Enhancing Productivity: Is Technology the Answer?
Source: Ric Payne's Blog
The following includes excerpts, reproduced with permission, from a blog entry by Ric Payne. In it, Payne challenges the idea that software designed to save accountants nearly three hours of work on a traditional accounting task would lead to a proportional increase of 3x more clients and 3x more revenue. Following are highlights of Payne's response to this idea:
There are three flaws in this proposition. One is systemic, another is competitive reality, and the final one concerns its profit impact.
- At the end of the day every business consists of a series of chained processes, and when the productivity of one process is improved it will only lead to an improvement in productivity if that process is currently a constraint or bottleneck.
- Supposing the solution really does lead to a demonstrable improvement in productivity, with the result that the firm does free up capacity and does race out and look for more clients, the competitive reality in this industry is that it will be a price-led marketing and sales strategy.
- Sales people (and too many firm managers) are preoccupied with revenue growth. It's the bottom line that counts at the end of the day. My research shows conclusively that the vast majority of firms are lucky if they're breaking even on at least 50 percent of their clients, and typically between 15 and 20 percent are contributing a net loss.
All potential productivity-enhancing technologies should be carefully evaluated and for the most part implemented. But real gains are made when you adopt an evaluation mindset that starts with the following question: How can we use this technology to create, and deliver, an enhanced value offering for the type of clients we want to grow with?
For the complete article, read “Why technology is not necessarily the answer.”
From Ric Payne's Blog, November 29, 2014, theconsultingaccountant.com.