Access Group – a new paradigm for meeting the needs of mid-market companies

14th December 2009

NEW FSN White Paper - 

Faced with market volatility, regulatory change, the green agenda and a turbulent economy, mid market businesses are under constant pressure to adapt, for example, to take advantage of new market opportunities and to improve their competitiveness and productivity.  Whilst traditional ERP systems have served businesses well in the past they have proved to be inflexible and expensive to maintain in a period of change.  A new era requires a different model, based on a more consultative approach backed by the technical, organisational and process skills needed to cost effectively deliver complete solutions.  In this new FSN White Paper, Gary Simon, FSN’s managing editor examines Access’ response to the challenges of the mid market.

CONTENTS

 

 

Introduction

  

Drivers of change in the mid market

Regulation and Compliance

 The economy

 How well have we coped with rapidly changing demands?

 The ERP model is inflexible

Mid-market ERP also misses the mark

The large domestic providers

The SaaS (software as a service) model

But is there a different way?

The Access Way – a new paradigm for the mid market.

The Access paradigm in practice

 Summary

 

 

 

Introduction 

Rarely has there been a period of such tumultuous change.  Regulatory initiatives, a global slowdown and rapid consolidation of software suppliers have come together to form a ‘perfect storm’ of confusion and uncertainty. 

 But it is not all bad news. For well managed businesses a period of change presents unique opportunities to take market share from weakened competitors, acquire individual assets or businesses at below book value and to recruit new talent.  But to take advantage of the opportunities presented by change, even the most talented management need to be supported by agile systems and processes.  So what exactly is driving change in the mid market and how well have businesses coped? 

Drivers of change in the mid market 

Regulation and Compliance 

The regulatory environment has been in a constant state of flux.  Some of the changes have been driven by European Directives, some by fiscal policy and others as part of more broadly based initiatives such as e-citizenship, designed to make government more responsive by taking advantage of new technology. 

European Directives have driven substantial change in business reporting (the Business Review), employment law (the Working Time Directive) and more recently in environmental standards and reporting – to name but a few. But the pace of change has been breathtaking, with new regulation seeming to appear from all directions simultaneously. 

The Business Review, a Companies Act requirement is particularly demanding, taking organisations into new territory such as environmental, employee and corporate social reporting.  Environmental reporting is especially topical as mid market businesses become part of the green supply chain of larger organisations and whose brand reputation rests with customers and employees who are increasingly influenced by green credentials. 

A change in VAT rates (soon to be switched back), new compliance regulations governing security of credit card transactions (PCI DSS), e-filing of VAT, and the requirement for all companies to submit Corporation Tax Returns (CT600) using ‘in-line XBRL, a new digital language, together with the possible introduction of IFRS (International Financial Reporting Standards) for mid market companies are just some of the changes that have arisen in the last year.  Any of these in isolation would be stretching but taken together in such a short time frame they represent a formidable challenge. 

The economy

 The global economy may be climbing out of recession but liquidity remains the central issue. Recent evidence suggests that a two tier economy is emerging in which quoted companies are able to tap into the full gamut of funding options while mid sized companies are restricted to traditional bank finance.  

So whilst large listed companies eager to escape the clutches of the banks are paying down their expensive bank debt and substituting less expensive bond or equity financing, private companies must endure slower decision-making by banks, harsher terms on re-negotiation and a smaller pool of lenders as banks shore up their own balance sheets.  In fact the IMF (International Monetary Fund) estimates that the shortfall between credit supply and credit demand for 2009 and 2010 will represent no less than 15% of GDP in the UK which means that for the foreseeable future, working capital management is going to remain top of the agenda for all businesses. 

Responding to change on this scale requires deft management and the support of agile transaction and information systems.  But many organisations find themselves restrained by historic investment in systems that are inflexible to change and poorly served by software dealers (partners) acting on behalf of global software players and large domestic software providers.

 How well have we coped with rapidly changing demands? 

A variety of business applications and support models are deployed in the mid market but a downturn has exposed weaknesses in the traditional ERP and dealer based models at a point in time when mid market businesses are most reliant on their systems. 

