We all know that businesses need to accomplish many tasks each day for their companies to function. And they need to complete those tasks efficiently, smoothly, and quickly to thrive. As an organization evolves, old systems might need to be replaced with new ones. In many cases, a complete overhaul of business systems might become necessary. This is because systems and technology are fluid. Just when you think you got your systems down, it might be time to update them.
As consulting professionals, we are often at the helm —spearheading the overhaul of a critical business system or set of systems. But how do we know when it's time to shake things up or make any system changes at all? We asked our TAB community to chime in.
Here are signs that your business needs a system overhaul:
#1. The best time for a system overhaul is when things are going well.
We believe that you don't want to wait until your business needs an overhaul. The best time to improve is when things are going well —you'll have more energy, more money to invest, less to worry about, more momentum, and time to research your competitors. The best time to address the health of a person, a relationship, or a business is when it is healthy so you can prevent the problems. Therefore, consider making changes while things are going well.
#2. Continually innovate to ensure positive growth.
Resting on your laurels can be costly. And here's why: Your business may be generating revenue, have a constant cash flow, and have lots of new customers. However, if the growth rate continually slows down for years, or worse still, you get pulled into negative growth, it might already be too late.
Therefore, you must constantly check your relevance as your service or product may become old and obsolete.
Nir Makovsky, The Alternative Board, Israel
#3. Watch your Leading Indicators.
Most business owners monitor historical data, and it is undoubtedly essential to do so. Comparing things like revenue, profit, expenses, and inventory against prior months, quarters, and years is a crucial business practice.
Leading indicators are equally and often more critical than historical information because this data set allows business leaders to predict the future with much greater certainty. Sales executives can predict future sales results by looking at sales rep activities like calls, contacts, conversations, conversions, and more. All of these sales activities precede growth. Without the activity, the results will not follow, mandating swift action.
Another crucial leading indicator is stakeholder satisfaction. If the satisfaction scores of your customers, employees, investors, and partners are trending upward, the future looks bright. If not, you better make adjustments quickly. This is a sure sign that your system needs an overhaul.
Owner of The Alternative Board, Austin
#4. Watch out for poor system performance in all areas.
All businesses have a collection of systems, some more important than others: CRM, Sales, Fulfillment/Ops, Design/Engineering, Bookkeeping, Accounting, HR, Finance, etc.
Business leaders may look at one system or the entire collection and say: "Well, they still work fine, so why should I consider changes?" So, the real question is: "Do they really still work fine?"
Still working and still working fine are two very different things. How do you know which are (just) working and which are working fine?
Just as you use KPIs to determine the performance level of employees, every system should have a KPI as well. This is some measure of the effectiveness or performance of the system. Just like employee KPIs, the measure might be obvious, or not; it might be readily available, or not; it might be easily quantified, or not. Regardless, with a bit of thought and effort, you can and will find an appropriate measure for each system's performance.
With an appropriate measure in hand, you can now determine the system's performance. The performance of particular systems degrades over time as the environment around them changes —the inputs, the volume of data and calculations, the output required, etc. Other systems may perform precisely as they did on day one, while new systems now perform much faster and better, offering entirely new capabilities (new benchmarks).
What's important here is knowing what your current systems are doing for you versus what upgrades or entirely new systems could be doing for you and at what cost. In most cases, the decision becomes evident at this point, and it is worth the effort to measure your systems correctly!
Owner, The Alternative Board, North Texas
#5. 4 Strong Indications
Sound business systems are about driving efficiency, holding people accountable, and enabling transparency across the enterprise. They're about ensuring the right people have the correct information at the right time with the proper motivations to take action.
As businesses grow and organizations evolve, problems can occur if systems are left unchecked. The following are reasonable indications that it's time to take a serious look at these systems:
- Company strategy isn't driving everyday decisions.
- Approvals are continually causing delays.
- Internal meetings take priority over the customer's schedule.
- Something goes wrong, and no one knows why.
President, The Alternative Board, Mid New Jersey