D Murali

Wear the CFO hat!

D. Murali | Updated on September 17, 2011 Published on September 01, 2011


For SMEs, investment in IT has to definitely have short-term benefits and will have to be at least neutral in the long term.

It is important for SMEs not to be insulated from the financial sophistication normally associated with larger enterprises, feels Mr Bastin Gerald, CEO, Apptivo, US (http://bit.ly/F4TBastinG). “I'd like to think ‘growth' is inevitable,” he avers, during a recent lunch-hour interaction with Business Line.

Reminding that, apart from organic growth, businesses grow by acquiring and merging with each other, Mr Bastin notes that when such a deal is a possibility, it always helps to have clean / sophisticated financial processes. Our conversation continues over the e-mail. Excerpts from the interview.

From your experience, can you think of a few examples of SMEs being savvy about finance?

Within every successful entrepreneur, there is a CFO hiding somewhere. In general, these guys focus on the basics — cash flow and profit. Mr Kishore Kochi, who runs Swathi Jewelleries, an online jeweller out of Washington DC, has managed to grow his business by more than 100 per cent every year . Mr Amin Sikander, who founded Gaea Global Technologies, has successfully steered his ship through a couple of market downturns and managed to maintain more than a 50 per cent CAGR. Mr Rajeev, who heads the Malabar Beedi group in Madurai, India, has diversified into many areas including business services, printing, and trading.

All these guys do a lot of mental accounting. Although there is a strong reliance on clean books, key business decisions are typically backed by quick, back-of-the-envelope or mental accounting.

Do you find small entrepreneurs expecting their IT investments to pay back fast?

Typical IT investment motivations are to save cost, automate / speed up business processes, know more about business, and comply with regulatory requirements.

I do believe that, time permitting, going through a proper ROI exercise is beneficial and will stress test the investment decision. Although they do seem to live a lot in the “short-term world”, they don't ignore the long-term completely. The investment has to have short-term benefits and will have to be positive to neutral in the long term.

Are these entrepreneurs looking for IT solutions to make a difference to their revenues, costs, and profits?

Definitely there is a profit motive, which is essentially influencing revenues, costs or both.

For instance, when you implement a CRM system, you expect to increase the rate at which you acquire and retain customers. Similarly, when you implement a project tracking and invoicing solution, you want to make sure your projects are executed on time, services are billed for on time, and your accounts receivable is collected on time.


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Published on September 01, 2011
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