Software application development: Maximising ROI for SMEs

26th January 2011

Investments in bespoke software application development can achieve significant return on investment for small and medium enterprises – despite the perceived high up-front costs.

SMEs have historically shied away from investing in bespoke software application development due to the associated costs, which many felt would put a severe strain on their resources. That, coupled with the perceived complexity of implementing a new system, led many SMEs to question the ROI these investments would yield.

Yet in recent years, we’ve seen the picture changing, with more and more SMEs taking the plunge and seeing their businesses transformed as a result.

Why should SMEs invest in bespoke software application development?

SME owners should always be concentrating on growing their business, which is often difficult in practice. Dealing with daily challenges tends to become the focus, often at the expense of long-term planning.

But the real issue behind the lack of investment in new software tends to simply be about resource. SMEs, unlike their larger counterparts, usually have severely restricted resources – both financial and human. Yet this is the very reason investments in software are so vital: to ensure that core business processes run as effectively as possible: business operations need to be automated, thereby increasing the efficiency of each individual member of staff.

MEs are also increasingly operating in the global market place and only by investing in bespoke software application development can they achieve the direct – and instant – interface between themselves and third parties that is vital for business success. Software empowers businesses of all sizes to compete on an equal footing in the global marketplace.

SMEs, like larger enterprises, are also governed by compliance procedures. According to Price Waterhouse Cooper’s 2009 Global Economic Crime Survey, 30% of all companies globally have experienced some form of economic crime. In South Africa, this stands at 62%. This puts further strain on SMEs’ already limited resources. The appropriate software allows businesses of all sizes to manage the duties and responsibilities of all members of staff better, building a layer of “checks” that vastly minimises employee fraud and ensures compliance with local and international regulations.

In summary then, many of the challenges facing SMEs are no different to those facing large enterprises. Efficiency and productivity are paramount to success.

How can SMEs maximise their ROI?

Choosing the right technology or business solution is a daunting task for many SMEs who have to weigh up the cost against immediate and future benefits. Inevitably, the decision is muddied by the desire to save on expenditure in the short-term, resulting in a solution that fails to serve the company’s best interests in the long run.

SAP’s business all in one solution is an example of a software package that eliminates the majority of the concerns SMEs have traditionally held around investing in ICT infrastructure. It helps companies close the gap between strategy and execution by including all the core processes needed to run an entire business. So unlike niche solutions that focus on a particular area of an SME’s operation, this system is designed to provide complete business management functions, covering financials, sales, customers, inventory, operations and more.

We have found that the reason behind its appeal is that it can be installed extremely quickly and is straightforward to maintain. It captures all the companies’ information in a single system, making the information instantly accessible across the organisation and eliminating duplicate data entry, cost and related errors. The solution is template-based, making use of global best practices, and can be localised to meet South Africa’s unique requirements. The template-based system and SAP’s renowned ASAP Focus (accellerated SAP) implementation methodology combine to significantly reduce implementation costs. Go live can be anticipated in less than six months, greatly decreasing the time consultants spend on site.

And the results speak for themselves. More than 75% of SAP South Africa’s customers are SMEs – and this percentage continues to grow.

Why investing in software works

At the end of the day it’s all about where SMEs can see the results of their investment, and how quickly they can generate ROI. Embracing technology that helps them automate their business processes will improve efficiency, productivity and significantly drive down labour costs.

According to a study by Forrester’s, over 80% of SMEs believe that application software improves their efficiency and productivity. Improving the functioning of their core business processes usually yields quick, positive results, which relate back directly to the bottom line. Typically a SAP business all in one client can now expect to recover their investment costs within 18 months or less.

Cleary, times have changed. For SMEs wanting to grow their business, investing in solid software packages is essential. But a word of warning: only if an organisation is prepared to embrace change is this going to work. Otherwise our advice would be: don’t invest until you’re ready.

Source:  EngineerIT