Member Article

2021: the year that back-end needs to become front-of-mind for ambitious scale-ups

By Brian Duffy, President, SAP EMEA North

The past year has been make-or-break, not just for individual businesses but entire sectors. Digitisation and market disruption are hardly new trends, but amidst a global pandemic, they have transformed the way we work, shop and live. Many of the businesses that stepped into the gap of legacy businesses have been scale-ups: fast-growth businesses on an upwards trajectory. Think of the likes of Deliveroo, Monzo and Cazoo. The question remains: will these businesses continue to grow once the pandemic has passed?

According to a recent report from Deloitte, Innovate Finance and the ScaleUp Institute, these fast growth businesses will be critical to the UK’s post-Covid economy and recovery. Given the right management expertise and technology to help them grow, they have the potential to create high quality jobs, increase work productivity, boost regional economies and protect the environment. It is therefore essential that we ensure scale-ups have the necessary tools to step up to the mark and continue their growth trajectory as we look to recovery as a country.

What holds the key to that success? One vital element to unlocking the potential of scale-ups lies in approaching back-office solutions in a more sophisticated way, looking to a more formalised way of running the organisation. A report from Barclays and The University of Cambridge supports this view, outlining how “management systems” and “a top management team with the proper skills and partners who collaborate with the firm” are vital to creating and sustaining scale-ups.

The importance of the back-office approach Tackling back-end solutions head on and finding fit-for-purpose solutions is important for many reasons. It’s understandable that to get to where they are, scale-ups have lived and breathed a rather ‘in the moment’ mindset, focusing on selling the product, raising the capital and hiring the right people just in time. It’s this mentality that has set them on the path of success.

To continue to grow once those impressive milestones have been reached, scale-ups need to focus on how the businesses should be run for the long haul. It’s clear from on-the-ground experience and numerous reports that only when foundations are built on robust back-end solutions will this growth be maintained.

When a scale-up reaches a fast-growth stage, it’s even more important to understand what is happening in the business in real-time. Without the proper platforms and programmes in place, it can take upwards of weeks to get logistics and sales data. Unfit solutions are often outpaced by fast growth because it makes quick decision-making practically impossible, let alone being able to effect swift changes when needed. Only a dynamic back-end solution will afford rapid, data driven decision-making.

Another way in which taking a back-office approach will pay off is through the benefits it will have for future funding. Scale-ups are facing a £15 billion funding shortfall according to the ScaleUp Institute report, so competition for investment moving forward is going to be even stiffer. As such, the structure and data insight provided by sophisticated back-end solutions is going to help to make a compelling business case for investors and venture capitalists who are looking for accurate data and clear traceability.

Identifying areas for an upgrade However, more comprehensive, mature back-end solutions have often been seen by scale-ups as aspirational, despite the clear benefits. Cost barriers and integration concerns often leave scale-ups sceptical about whether this is a step too far for them. But this simply isn’t, and doesn’t need to be, the case. Enterprise Resource Planning (ERP) may seem like a lofty term for an exciting fast-growth business, but essentially, it breaks down to the cogs that keep the machine running. And as scale-ups grow, the machine needs to be well oiled.

It’s important for scale-ups to identify which back-office functions need addressing as a priority. If the scale-up is a service provider that has required a large customer service team, it might be that a core HR solution is the first port of call to manage a growing employee base effectively. If the business is driven by consumer-demand, business analytics might be one of the primary considerations. However, whether it’s an HR function, business analytics, finance, procurement or project management, each is important to address in order to drive scale-ups to future success.

While it might seem like a long list of functions to consider, there are expert providers in the space that have the back-office solutions that can scale with the business, addressing not one, but all, of these areas. It’s particularly important that when considering a partner, implementation times are fast, costs are manageable and a customer service team is always on hand to support.

Scale-ups are the businesses of tomorrow. Spanning multiple sectors and becoming important cornerstones in the lives of so many, it’s vital that scale-ups don’t fall now. As the Barclays report also concludes, the UK is at a period whereby its attractive scale-up ecosystem could become a European leader and a driver of economic growth. It’s time to tackle back-office solutions to make that prediction a reality.

This was posted in Bdaily's Members' News section by SAP .