In more testing times management rely on ERP systems for working capital management, such as balancing debtor and creditor days outstanding, timely reconciliations, purchasing policy, expense management and keeping inventory to optimum levels.  Furthermore, integrated HR planning and payroll allow businesses to keep a careful watch on employee costs and headcount.  Accurate and timely information taking different views of the business is critical to obtaining clear insights into business performance and emerging business trends.  But the ERP model, popularised during the nineties has found itself lacking during a period of rapid change. 

The ERP model is inflexible

Initially embraced by organisations seeking to standardise their processes and reduce transaction costs across the globe, the concept has never sat easily in the mid market.  The ERP concept was designed to provide a broad spectrum of functionality, (effectively a ‘one-stop shop’) which could serve all of the complex transaction processing and information needs of multinational corporations in a wide range of industries.  But in a period of constant change the ERP model has proved inflexible and costly to change, requiring an army of consultants to effect even minor changes.

Mid-market ERP also misses the mark

Under pressure to maintain their growth, global ERP vendors entered the mid-market hoping to emulate their success with large enterprises in the mid market.  But the initial strategy failed.  Cut-down versions of major ERP products were simply too complex, inflexible and expensive to work effectively in a mid market environment and a failure of the large software houses to appreciate the special characteristics of the mid market and recruit suitably experienced and qualified dealers quickly led to dissatisfaction.  

The large domestic providers

Large domestic vendors are steeped in the lower end of the mid market and smaller start ups.  Support, particularly at the lower end is often provided via telephone hot lines and call centre operations.  For larger enterprises support is driven through the dealer network and once again the quality of support and range of services depends on the competence and experience of each dealership which can vary widely.  Whilst many can support the packaged applications, few can reach out beyond the finance function to help organisations take advantage of new technology or effect change in other business areas.

The SaaS (Software as a Service) model

Software as a Service or rented applications over the web have been touted by some as a more cost effective and less troublesome way of providing business systems.  Applications are hosted in the “cloud” and advocates claim lower start up costs, reduced implementation effort and the reduced burden of IT skills and infrastructure as some of its major benefits.  But not everyone is convinced that the total cost of ownership is lower than ‘on-premises’ solutions or that implementation is any faster. 

Lack of flexibility is a key consideration.  The business model of cloud-based suppliers relies on repeatability to be cost effective, i.e. with customers following a standardised approach.  With less room for manoeuvre, a ‘one-size-fits-all’ approach is limiting in the face of change added to which there are continuing doubts about security and confidentiality of data that continue to haunt the on-demand option.

Support too is invariably web based, with very little human contact between customer and supplier. For all but the simplest of requirements, a SaaS based solution appears to be inappropriate in a period of rapid change.

But is there a different way? 

Market consolidation and the economics of the software industry have driven an increasingly standardised approach to meeting business needs underpinned by a failure to understand the special needs of mid market businesses.  Many providers mistakenly believe that mid market businesses have simpler requirements when in fact they can be every bit as demanding as their larger competitors – just on a smaller scale.  Furthermore, smaller businesses are often more agile and entrepreneurial.  They are quicker to make decisions, and regularly stretch product and service boundaries in all sorts of innovative ways that cannot be countenanced in a larger enterprise. 

For these organisations ‘fleetness of foot’ in the face of competition and regulatory change is critical, but many software vendors cannot match the agility required.  As a result, businesses are constrained by their systems.  It is a case of the ‘tail wagging the dog’ - locked into rigid applications and unable to take advantage of newer technologies, smaller enterprises are often forced to employ a patchwork quilt of work-arounds and poorly integrated temporary measures that hamper their growth, productivity and competitiveness.

The Access Way – a new paradigm for the mid market.

Over the years, accounting packages have become increasingly standardised.  Whilst these systems have contributed to reducing average transaction costs, improving user productivity and customer responsiveness, core financial capability is rarely considered a major source of competitive advantage.  Hence few companies see an advantage in changing financial systems unless, for example, support is withdrawn or the underlying technology becomes obsolete.  So most businesses, (especially in these more challenging economic times) are seeking to maximise the value of their systems investments by building on existing platforms to realise competitive advantage, rather than starting afresh. 

