According to a Gartner study in 2023, businesses using management software have reduced average operating costs by 20% and increased work productivity by 30%. This shows that management software is not just a supportive tool but also an important factor for business success.
In this article, let's explore whether managing a business with software is more cost-effective than traditional methods. From there, businesses can have an objective view when choosing effective and cost-saving business management methods.
1. What is traditional business management?
Traditional business management is a management method that businesses have used for a long time, primarily relying on manual tools and methods. Management activities are often carried out through:
- Books and documents: Information about customers, products, finances, etc., is manually recorded on paper and in ledgers.
- Spreadsheets: Using Excel software to manage data, but still highly manual.
- Meetings: Regular meetings are held to exchange information and make decisions.
- Manual reports: The compilation and reporting of data are often done by manually entering information from ledgers and spreadsheets.
2. What is enterprise management software?
Enterprise management software is an information technology system designed to support businesses in managing and operating their business activities efficiently. This software helps automate processes, integrate data, provide analytical and reporting tools, enabling businesses to make more accurate decisions.
Common types of business management software:
- ERP (Enterprise Resource Planning): Comprehensive management of business activities, from finance, accounting, and human resources to production and sales.
- CRM (Customer Relationship Management): Managing customer relationships, helping to enhance interaction and customer care.
- SCM (Supply Chain Management): Supply chain management, helping to optimize the production and distribution process.
3. Comparing the costs of business management with software and traditional methods
The choice between managing a business with software and traditional methods often depends on many factors, among which cost is one of the most important. Below is a detailed cost comparison between these two methods to give you a clearer overview:
Criteria | Software management | Traditional management | Note |
Initial costs | Initial investment for software, hardware, deployment | Office supplies, office equipment costs | Software may have a high initial cost, but it can save costs in the long run |
Personnel costs | Reduce administrative staff, focus on creative work | Need more personnel to perform manual tasks các công việc thủ công | Software helps automate many tasks, reducing the burden on employees. |
Storage costs | Storing data on servers or the cloud, low cost | Cost of storing large paper documents | The software helps reduce the amount of paperwork that needs to be stored. |
Operating costs | Software maintenance and upgrades | Printing, photocopying, and equipment repair costs | The operating costs of software are usually stable and easy to predict. |
Opportunity cost | Opportunity to access information quickly, make accurate decisions | Lack of timely information, difficult to make decisions | The software provides reports and data analysis to help make better decisions. |
Error costs | Minimize errors from data entry and calculations | High risk of errors due to manual work | The software helps reduce errors and increase accuracy. |
4. Benefits for businesses when using software for management
The transition from traditional management methods to using software brings many benefits to businesses. Here are some outstanding benefits:
Enhancing work efficiency
The use of management software helps businesses significantly automate repetitive workflows, from data entry to report generation. As a result, employees are freed from time-consuming manual tasks and can focus on more creative and higher-value assignments. As a result, work productivity is enhanced, errors are minimized, and the time to complete tasks is shortened.
Improving data quality
The use of management software significantly improves the quality of the company's data. Thanks to the centralization of data into a unified system, the accuracy and consistency of information are highly ensured. Retrieving, searching, and analyzing data has become faster and easier than ever. Especially, advanced security features help protect data from the risk of loss or intrusion, providing absolute peace of mind for businesses.
Enhancing decision-making capabilities
One of the standout benefits when businesses adopt management software is the ability to enhance decision-making quality. Thanks to detailed and visual reports, leaders gain a comprehensive and in-depth view of the business situation, allowing them to make accurate and timely decisions. Moreover, the software's deep data analysis capabilities help businesses discover new trends, seize opportunities, and effectively mitigate risks. Especially, based on historical data, the software can also forecast future trends, helping businesses plan their operations more proactively and effectively.
Enhancing transparency
Transparency is enhanced thanks to management software that provides business leaders with a comprehensive view of business operations. Monitoring all activities from sales, production to finance, combined with deep data analysis capabilities, provides a solid foundation for making accurate and timely business decisions. At the same time, the quick detection and resolution of issues help minimize risks and optimize operational efficiency.
5. Difficulties in using management software
High initial cost
One of the biggest challenges is the high initial cost. Businesses must invest in hardware, purchase software licenses, and pay for the installation, configuration, and training of employees. Upgrading computers and networks to meet the software's requirements is also a significant investment. In addition, the cost of purchasing licenses for quality software is often quite high, putting pressure on the company's budget.
Difficulty in changing work habits
The transition to using management software also comes with the challenge of changing employees' work habits. Many people often feel reluctant to change when they are used to the old way of working, or fear making mistakes when using the new software. Additionally, the lack of motivation to learn and use new tools is also a significant barrier.
Difficulty in choosing the right software
The current market offers a variety of software solutions, making decision-making difficult. Many software solutions may not fully meet the specific job requirements of the business or may be difficult to integrate with existing systems, causing obstacles during the implementation and usage process. Therefore, thoroughly evaluating factors such as scale, industry, and specific needs of the business is extremely important to select the appropriate software.
Difficulty in training employees
One of the other common difficulties is the lack of time, as employees have to balance their current work with learning new software. In addition, the lack of information technology knowledge among some employees also hinders the learning process. Finally, effectively conveying knowledge is also a challenging problem, requiring the trainer to have appropriate methods to help employees understand and proficiently use the software.
Technical issues
No matter how modern the software is developed, it can still encounter errors during use, causing work disruptions. In addition, network connectivity issues, such as disconnections or poor transmission, also directly affect work efficiency. Especially, security issues are always a top concern when using software, with the risk of cyberattacks and data loss constantly lurking, threatening the safety of business data.
Difficulty in customizing software
Many software applications on the market have fixed interfaces and functions, not allowing businesses to adjust them to fit their specific workflows. This can cause inconvenience and limit the ability to fully exploit the software's potential. In addition, customizing software often requires high costs, including development and maintenance expenses, making it difficult for many small and medium-sized enterprises to implement.
6. When should software be used for management?
The transition from traditional management methods to using software is an important decision for businesses. To make the right choice, you should consider the following factors:
The scale of the business is increasingly large.
As the amount of data, customers, and employees increases, managing them manually becomes difficult and prone to errors. The software helps automate processes, enhancing work efficiency.
It is necessary to enhance transparency in management.
If a business wants to have a transparent management system that is easy to monitor and control, software is an effective solution. Software helps to store and manage data centrally, facilitating audits and evaluations.
Want to enhance competitiveness
In today's competitive business environment, making quick and accurate decisions is a crucial factor. The software provides data analysis tools, helping businesses make informed business decisions.
Want to improve customer service quality
The software helps manage customer information effectively, thereby enhancing the quality of customer service.
Want to reduce costs
Although the initial investment cost may be high, in the long run, the software helps businesses reduce personnel costs, office supplies costs, and other expenses.
7. Conclusion
The world is becoming increasingly digital, and business management is no exception. The transition from traditional management methods to using software is an inevitable trend. Businesses need to quickly adapt to this change to maintain their competitiveness. Although the initial investment cost may be higher, in the long run, using management software will help businesses save a lot of costs. From reducing personnel, optimizing processes to minimizing errors, software is a smart investment for the future.