The most common money pitfalls are when businesses view IT and IT resources as an expense rather than an asset. It’s a broad statement, but the fact of the matter is true. Companies arguably look at the cost of developing or purchasing software, coupled with expenses of software maintenance, licensing agreements and so forth. However, the alternative often leads to failure and costly mistakes.
The most classic example that I can think of is when a business owner decides that they can manage their business using Outlook and Microsoft Excel.
A recent study came out that highlighted that 88% of Excel sheets often contain mistakes in them (MarketWatch.com). The fast pace and highly rich information world we live in today, simply overloads basic excel sheets. Software is relatively cheap (compared to human capital) and programmers can always pick up when the previous one left.
Another example that clearly illustrates the value add of back-end software is simple filing of bank, credit card and insurance statements.
Consider the options; on one hand a business can take the paper route and file all their business statements, check images in binders and store them in a file cabinet. Doing so, would require hiring a temp to manually file, plus the cost of office space, let alone managing the clutter as the years pass by.
The alternative is purchasing a software program that automatically grabs all the documents from the provider’s web site (example, bank or insurance web site) and files it for you in a secure drop box. Without a question most companies would prefer the automated software approach. So why aren’t companies doing so?
The only reason I can think of is because a business would rather pay for an upfront cost and hire someone at a higher cost rather than pay upfront for the software.
In short, if businesses want to avoid costly financial mistakes in 2014 and want to grow their business, they have to move as much of the back office operations from “manual human mode” to “automated software mode”. Yes it will take an investment to hire a software developer or purchase an off the shelf software code, but continuing to live in the “dark ages” of manual excel sheets is an option a business can no longer afford.
BP Analytics is a financial software development company based out of Los Angeles. Over the past 6 years our staff has been coding complex financial applications to help Wealth Managers and Small business owners enhance productivity and develop competitive advantage.