In this environment the know-how (skills and capabilities) of software vendors is absolutely vital to success.  Few mid market businesses have significant IT resources in-house and the rate at which new applications have come on to the market means that most are unlikely to have the breadth of competencies necessary to sustain existing IT systems and take advantage of new technologies.  As a result, partnerships between companies and their software providers are crucial to delivering leading edge business solutions.

But the creation of appropriate business solutions is no longer down to software functionality.  These days, successful delivery of competitive advantage depends on a unique blend of consultancy, business analysis, software development, advanced functionality and awareness of the latest developments, working in partnership with a business.

It is with this model of excellence in mind that Access has come to market.  Steeped in mid market business systems, Access has created a store of knowledge and capability that is almost unique in the mid-market.  Access has eschewed an exclusively ‘dealer-based’ model favoured by most competitors in favour of a predominately ‘direct model’ in which complex customer needs are dealt with centrally by the software author and more straightforward requirements are served by a few hand-picked Access dealers.  This closely coupled arrangement of direct teams and a limited number of specialist dealers means that all of the capability is retained and shared within the organisation and put at the disposal of its customers.

Whereas the dealership model, almost by definition, creates distance between the software authors and customers, the direct model does the complete opposite.  This means that imaginative solutions are not constrained by software development – a marked contrast to dealerships who have limited access to source code (the underlying programmes) and are bound by strict rules governing what changes are permissible.

But the difference between the new Access paradigm based on a predominately direct model and the rest is not simply confined to software development.  Domain knowledge and skills lie at the heart of the difference between the “also rans” and Access’ distinct positioning whether served by Access directly or any of its dealerships.

The ability to draw on a wide range of skills complemented by broad industry expertise (garnered from thousands of successful customer implementations) rather than being tied to a preferred technology, enables Access to offer objective consultancy grounded in genuine expertise.  The breadth of Access’ experience means that through its direct model or dealers it can offer support in areas as diverse as, customer relationship management, supply chain and mobile computing rather than ceding the problem to third party organisations. 

Furthermore, together with its specialised dealers, the organisation has worked across so many sectors that it rarely has to look outside of the group for specific vertical market expertise.  This combination of sector and functional expertise coupled with business analysis and software development under one roof means that Access can not only provide independent advice but can also deliver cost effectively the solutions it designs, whether delivered centrally or through its closely coupled dealerships.

But the ethos of the group is also profoundly different from others.  Access is a consulting led organisation rather than a product or technology led organisation.  This means that it is driven by business needs and can take the time necessary to explore requirements in detail, taking a broader perspective where necessary to ensure that process, organisation and change management issues, so often critical to success, are taken fully into account as part of any solution.  And with no inbuilt product bias Access can offer solutions that are the best for the customer.

 

The Access paradigm in practice

One area in which Access’s expertise and consultative approach can quickly drive benefits through an organisation is in the automation of inefficient manual processes.  All organisations rely on manual processes to a certain extent but they are labour intensive and often accompanied by paper documents and physical flows of information which are susceptible to error.  Access has found that not only do streamlined processes using workflow technology deliver immediate cost saving through productivity gains and reduced error rates, but they also provide a platform for business growth without necessarily adding to headcount or other costs.

In a tough economy Access workflow is particularly welcome and it can be used to rapidly design and automate processes which are both well-controlled and efficient. The approach is well suited to circumstances in which existing applications provide limited process support as well as idiosyncratic processes where there are no readily available software packages or package support is limited.

Supplier, customer and employee set-up and approval are typical everyday examples where traditional business solutions do not provide adequate process support yet these neglected parts are very susceptible to risk. For example, fraudulent set up of a bogus supplier, payments to an employee that has left the company or creation of a customer that has an untrustworthy credit record. Clearly a well designed process not only improves process efficiency but can also provide better management visibility and control.

Using workflow, Access can also help bridge departmental divides where traditional applications reinforce functional boundaries and the flow of information between departments is slow or unreliable. For example, an accounts payable application often focuses on the needs of the accounts payable department to process invoices and cash payments and typically, a separate purchase order processing module deals with order entry, goods inwards and invoice matching.  Applications assembled in such a modular way treat a process as a series of related but distinct steps where one functional areas passes the 'baton' to the next rather than, say, a seamless "Procure to Pay" process. On the other hand, workflow transcends functional boundaries and allows information to flow more naturally, i.e. emulate the way in which the business works in practice.

