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While businesses are increasingly embracing digital tools to manage their core processes, many are facing a dose of subscription overload and poor software integration, resulting in some tools delivering low return on investment, writes MYOB’s Daniel West.
Every business’s path towards digital enablement is unique – but it’s increasingly becoming more complex.
Still, digitisation is foundational for the success of companies of all sizes and industry categories, from freelancers and those working in the gig economy to startups, growing businesses and right up to large, corporate enterprises.
Today, nearly every worker relies on digital products and services to get their job done.
In fact, research shows small and medium businesses (SMEs) with advanced levels of digitisation are 50 percent more likely to grow revenue, eight times more likely to create jobs and seven times more likely to scale.
At MYOB, we’re interested in the benefits of digitisation for businesses, and we believe these benefits play out across the economy at large.
For instance, modelling forecasts a potential AU$10.5 billion windfall is available to the Australian economy, and in New Zealand an economic contribution of as much as NZ$46.6 billion, should SMEs embrace greater use of digital technologies.
However, in this race towards digitisation, we have identified a consequential problem. Businesses have invested in software believing it would help them better run their operations, however in many instances the reality has not lived up to the promise.
In short, businesses that have embraced digital tools are experiencing digital connectivity issues in a variety of different ways, leading to productivity loss and higher costs.
Whether it’s the local plumber, a taxi driver or a sprawling retail franchise, all of them may have acquired software or subscribed to apps that help them track, manage and get paid for the good work they do.
But, in many instances – whether it’s due to underutilisation, not having the right capabilities in their workforce, or because they’ve subscribed to too many disparate solutions – ‘bad digitisation’ is becoming more apparent in our offices, shopfronts, websites and worksites.
Simply put, bad digitisation is how we describe a lack of integration between digital business tools and systems that don’t talk to each other or work in unison.
Articulating this problem is our first meaningful step towards addressing it.
To better understand the reality of the situation, we spoke to over 2,000 SMEs across Australia and New Zealand about the issues around bad digitisation and some challenges they face as a result.
We found many business operators across Australia and New Zealand are dealing with the impacts of bad digitisation in their organisations, and we’ve compiled these findings in our report, The Digital Disconnection Challenge.
We now have a sense of scale for the issues resulting from disconnection and we can see how it is impacting businesses in three main areas.
Disconnection leads to productivity drain, with businesses wasting valuable time duplicating tasks, or manually entering data or fixing errors after transferring information between systems.
Sandra, a finance manager from Melbourne told us, “The tools don’t really talk to each other.”
“The software the team uses for their timecards doesn’t see eye to eye with our payroll system, so we have to dump timecard information into spreadsheets and then manually enter them into the other system.”
From our research we know on average SMEs are wasting a day a week (seven hours) on jobs and additional administration relating to disconnected digital experiences.
Disconnection is also a strategic risk, as it results in limited visibility across the business, meaning decisions are made without a clear picture of the business’ current finances and future potential.
The research shows that as many as eight in 10 New Zealand businesses and seven in 10 Australian businesses are making decisions without full visibility to guide them.
“On a daily basis we use more than five digital tools across our business for functions like marketing, billing, invoicing, fulfillment and so on,” said Christie, a general manager also based in Melbourne.
“Currently, these tools don’t talk to each other, so we have to manually pull all the sources from each of the platforms into one spreadsheet for consolidation in order to do any data analysis.”
Thirdly, poor integration can blow out costs, such as paying invoices for jobs that didn’t happen or paying employees the wrong amount based on inaccurate hourly data.
“There are a couple of different issues that come up with disconnection,” said Aaron, implementation manager in Brisbane. “None of the systems we use really connect with each other, so there’s a lot of double handling to get information from one to another.
“Not only double handling – sometimes that delay can cause mistakes.
“For example, an item might get cancelled in one system but doesn’t show up in the other system straightaway, so then a supplier bill might come in, and the purchase order seems to be valid, so we enter the bill and pay it.”
Add to this the money wasted in underutilisation – to the tune of around $1.77 billion – as a result of businesses using just a portion of features across multiple software subscriptions, or paying but not using the services, and you’ll agree systems that ‘don’t talk to one another’ are posing a significant cost to businesses.