How technology can help -- and hurt -- a growing businessSometimes it's the little things that hurt the most. Paperwork, for instance, may seem like nothing more than a minor inconvenience to most, but companies like Donnelly Mechanical have found it can be a major stumbling block for a business in hyper-growth mode. Business owners must be prepared to make major adjustments when the client list gets longer and the number of names on the payroll increases.
Donnelly, a College Point, N.Y.-based air-conditioning service and repair company, began 12 years ago with 1 truck, but now has about 75 employees and 50 trucks. Half that growth has occurred in just the last four years. With 50 drivers dividing service calls between about 300 customers at 800 different sites, invoicing became a major problem. By last year's summer rush, the overwhelming amount of paper began to cause serious billing mishaps. "One of our guys walked into the office and said, 'Hey, I just found these invoices under the seat in the truck,'" says account manager Dino Mangione. "I said, 'When are they from, this month?', and he said, 'No, April.'"
Growth Isn't Good?
It goes against conventional wisdom to view growth as a bad thing, but it can be for a business that isn't prepared. Growth should be a strategic decision. Computer systems and other technology can lead to higher productivity, but can also create new challenges. If you're not yet ready for the trouble, turn down clients, hold off on the Web site, wait a bit before hiring extra hands. If short-circuiting expansion seems like bad business, here's another option: plan ahead.
The daily struggle to satisfy customers and manage dizzying growth can put seemingly complex and esoteric technology issues on the back burner. For instance, ensuring that a big client gets his calls returned promptly usually takes precedence over making sure that the network server is backed up, but one or two days of lost productivity because of server problems can be equally devastating. At the same time, technology is not the answer to every problem, and the answer to technological problems is not always more technology.
"Technology should help support your goals and vision," says Matt Lang, vice president of business development at Baltimore, Md.-based LCG Technologies. "You don't need to have the latest and greatest. You just need something that works for you."
As Donnelly Mechanical grew, so did the complexity of its processes. Call scheduling had become chaotic, and because every technician was responsible for his or her own invoicing, sending out bills to customers had degenerated into a haphazard affair.
"It was pretty crazy," Mangione says. "Everywhere you looked, there were piles of paper. We would have 50 envelopes all coming in at the same time. In a good billing period it would take us a month to process that paperwork."
The invoicing delays began to irritate customers, many of whom needed prompt delivery of invoices for their own internal accounting purposes. "They were pushing us to get invoices out faster," Mangione says. "The whole invoicing thing held us back as we tried to grow."
To address the problem, Donnelly hired ServiceChannel, a New York City-based company whose Internet-based software enables contractors to consolidate billing on line. ServiceChannel integrated the company's billing systems into its Web-based invoicing network, which now hosts data for about 9,000 service companies. "We basically pulled out Donnelly's system and put it on the Web," explains Steve Keltz, ServiceChannel's chief evangelist. The process is ongoing, but Mangione hopes the eventual migration of all of Donnelly's billing systems to the Web will decrease the amount of company paperwork and allow customers to get their invoices faster (and as a side benefit, pay their bills to Donnelly more quickly).
Now, Donnelly can just e-mail the link to a Web-based invoice directly to the customer, who can pay directly on line and even look at the scanned image of the work order at the same time. Mangione hopes the improved billing system will help the company snag new accounts that otherwise might be lured away by competitors who offer cheaper service. "Anyone can come in and offer a lower price, but we want to make our customers' lives easier," he says. "Once we get these things completely worked out, we'll be able to move on and continue our growth."
The Electronic Deluge
Many companies see the Internet as an ideal, inexpensive way to expand the size of their clientele. But they need to make sure that their systems -- and employees -- can keep up with their ambitions. Everyone's heard stories about Web sites that caught on so fast that their owners couldn't handle the traffic (a nice problem to have, most think). But even if you don't have an e-commerce site, the Internet can be used to your advantage.
Like Donnelly Mechanical, Rurak & Associates had too much paperwork. The company was able to replace much of the paper with e-mail, but it soon found that the e-mail was just as overwhelming. The small, Washington, D.C.-based executive-search firm wanted to compete with larger recruiting companies. So all five Rurak recruiters started using e-mail to keep in touch with clients and enable mobile capabilities. But while the shift helped Rurak compete, it soon created another problem. People who once sent in resumes via snail mail started sending them electronically. Soon, Rurak recruiters' e-mail addresses were being passed onto other job seekers, and more than twice the normal flow of resumes began flooding personal in-boxes. "It was overwhelming," says Krissa Johnson, a Rurak partner. "We were getting about 200 unsolicited e-mails a day -- everyone from truck drivers to CEOs. Most of them were below our target level. People were just blanketing the world with e-mail. For us, it was like digging out of a pile every day."
Rurak turned to LCG Technologies, which installed a customized filter that ferrets out unsolicited resumes and dumps them into a folder that can be checked later. Instead of sifting through every resume that collected in their in-boxes, the recruiters now spend more time concentrating on quality candidates. And because the firm receives roughly half the snail-mail resumes than it did a year ago, the same employees who used to open envelopes can now spend more time on e-mail.
In the competitive executive-search world, an automatic filtering system can help the firm snag candidates it may have otherwise missed. According to Johnson, simply being the first to reply to an e-mail (which may have gone out to 20 or more different search firms) can mean the difference between gaining a new candidate or missing an opportunity. "All of the large firms have the resources to look at everything," she says. "They have someone digging through for all the nuggets." For Rurak, the filtering program has allowed it to save time while staying competitive. "We always hold what we're doing up against what the big guys are doing," Johnson says. "But just because they have it doesn't necessarily mean we should have it. We just have to respond to what clients want."
