Current Trends In Business Management | SMB User Report 2017

Business management (BM) and business process management (BPM) software are important tools used by small and midsize businesses (SMBs) to align organizational strategy with business goals.

To better understand how SMBs are using these systems and to uncover current trends within this software market, Software Advice surveyed current users about the benefits and challenges they’ve experienced with these tools.

This user report can help prospective buyers make a more informed purchase decision as they evaluate the various business management technology choices on the market.

Key Findings:

  • Top BM software capabilities include accounting/budget management (37 percent), scheduling and calendar management (36 percent) and invoicing (34 percent).
  • Top BPM software capabilities include process analysis (46 percent) analytics and performance monitoring (44 percent) and content management (33 percent).
  • Integration with other systems cited as a key challenge by both BM and BPM software users (33 and 29 percent, respectively).
  • The majority of current BM and BPM software users plan to continue their investment in these systems, while roughly one-quarter plan to invest in ERP software instead.

What Are “Business Management” and “Business Process Management”?

Business management is the practice of managing the overarching aspects of a business, i.e., people, products, processes and systems, and aligning them with business goals.

Business process management is specifically focused on refining processes to drive business strategy to achieve those goals.

Both are integral steps that businesses of every size should master prior to implementing ERP software.

James Aldridge, vice president of technology at Matrix Integration, a consulting firm specializing in business technology, further explains the distinction:

“Business management is the method of developing the long-term and short-term strategies and plans that guide the business. Business process management is the systematic approach of creating and evaluating efficient processes that support those long-term or short-term strategies.”

James Aldridge, vice president of technology at Matrix Integration

In this way, Aldridge says that both BM and BPM are important stepping stones for an effective ERP implementation.

He describes the relationship as a crawl, then walk, then run scenario, asking, “How can you have an effective ERP without well-defined processes, and how can you know which processes need to be in place without a strategy?”

Steps to an Effective ERP Implementation
 

erp implementation
While “business management software” is often used as an umbrella term to refer to both an independent system used to govern a central business function and processes, as well as an integrated ERP system, we’ll distinguish between them in the following ways in this report:

  • BM software refers to a system designed to manage a core business function, such as accounting or customer relationship management;
    • BPM software refers to the tools used to manage and optimize business processes; whereas,
      • ERP software refers to an integrated system used to manage several core functions and subsequent processes.

      With this in mind, we’ll review the following trends among BM and BPM software users.

      Financial Management Is Leading BM Software Capability

      We first asked current BM software users about the system capabilities they use most often, i.e., which critical business functions they choose to automate with BM software.

      The top three critical business functions and corresponding software capabilities include:

      Most Common Uses of Business Management Software
      common bm uses
      Leading Business Management Software Capabilities
      bm capabilities

      Aldridge says these functions are important because they help SMBs control costs, identify inefficiencies and, most importantly, understand actual versus assumed costs and profitability.

      Accounting and budget management, specifically, helps companies identify areas that are not meeting assumed profitability as well as those that are, says Aldridge.

      “This is extremely important when it comes to assumed versus actual market shifts, product placement and incorrect business assumptions. Ultimately, this should allow the company to quickly identify issues and pivot if necessary.”

      Software that automates these functions can help businesses reduce costs and pinpoint areas for improvement by creating a framework to help standardize processes and workflows.

      Process Analysis Is Top BPM Software Capability

      We also asked current BPM software users about the functions they most often use their software to perform. The top three critical BPM software capabilities include:

      Most Common Use of Business Process Management Software
      common bpm uses
      Leading Business Process Management Software Capabilities
      bpm capabilities

      While BM software is used to automate critical business functions, process management tools should be used to track, report on and ultimately refine and optimize those processes.

      As such, Aldridge says it’s important for SMBs to make sure they have a continuous improvement plan in place. He notes that some businesses that use BPM tools to analyze data struggle with believing in the data enough to take action.

      “Analyzing and monitoring is important, but action is where the rubber meets the road in making sure your company remains viable and relevant.”

      For a deeper dive into the specific process management tools available for SMBs, check out our BPM buyer’s guide.

      System Integration Is Major Pain Point For BM and BPM Users

      The majority of BM and BPM software users report they are “very” to “extremely” satisfied with their current software. However, those with moderate to low levels of satisfaction report the following challenges:

       

      Top BM Software Challenges Top BPM Software Challenges
      • Integration issues
      • System too robust for user needs
      • Data import/export issues
      • Nonintuitive interface
      • Integration issues
      • No mobile access

       

      Integration is a common pain point for businesses using disparate software systems, an issue that can be further compounded when they want a fully customized solution.

