In 2004, Deloitte Consulting was awarded a $55 million contract to implement an SAP payroll system for the Los Angeles Unified School District. In January 2007, the system went live and immediately started experiencing problems. Some staff were overpaid while others appeared to disappear completely from payroll master files. Hardware would randomly shut down and software would lock users out for no apparent reason.
Lack of communication is one way projects fail. Courtesy of dilbert.com
Due to the width and breadth of the problems, the school district began to point fingers at Deloitte blaming them for the failures. In response Deloitte began pointing them right back at the school district. It took over a year and an additional $40 million to iron out all of the bugs in the software and get the payroll running smoothly.
The word “startup” conjures images of a small cadre of dedicated founders working together to hack together solutions that provide value to the marketplace. In today’s lexicon, “startup” is an almost romanticized term, bringing visions of employee camaraderie, casual work environments, and dedication to solving a problem.
But when does a “startup” stop being a startup? When does it just become a company?
When should a startup add more bureaucracy? Courtesy of businessincubatorsindia.blogspot.com
Adam D’ Augelli, an associate at San Francisco based True Ventures, claims that when “the company begins to have a more bureaucratic structure which results in processes that inherently make it less startup like,” then they should no longer be considered a startup.
At software and professional services companies, the leadership teams have to keep focused on their revenue and profit goals in order to succeed. This means relentlessly seeking new ways to provide value to customers, hiring the right employees, and keeping the rent paid on time.
However, the leadership team does not have the ability to keep track of everything. Usually, they rely on software products to help them keep their eye on the prize. These software products may include an application to track customer information (Salesforce.com), eCommerce operations for web sales, project resource management software for resource management, and accounting software for score keeping.
Each of these products tends to be purchased and managed individually. Usually, this means that there is a separate application to perform the necessary functions and a separate database to track the data.
And therein lays the problem. Separate Databases mean Data Fragmentation.
Multiple Databases can create Data Fragmentation Courtesy of orgmonkey.net
While making Toy Story 2, the animators at Pixar would save their work on both Linux and Unix servers. One afternoon, while working on the movie, the animators noticed that parts of their characters started to disappear. First, it was Woody’s hat, then his boots, and finally all of Woody. Then the rest of the characters started to disappear as well.
It turns out that someone within the Pixar IT department had accidentally run the “RM*” delete command which deleted about a year’s worth of effort on the movie. At first, everyone thought, “No big deal, there is a backup.” But to complicate matters even more, the backup had been failing for the past month and no one had noticed.
Like human development, software and professional service companies go through different phases of life. In the beginning, there is the startup phase. This phase is characterized by frantic attempts to find customers, hire the right team, and stabilize funding. Next is the growth phase. During this phase, companies scale rapidly as new customers find a need for their services. The final phase is the mature phase, where a company has balanced the need of their three primary stakeholders – customers, employees, and investors.
Most startups do not want to stay small, but move to the growth phase. Courtesy of quotesbuddy.com
In the startup phase, decisions are usually made on the fly, especially when it comes to support software. This is why most companies end up with QuickBooks as their accounting software. However, when companies begin to move into the growth phase of their existence, QuickBooks is no longer the right solution, and companies need to consider a professional services management software like NetSuite.
Below are 3 reasons why companies should consider NetSuite over QuickBooks when the startup tipping point is reached and the growth phase begins:
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