While technology can often save your skin, it's also one of those double-edged swords that can take off a limb if it cuts the wrong way. Servers and databases are wonderful for keeping track of invoicing, customer lists, and other vital business information. But a simple software conflict can crash a server and paralyze a business for days. All the more reason for businesses to make sure that there are systems in place that can prevent crashes and quickly get the server up and running again if it does crash.
Growing companies often add a server here and a server there, add seats to the network, and install new programs to the PCs. But they may not realize just how dependent they've become on all those disks and doodads. They also may not consider what they should be doing to protect themselves.
Isaac Heating, a 100-employee heating and air-conditioning contractor in Rochester, N.Y., seemed cursed with a software problem that caused its main server to crash every couple of months. "We would lose a whole day's worth of data," says Chris Isaac, IT director and son of the owner. In addition, a crash would block access to service-call data for an entire day, meaning that drivers wouldn't know where to go, thus jeopardizing business with existing customers. "Any customers who called during the crash we couldn't really help, and we were losing that business," he says. "So we would actually lose two days of business."
The company's database handles accounting, dispatching, job costing, sales leads, purchase orders, employee records, and other important information. "The database is the lifeblood of this company," Isaac says. Restoring the database cost about $6,000 in lost productivity, not to mention other costs that are hard to measure. But more than that, Isaac says, was the potential effect on Isaac Heating's overall reputation. "When you don't show up at someone's house," Isaac says, "that goes beyond money."
Isaac struggled for months to figure out what was causing the problem, until he noticed a pattern between the crashes and a particular data-entry process. "It took six or seven run-throughs before I finally figured out what was happening," he recalls.
Even though the company fixed the problem by year's end, Isaac says he worried about future crashes linked to other software conflicts. So he hired LiveVault, a Marlborough, Mass.-based firm whose system constantly backs up data using a "real-time replicator" that copies data onto a mirror system. The server has crashed at least once on its own since the company installed the LiveVault backup system. But the ramifications of a crash are now much less serious. "Now, instead of losing whole days of work, we lose 10 minutes of work," Isaac says. "The cost is insignificant in the big picture when you look at the potential for crashes and lost data," he says.
Ames Abbot, LiveVault's vice president of marketing, says Isaac's problems were minor compared to those of other businesses. "Most small businesses think they are doing their backups correctly," he says. "The customer thinks he's protected even though he might not be. They don't realize whether they've done the backup correctly until it crashes."
Abbot says common pitfalls include delegating backup duties to someone who isn't truly qualified to do it correctly, failing to check the quality of the backup media, or failing to test the backup catalog to make sure it isn't corrupted. "I can't tell you how many people say, `My backup works great, but I just can't restore anything,'" Abbot says. "You have to move this stuff onto the radar screen. It's sort of like flossing. People know they need to do it, but it falls to the bottom of the stack."
A Game Plan For Growth
Of course, waiting for systems to crash and then retroactively fixing them isn't ideal. Few would argue that putting safeguards in place beforehand (preferably, before something bad happens) is the most desirable scenario. But being able to predict when disaster will strike seems as as difficult as trying to time the stock market. NativeMinds, a San Francisco-based company that sells customer-service software for use on the Internet, proves you don't have to be a genius to prepare for trouble in advance.
NativeMinds signed on with Ecora, a Portsmouth, N.H.-based company that provides server-backup services. Using Ecora's automated documentation service, NativeMinds recorded a backup of its server settings. One week later, the server crashed, and all settings were lost. "It took us about two hours to get it back up," recalls Michael Skaff, NativeMinds' director of information systems. "It would have taken us more than a day otherwise. We would have had to go through by hand and reset everything from default."
Skaff says a day lost would have been disastrous for the 83-employee shop. Not only would the company have been forced to shut down its operations within the office, but its sales force wouldn't have been able to access the system from the outside. Because off-site sales teams need access to the site to run product demos for prospective clients, they would have been forced to cancel some meetings. And even though the IT team would have been able to get the basic documentation up and running overnight, tweaking and spot-check fixing over the next few weeks would have made it difficult if not impossible for the sales team to effectively run the demos.
"It would have been a bad thing," Skaff says. "We would have been spending a lot of money and getting nothing for it." In addition, restoring server defaults can disable the system's security features, which can number as many as 300 on a typical Windows NT server setup.
Alex Bakman, CEO of Ecora, says small businesses have to reorder priorities to protect themselves. "Realize the importance of IT," he advises. "In small businesses, it tends to be an afterthought." But reality dictates that businesses prioritize. Often, making sales calls and managing clients takes precedence over deploying the necessary IT wares in office computer systems. The problem is that those old-line responsibilities are becoming directly linked to those very systems. Let them lapse, experts say, and the foundation for sales and customer service can falter. In the end, small businesses that want to grow may have little choice but to spend money on technology -- within reason.
Technology is often needed to solve problems caused by inefficient or outdated procedures left over from when the company was just starting up. At the same time, however, it can contribute to even greater inefficiency when a company's needs outgrow its technology. Businesses need to plan for that growth, or they may watch their systems buckle beneath them just when they're needed the most.
For fast-growing companies trying to compete with larger entities, using technology to its fullest and minimizing downtime isn't just a luxury. It's absolutely vital for continued growth.