      Customizations can be expensive upfront and over the life of a tool as well. This is because companies have to pay for customizations to be maintained each time the software is upgraded. Failing to maintain customizations over the life of a tool can result in a poor user experience as well as issues with data transfer between applications.

      To combat integration issues as well as the other challenges cited in the chart above, prospective buyers are encouraged to keep the following software selection best practices in mind when evaluating demos and comparing vendor price quotes:

      best practices

      A Quarter of Current BM and BPM Users Ready to Invest in ERP

      Lastly, we asked respondents about their plans for future investments in business management technology. While the majority of current BM and BPM software users plan to invest in the same solutions moving forward, an average 25 percent plan to make the jump to an ERP system.

      Future Investment Plans for Business Technology: Current BM vs. BPM Software Users
       

      future investment plans
      One reason for this, according to Aldridge, is that the ERP market is expanding, and vendors are starting to become vertically focused, or purpose driven. This means that vendors are building a core product and then designing configurable solutions off that core product, each designed to serve the unique needs of various business segments.

      One example of a vendor pioneering this charge is NetSuite, which offers business management solutions that cater to segments such as financial services, wholesale and distribution, retail, media and publishing among others.

      Other vendors, such as Intacct, have designed their product around core financial applications, i.e., accounts payable, accounts receivable, order management etc., and offer additional, industry-specific modules for markets such as hospitality, health care and franchise.

      While an ERP solution can solve many of the integration issues cited by respondents as a key challenge with BM and BPM solutions, Aldridge cautions that ERP software is not a “silver bullet.”

      Indeed, he notes that SMBs should take steps to ensure these systems provide the accurate risk management protocols and access controls required to identify potential vulnerabilities and maintain business security.

      Especially with the growing interest in cloud-based software, this becomes a cost vs. benefit consideration: Prospective buyers should ensure they are comfortable placing the maintenance and security of their data in the hands of vendors (via cloud-based solutions), versus the costs of maintaining these complex systems themselves on-site (via on-premise software).

      Conclusions and Next Steps

      Based on the results of our research, prospective business management software buyers should keep the following trends in mind as they evaluate solutions:

      Level of business maturity: Do you have defined business goals in place, and are you ready to refine your processes for achieving those goals? Or, are you in the early stages of aligning business strategy with your goals? These considerations will impact whether you invest in BM or BPM software.

      Support for critical business functions: Bear in mind that current BM and BPM software users are automating different business functions. As such, it’s important to choose a system that supports your current needs and has the capabilities you require, i.e., accounting versus content management.

      Common software challenges: Difficulties integrating your software with the other tools in use at your organization is not an uncommon challenge. As such, be sure you’re discussing your integration requirements with vendors and avoid over customizing a system as it may be difficult (and/or costly) to maintain those customizations over the life span of the software.

      If your organization is ready to start your search for business or process management software, here are a few next steps you can take:

      • Call our advisors at (855) 998-8505 for a FREE consultation. Our dedicated team of software experts will carefully review your business and industry requirements and help you evaluate if business management, process management or an ERP system is right for you. At the end of the call, we’ll send you a shortlist of products that meet your needs.

      Demographics

      The demographics for the respondents in our survey are as follows:

      Business management:

      • The majority of respondents (89 percent) are from small businesses with $50 million or less in annual revenue.
        • The top segments represented by respondents include financial services/insurance (14 percent), customer service (14 percent) and nonprofit/education (11 percent).
        By Annual Revenue: Number of Business Management Software Users
        annual bm users
        By Segment: Number of Business Management Software Users
        segmented bm users

        Business process management:

        • Roughly three quarters of respondents (76 percent) are from small businesses with $50 million or less in annual revenue.
          • The main segments of BPM software users from our survey include financial services/insurance (17 percent), manufacturing (11 percent) and information technology (10 percent).
          By Annual Revenue: Number of Business Process Management Software Users
          annual bpm users
          By Segment: Number of Business Process Management Software Users
          segmented bpm users

          A detailed methodology for this report can be found in the User Report section of our methodologies page.

          If you have comments or would like to obtain access to any of the charts above, please contact me at eileen@softwareadvice.com.

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