Hungary: Are managers overestimating the efficiency of software solutions?

Company managers tend to overestimate the role of software, according to a study which finds some enterprise resource planning systems can even hamper a company’s productive sectors. Many workers also do not realise that they might have to work longer because of extra time spent in meetings or responding to emails. 

Research background

A recent survey has shed some light on companies’ use of software (in Hungarian), previously a rather hidden feature. The survey, commissioned by DMSONE Zrt., a software development and consulting firm, was conducted by eNET, an internet research and consulting company.

eNET began by carrying out phone interviews with managers from 350 companies with a combined turnover of over HUF 2 billion (€6.52 million as at 9 February 2015) and employing more than 20 office workers. In this initial survey, eNET analysed the companies’ internal operations and their use of information technology, before conducting in-depth interviews with 35 information technology (IT), marketing and operations leaders. Managers were asked about factors affecting the operation of the company and the IT solutions chosen.

The survey revealed some striking findings, which were published by DMSONE and eNET in July 2014.

Main findings

The initial survey showed that Hungarian companies face several organisational problems. Company leaders are open to introducing new software, but often fail to select the most suitable.

Business management is relatively complex in companies with more than 50 employees. Companies employing 50–500 people usually have a leadership structure organised on three levels, while companies with more than 500 employees typically have a four-level leadership structure. Decision-makers are convinced that such structures allow them to delegate and monitor duties easily. In reality, however, the fragmented vertical hierarchy makes it difficult to assign tasks and to follow their resolution, while the slow and complicated coordination involved hampers routine work organisation.

In companies with more than 50 employees, the administrative burden is significant. On average, 1,500 documents are generated each month in companies of this size, which means storing 50–100 documents every day. It is no coincidence these companies use at least three different types of software to support their internal operations.

Managers like, but often misunderstand, these enterprise management systems. According to the survey’s findings, chief executive officers (CEOs) overestimate the role of software. Even though half the companies with 100 employees use a subsystem for enterprise resource planning (ERP), many managers still believe that this can also replace traditional forms of document management and teamwork support.

However, the survey has revealed that ERP systems, as they are used in most companies, neither support the whole organisation nor a company’s complex internal processes. Actually, ERP systems are applied only by certain parts of the company and with limited functions. These systems typically best handle activities such as finance and production, which are sorted in processes, according to predefined rules. But they are inflexible, and thus cannot effectively handle spontaneous tasks or the unforeseen changes (and the related communication) typical of ad hoc teamwork. ERP systems also cannot provide effective help for project operations where changes occur frequently and flexibility is crucial.

ERP systems can be, but currently are not, linked to various document handling systems and teamwork support software. These sorts of shortcomings often hamper the productive parts of the company most.

Observing daily practices

The survey analysed how meetings and internal emails have become part of the corporate culture and whether they increase efficiency. The research modelled a typical, email-based decision-making process, involving five people, and found that this generated 65 emails.

The survey also found that office workers spend close to 24 hours a month, or three working days, at meetings, with two-thirds of workers thinking that these meetings are not at all productive. Meetings are often difficult to arrange at a time which suits everyone concerned, and are frequently rescheduled or postponed. This leads to delays in completing tasks, if they are accomplished at all. Most meetings are of varying importance to those attending them, with some participants who need to attend for only five minutes, having to stay longer; while others, for whom the meeting would be useful, cannot be present.

All this means that, in many cases, the office workers – and particularly managers – spend a significant part of their working time in meetings as well as responding to emails, with the result that their actual work is accomplished only after normal working hours. All this is neither efficient, nor does it help a company reach its improvement targets.

The survey’s in-depth interviews showed that company managers are aware that meetings and emails reduce efficiency, but they do not know how better to support internal communication and teamwork. Thus it is not surprising that the use of software for project management and collaboration has been found to be extremely rare in the companies analysed.

Consequences

Companies’ organisation of work has been subject to fundamental changes. Different ways of working are being introduced and information technology is expected to improve company performance. However, computer systems do not solve all organisational problems and, sometimes, according to DMSONE, they cause more.

The survey’s respondents considered their companies to be innovative, probably because of the use of enterprise software, assessing this characteristic at 7.6 in a scale of 1 to 10. Two-thirds of managers expected an improvement in work organisation by using software, while only 12.5% put financial returns as the primary goal.

The survey also revealed that companies are open to e-invoicing: three-quarters of the companies in the survey received e-invoices regularly, with respondents expecting this to increase to 90% within two years. This can assist even smaller enterprises to use cheaper and more environmentally friendly business practices.

New types of work organisation are effective only if they are accepted and adapted to by all concerned, including company leaders. Well-organised work helps attract a young, well-educated labour force; it can make sense of daily work, and it improves the company’s effectiveness. Today, companies need to respond to challenges quickly and, in this competitive environment, the internal organisation of work must not distract attention from the main activities of the company.

If internal communication is poor, with uncontrolled or unregulated workflows, tensions may develop among staff, resulting in additional, unnecessary work. For an enterprise organisation to remain viable it is crucial that internal processes, such as IT management and workflow management, take place smoothly so that employees can focus on their main work, without routine tasks robbing them of valuable time. 

The survey concluded that the participating companies would rather have software for project management and supporting teamwork. This kind of software can display all communications in one place, storing the whole project documentation, while speeding up and simplifying managerial tasks such as delegating, monitoring and controlling. It also efficiently lists urgent tasks, issues deadline reminders, and aligns incoming accounts with contracts.

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