ANALYSIS
Systems Are More Important Than Software

For an IT person running his own business supplying customer relationship management (CRM) software to large companies, it's been an interesting experience to discover that "systems" is not a word that applies only to software. The emphasis on systems and process always sounded like consultant-speak to me; but my observations of clients, as well as experience in my own company, have convinced me that the most successful businesses are built on excellent systems.

A good system doesn't have to be software-based (although software often helps). It's often as simple as a manual that explains to every employee exactly what to do, when and how -- provided the manual also includes ways to measure performance and make people accountable for it.

The Systems Are the Company

In essence, a company's systems, its way of doing things, are what really make it unique. They answer fundamental questions like "what really makes our business succeed?" The best systems are driven by the business's leaders, with the thorough involvement, understanding and support of everyone else in the business. They are a form of collective intelligence, evolving as the group learns and feeds its experience back in.

Here's an example of why systems are important. In the CRM space we've seen plenty of software implementations that have gone wrong. In most cases two factors stand out: Hardly anyone actually uses the software, and senior managers seem scarcely aware that it exists.

We've come to realize that what really underlies this is a failure of organizational systems. If there's already a clear system in place that is driven by senior managers and defines exactly how you deal with your customers, then good software slots right in and helps the whole thing run better. But if there isn't a system to start with, then no software in the world can replace it. We've seen too many companies try to fix organizational problems with one software implementation after another, wasting millions on IT systems when what they should be concentrating on is organizational systems.

It's in the Book

It's hard to overstate the importance of this: every long-term successful business we've dealt with can take us straight to their operations manual and show us how they do things. The manual is a living document, regularly updated with new learnings and the foundation of induction training for all new employees.

It's not rocket science -- in fact, the simpler company systems are, the better. The scary thing is how few businesses have these systems, communicate them well to their staff and measure their performance. It's the easiest way to eliminate inefficiency.

At one leading professional services firm, we saw our CRM software used as an integral part of a carefully planned sales and marketing system that resulted in real revenue growth for the firm. There was nothing magical about this success: The company designed a system to achieve what it wanted, communicated it clearly to everyone, and then measured its performance. Data from the CRM software was examined at board meetings to see how many leads were being created and what progress was being made. There was never any discussion of "how do we get people to use the CRM system?" because using it was part of their jobs.

Eating the Dog Food

Applying these insights from leading firms has helped my own, much smaller company perform better as well. We've always used the CRM software that we sell and diligently logged all our contacts, but it never really helped us grow until we sat down and worked out how to use it better. Now we have a clear system for following up cases, measuring our performance against SLAs and incorporating new learnings. We're still capturing the same data, but now it has a purpose and meaning that has transformed our work.

We didn't, incidentally, hire consultants to do this for us. An army of consultants can document and analyze your business processes forever -- but in the end, only you know your business and only you can design the systems that will make it fly.

In all this, software is a valuable enabler -- but never a substitute. It's a strange thing to say for someone who makes his living selling software, but we will welcome the day clients only call to implement systems for them, not design them.