Why You Should Make Operational Efficiency a Priority

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.

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A traditional crm was built for general ‘customer’ scenarios

Software platforms have made the world a better place by making work a better place. Indeed the world is better off when people enjoy their jobs even marginally more, and workplace applications on big CRM platforms like Salesforce.com have done that and much more.

But the potential that platforms like these offer presents diminishing returns: once the platform provider has engineered too many industry specific components into its platform, its usefulness for other industries begins to be threatened, and with that so do the usefulness of the component tools built into the platform.

So it is with the CRM category that Salesforce.com has defined: it is generic enough to work for many industries, and yet still offers the potential for others to round off the edges and nail more vertically-oriented and extremely tailored software solutions.

Private capital markets are actually a great demonstration of this dynamic. Where generic CRM platforms simplify — appropriately so — to assume there’s a business, a customer, a sale, and service of that customer, there are a few industry-specific pieces that are missing.

Take for example, that investors become customers by investing through legal entities the GP raises. It’s a subtle but important nuance that just doesn’t make sense at a platform-as-a-service level (because it’s overly complicated for a simple one-time sale that many industries require), but which can easily be added without 10 years or software engineering. Once provided, the rest of the platform’s components become tremendously powerful again and you’re set to take over the world.

As a traditional CRM in our pillars methodology, these nuances must be present to properly account for investors in these legal entities, potential target companies and which are owned by these entities, the context of all interactions with these parties (as well as the appropriate overlap, ie co-investments), and how you’re arriving at finding these opportunities on both sides of the equation, such that you’re able to piece together what’s effective and what’s not. Not just because we say so, but because these are the very relationships and data that are key to the motivation behind a CRM in any industry.

It’s critical, too, that the valuable publicly-available information that helps to enrich CRM systems and save users painful steps of entering it themselves is fully-integrated at the platform level.

Again, look no further than the 3,000+ pre-built integrations that Salesforce.com — the creator of the CRM platform concept — has at a platform level to do so, and which only exists by way of holding just short of overly-specifying certain industry workflows that would present challenges to properly integrate.

Stakeholder reporting and communication (investor relations) draws on a range of datasets

The traditional “customer service” model of CRM systems once again makes overly-simplified assumptions about the customer relationship when applied to private capital markets.

In fifteen years I personally have yet to hear the terms “warranty” or “service call” in this market because it’s just not the same. But make no mistake, as uncomfortable as it may be to say aloud, customer service is more important now than ever and it’s constantly happening; the industry is, after all, considered to be a financial “service”.

As it turns out, that service is primarily information-based — it’s driven by data and takes the form of reports and analysis that drive decisions, and then end up again in investor-facing reports and analysis.

The foundational elements of a private capital markets CRM must be built such that they accommodate this data (like we discussed above), but so too that it can accommodate additional supporting data that investors (customers!) need in the context of service.

Oftentimes this supporting data — financial metrics and time-based values, for example — is believed not to meet the traditional definition of CRM and the natural thought is “well, better do this in Excel!”.

While I happen to believe Excel is still the greatest software application ever built, its introduction to this value chain we’ve discussed herein actually creates the problem many firms suffer from: key data needed to provide customer service (again: effectively the entirety of a firm’s reports and analysis) is now in disparate systems and detached.

Both of those dynamics are important and distinct: not only is this supplemental data disparate, but when brought together there is no logical association that can be made between the two data sets.

Allow me, then, to make the point very simply: not only can this financial and time-based value data (you may be thinking about is as “portfolio monitoring” or “accounting”) be a part of a CRM, it is arguably the most important part of a CRM because it’s at the core of what providing service to the customer entails — information that comes out of data!

Firms need a digital method to engage stakeholders (ie investor portals)

Investor portals are not new; in fact, for many of us — including myself — they conjure up horrifying nightmares in which we’re aimlessly guessing at folders to find the newest document we need.

So in lies the opportunity: not only have the portals we’ve come to hate not simplified the process of acquiring information, they’ve failed to create an entirely new experience that is “customer service” driven.

To be fair, this is not a B2C market where you’d be long out of business for not having focused on customer service and thus the customer’s technology-driven experience. But don’t expect to be around too much longer if you aren’t thinking about this shift.

Today’s institutional investors increasingly expect this same consumer-like experience, and a massive opportunity is being missed by not providing it. It’s not about providing them the experience they desire; it’s more about the ability to measure engagement that is had in return.

Put simply: what’s keeping the market from providing this experience is the availability of the information that’s required to create the service that provides the experience.

If you’ve hung in this long, you know that by focusing on your CRM, you have the data that’s required to manage the customer relationship and the technology-driven experience through which that information is shared to create a differentiated and opportunistic customer experience.

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