So what is the starting point for someone who would like to go down this route? It is important to first define what the core and non-core tasks are that a business needs to perform. The easiest way to define a core task is to formulate a simple question. For instance ‘is it important to my customer that I do this or can I outsource it?’ If the answer is positive, then obviously this activity needs to be retained and not outsourced.

This way your attention is focussed on keeping your customer happy. Now you know what can be given to a technology or a service provider. The benefits of Finance & Accounting BPO’s have evolved substantially over the past two decades. The focus initially in the emerging days was more on costs.

Today’s BPO providers can add strategic value to an organization by providing actionable insights or intelligence. This is a result of the tools being used in the process going through considerable maturity over a period of time. So by taking this route there are some objectives that one must look to attain.

Reducing investments risks

Firstly, this should result in increasing the strength of your company. This can come from your ability to now focus better on the customer or from the expertise built and accumulated by the provider.

Secondly you must be able to reduce projected capital costs and therefore as a result, reduce investment risks. Thirdly it should increase access to state-of-the-art technology to make significant efficiency improvement.

Lastly, service levels to your customer must improve and they must be able to perceive this improvement. From a vendor selection perspective they need to bring understanding of your business, metrics for performance measurement and most importantly, the ability to adapt as your business undergoes changes.

Some of the benefits to the customer also come with providing a model where the business process is embedded with appropriate metrics. What this means is that they need help to define exceptions. If we can manage to separate the routine from an exception it is always possible to provide a technology solution to deal with the routine.

The goal then becomes how much more can be put in a basket called ‘routine’ and how much less can be put in the basket called ‘exception’. Basically this boils down to a review of both their processes and information and defining what should happen when, in what order, and what the red lines are.

Once this is in place the ability to set up exception rules will start to emerge and providing information on the go for decision making becomes all the more meaningful.

This is where I believe the existing lot of service providers can not only add tremendous value but also embed themselves in the customer’s DNA, and of course, they need to partner with a strong technology provider as well.