Why does operational efficiency even matter for a SaaS company?
It matters because we work in a market-based economy. The labor market makes the acquisition and retention of great people a priority. The B2C/B2B market drives competition with a focus that the problems we solve better be worth more than the cost of our products and services. The corporate finance market tells us we need better margins, economies of scale, and do more with less as we grow. And its operational efficiencies that give you scale.
They give you the ability to retain the best people and keep control of your costs while delivering quality products and services to your customers. The market rewards companies and employees with proven abilities to scale.
It has been an enjoyable and interesting experience to observe and be a part of the evolution from a small team to an organization of accountable people. We have learned quite a few lessons and fold this experience into how we evolve as a company, evolve our solutions and help our Private Equity clients evolve using private equity management software.
I’ve noticed several patterns over the years that seem to repeat themselves over and over. Stick with me because I will bring this all back to operational efficiency in due time. Many folks who don’t work at a small company may be surprised to know that it’s not always clear who does what at a smaller organization.
How to become more operationally efficient
The subtle differences in language in the scenarios above hint at the evolution in how we have become more operationally efficient from the people side of things. It evolved from a situation where everyone was responsible (which means nobody is responsible) to single accountability and in some cases, a process that can be followed by anyone.
A similar evolution has occurred in how we do things:
- Step 1: Awareness of a lack of a process
- Step 2: Do it a few different times and in different ways until we are confident that we understand it
- Step 3: Document a manual process and iterate on that a few times
- Step 4: Automate using technology or vendors to streamline process flow
The 4 steps above are much easier said than done.
Frankly, it may take years to get from step 1 to step 4 for a complicated process. In a perfect world where operational efficiency is a priority (if you are in a market-based economy, it better be) and you have sufficient capacity to work on the business, you have to think about the Who, What, and How.
Most people only think about the ‘how’
- Who is responsible, meaning who will perform the process.
- Who is accountable, meaning who will explain either the success or failure of the process.
- I like to think of accountability as being both responsible and accountable.
- What problem is the process trying to solve?
- What outcome is desired?
- Does the Who understand the What?
- How is the process going to be done?
Once you have all of those key elements figured out and followed by everyone, you will see improvements in operational efficiency. Better yet, you will start to see reductions in the amount of time to achieve fully automated processes once accountability is understood. In our experience, the efforts to drive operational efficiency are a continual process for improvement.
As an ambitious and evolving SaaS organization that specializes in private equity software, that journey never ends as we strive to thrive and become an even better company, business partner, and solutions provider.