I never really thought about how there could be confusion between growth and scale until a co-worker asked me the other day. When I speak about an ECM solution being scalable, primarily, I want an SMB customer to understand that we need to think about their strategy and the systems that they are using to support their expansion.
Are they expecting gradual revenue growth where they will be able to keep their resources static? Or will their business have exponential revenue growth that, without increases to resources, will overtax their systems and employees with too much to do jeopardizing their success?
Why is the distinction important for a business and why is that distinction important for your business processing? Clearly, planned growth is the preferred type of strategy – so it can be managed and demand does not overwhelm operations that are not ready to handle it. A huge demand without an adequate supply of products or services to satisfy that demand leads to unhappy customers who may look for satisfaction elsewhere and never return to be your customers.
What comes to mind is a television commercial from a few years ago where a small retail business launches an e-commerce website. The team watches and waits to see what kind of orders pour in. And do they pour in – from hundreds to thousands – so the counter shows on the screen. We can easily see that the team was excited for a robust ecommerce business, but not ready with product to fulfill so many orders at the get-go. Excitement turned to fear.
So, there is risk with unplanned explosive growth. According to Aberdeen CFO Essentials’ Abigail White, “Growth is an excellent goal for a small business, but by the time an organization reaches mid-market size, growth is far less important than scale.”
We have seen start-ups experience the pain of overwhelming growth (as noted), the joy of acquisition from a bigger organization that can manage the growth and the agony of alienating customers by failing to fulfill their order to meet the customers’ expectations. “For a midsize enterprise, scale is a better goal than growth. Financially, scaling up allows a company to increase profit without expending any other departments beyond their means.” says White.
While we talk about “scalability” when we are advising the SMB marketplace about their ECM solution for their growing business, most people equate the two terms as the same. In White’s post, she further notes that “growth is reflected by increases in revenue and resources at the same rate. Scale is the increase of revenue with no change in cost to the business.”
Why does this matter for ECM? When a SMB decides to invest in a solution or replace an existing solution, they want to reap the benefits of that solution now and in the future. As they grow, whether organically or through acquisition, ideally, they want their core operations to stay constant. This means they want to make the financial, human resources and accounting teams efficient and able to handle the employee and sales growth with the same team. ECM will give their operations the flexibility to work efficiently and absorb the increase in onboarding, invoicing and billing because the systems enable them to handle more volume.
We have had customers see the same team handle two to three times as many invoices as their business grew because of the automated capture and indexed information from their invoices, the ease of retrieving what they needed and subsequent routing through an automated workflow. Manual processing for a smaller operation may seem simple and effective, but with growth, they tend to produce less efficiency and more errors.
Finding an ECM solution that is scalable is the critical point. Older systems need to be replaced and new systems have to be flexible: focus on value not price. An SMB that has been using document management but has not taken the step into content management needs to be forward-thinking and to recognize that they cannot afford to continue without the upgrade to content management.
According to White, a CFO needs to think “resolutely while also maintaining the strategies and values that helped them rise to the mid-market in the first place”; that CFO cannot ignore the operational imperative of content management. For the good of the business, strategic planning for SMB sales has to go hand-in-hand with business operations.