Using Access Workflow, processes are described within the application as a series of related tasks. Individuals involved in the process can see tasks assigned to them and tasks that are assigned to others, giving them a clear picture of where they fit into the process. Where necessary, a process can make use of user-definable forms (Access Workflow Forms) which are embedded within the application to capture, for example, authorisations for a part of the process, or to display selected data from the underlying applications such as Access Dimensions or other ERP systems. They can even be used to provide integration with underlying systems and act, say, as a posting document or journal to another application. Forms can also play a pivotal role in ensuring an adequate level of business control by requiring personnel with responsibility for signing off parts of the process to signify their acceptance by 'signing' the electronic form.  The technology allows forms, alerts and reports to be sent to authorising staff by email, or even SMS.

There is also a ‘green’ incentive to use workflow since it eliminates much of the paper chase which ensues when documents need to be forwarded between departments, different offices or third parties.  Digitised documents are easy to retrieve from anywhere where internet access is feasible and reduces or in some circumstances completely eliminates the need for physical documents.

But the use of Workflow forms is also a good example of the direct support model in action.  Access consultants can evaluate the opportunities for change, assess existing technology, design the process, build the application, test and implement it in partnership with a company without stepping outside of the boundaries of the organisation. It is a level of self-sufficiency that few other software authors and their dealers can match in the mid market. 

Summary

Faced with market volatility, regulatory change, the green agenda and a turbulent economy, mid market businesses are under constant pressure to adapt, for example, to take advantage of new market opportunities and to improve their competitiveness and productivity. 

Whilst traditional ERP systems have served businesses well in the past they have proved to be inflexible and expensive to maintain in a period of change.  Furthermore an exclusively dealer based model, favoured by so many global software vendors or large national software suppliers, is impersonal and does not readily deliver the skills needed by mid market companies that have complex needs but relatively few skills in-house.  Newer possibilities such as ‘Software as a Service’ (SaaS) look attractive initially but tend to confine users to the straightjacket of the functionality on offer.  The SaaS model which is predicated on a standardised approach with little customer contact provides little advantage for companies seeking a partner to help them navigate their way through a period of rapid change.

A new era requires a different model, based on a more consultative approach backed by the technical, organisational and process skills needed to cost effectively deliver complete solutions.  Access is uniquely placed to provide the combination of skills and capability necessary to provide total support to its customers.

With deep product and industry knowledge gained over many years serving the mid market Access understands intimately the special characteristics of mid size businesses.  As a software author and consultancy rolled into one, it is able to objectively evaluate business problems and provide consulting expertise and the services necessary to deliver a complete solution – whether directly or through its carefully selected dealers

One example of its capability is the development of workflow applications that transform manually intensive processes into dependable automated processes leveraging the latest forms technology, integration and mobile computing capability. The expertise extends well beyond Access’ accounting roots and reaches into operational areas such as supply chain and CRM (customer relationship management) creating marked improvements in productivity and organisational effectiveness.

It is just one example of how the Access model allows all of the required services and competencies to be brought together to deliver exceptional solutions. But the principles have wider application and the direct model is a distinct advantage for companies seeking a full range of services from a single vendor.

 

 

 

 

 

About FSN

FSN Publishing Limited is an independent research, news and publishing organisation catering for the needs of the finance function. The report is written by Gary Simon, Group Publisher of FSN and Managing Editor of FSN Newswire. He is a graduate of London University, a Chartered Accountant and a Fellow of the British Computer Society with more than 23 years experience of implementing management and financial reporting systems. Formerly a partner in Deloitte for more than 16 years, he has led some of the most complex information management assignments for global enterprises in the private and public sector. His book, “Fast Close to the MAX” was published in 2008.

Gary.simon@fsn.co,.uk

www.fsn.co.uk

Whilst every attempt has been made to ensure that the information in this document is accurate and complete some typographical errors or technical inaccuracies may exist. This report is of a general nature and not intended to be specific to a particular set of circumstances. FSN Publishing Limited and the author do not accept responsibility for any kind of loss resulting from the use of information contained in this document.

 

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