Analysis: Lessons From Midsize Companies - ' page 3'
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for statistics on small and medium size businesses.
So far, the project has met the benchmarks. It was completed in six months, as scheduled, and 50 percent of dealer orders were placed through SonaLinQ in its first week of operation. Collection of accounts receivable has sped up and many distributors are downloading marketing materials from the extranet, cutting in half the number of calls Sonance customer service reps must handle. As a result, Brown has canceled plans to hire more people, a significant cost savings. And the system lets Sonance keep track of dealer-ordering patterns more precisely and, thus, better anticipate purchases and ship most products within 24 hours. All told, Sonance expects $9.4 million in increased sales and cost savings over five years from SonaLinQ, including about $6 million in revenue from new dealers and distribution channels—much of it business its rivals could have won. Most important, says Brown, SonaLinQ goes well beyond what its closest competitors have to offer.
"When you're a small or midsize company, your first line of defense is your only line of defense," says Brown. "That's what SonaLinQ represents. Customers remember when they can't reach a company for two or three hours, and that bad taste never goes away. Customers may not always outwardly express appreciation for great service, but they're turned off by bad service. Hopefully, that's in our past."
Perhaps the most impressive part about many of the newer implementations at smaller companies is how few of them end up over budget and behind schedule. Small and midsize businesses have little margin for error and tend to be extremely demanding about keeping projects on course. For one thing, they usually phase in technology one small step at a time, measuring it at predetermined intervals to see whether it meets certain organizational integration or financial performance requirements. To match this painstaking approach, many hardware and software providers targeting small and midsize businesses are offering accommodations that vendors have been hesitant to suggest in the past—including fixed-price bids, implementation guarantees as short as 90 days, and assurances of return on investment.
Smaller businesses "can't afford to do a Big Bang project because of the risk associated with it," says Jim Upton, senior manager at J.D. Edwards' Enterprise Asset Management group, now part of PeopleSoft. "So we have to do everything we can to give them a comfort level that the project won't get out of control."
Some of the more unique guarantees are coming from outsourcers—an option that is slowly attracting small and midsize companies, which have very limited IT staffs and difficulty supporting in-house technology. For a long time, small and midsize businesses viewed outsourcing as too grandiose an idea for their minimal use of computers, perhaps 60 to a couple hundred desktops. But with technology playing an increasingly important role in determining their future, top management has begun to reconsider outsourcing as a way to maintain both the basics of in-house computing, such as e-mail, security and simple programs such as office suites and presentation software, and new, necessary corporate strategic applications.
Outsourcers have responded to this shifting landscape by offering no-lose deals that many small and midsize companies can't refuse. Customers of LuxScientiae Inc., a Boston-based e-mail and network server outsourcing company, are promised a refund of 5 percent of the monthly fee if its network's downtime exceeds 24 seconds per month. RightNow Technologies Inc., a Bozeman, Mont., builder and host of CRM applications for small and midsize businesses, lets potential customers try out live before signing an outsourcing contract. Perhaps the most radical deal is offered by CenterBeam Inc., a San Jose, Calif.-based outsourcer that targets companies with up to 2,500 employees. Instead of long-term contracts for managing a client's technology infrastructure, CenterBeam offers month-to-month service agreements—in the simplest cases, costing about $50 per month for each desktop—that can be canceled with 30 days' notice.
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