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iRely Study Finds Coops Recognize Importance of Technology For Growth, But Are Slow to Adopt

Date Posted: July 15, 2013

A new study by agricultural software provider iRely has shown that most co-op leaders recognize the benefits of new technology, although not as many are making investments due to time, implementation concerns.

Most co-ops (61 percent) are still running their accounting departments with spreadsheets or other manual processes.

The National Council of Farmer Cooperatives (NCFC) estimates that a majority of our nation’s 2 million farmers and ranchers are members of the nearly 3,000 agricultural cooperatives across the country.

Those co-ops account for as many as 300,000 additional jobs and run a total payroll of over $8 billion. As the NCFC puts it, “farmer cooperatives are farmers.”

Traditionally, however, emerging technologies enjoyed by other industries have been slower to the agri-business market.

It’s not necessarily that the co-ops weren’t adopting these technologies, but that they were not available from providers.

The focus has always been on innovative equipment and infrastructure, not as much on new software features.

So while other industries enjoy the efficiencies of new IT trends, the agricultural sector has long continued with their old ways.

According to a new survey by agriculture software provider iRely, however, this trend may be changing very quickly.

iRely’s survey of national cooperative leaders found that while all cooperatives offices haven’t necessarily shifted to better enterprise resource planning tools, their management teams are beginning to recognize the importance of new technology features.

The fact is that technology has not been a focus of cooperatives until recently. Only 13 percent of survey respondents attributed success over the past five years to technology improvements.

They instead listed infrastructure improvements (45.7 percent) and new hires or staff expansion (41.3 percent) as the keys to success.

When looking to the future, however, that mindset changes drastically. Asked what they believe will most drive success over the next five years, 47.9 percent cited technology improvements, far exceeding infrastructure improvements (22.9 percent) and new hires/staff expansion (29.2 percent).

The dramatic increase of respondents who note the importance of technology to their success highlights a growing shift away from the traditional way of doing business.

A contributing factor to this changing outlook could be an increasingly younger and more tech-savvy leadership base.

When asked which of these new technologies will be most important for cooperatives to remain competitive, respondents offered a long list of features.

Leading the way was electronic payments with 58.3 percent of respondents, followed closely by handheld and mobile devices (47.9 percent) and online customer account look-up (47.9 percent).

Others with over 30% of respondents included eCommerce, dashboard reporting/business intelligence and scale automation.

But while the survey respondents echoed the importance of these new technologies, they also exhibited that many cooperatives are still hesitant to adopt them.

Whether the technologies are being used for business data input or reporting tools to analyze that data, survey respondents noted a lack of technology features in their business.

As with many cooperatives around the nation, respondents are still using time-consuming manual processes to track many business activities that could be quickly automated with new software.

For example, 61 percent of survey respondents said they are currently using spreadsheets or other manual processes for both inventory and pricing management.

Of feed mixing operations, 36.6 percent use manual programs for their recipes and formulas, 34.1 percent of liquid propane and petroleum distributors still manually run their tank management departments.

In fact, when asked if they have a centralized reporting tool to analyze business data, a large majority, 64.6 percent, said no.

This lack of adoption trend continues even with technologies the respondents had listed as important to their future success.

For example, as noted above, 35.4 percent of respondents listed dashboard reporting tools as a key to remaining competitive.

Yet when asked which technologies were implemented, only 22 percent said they currently use dashboard reporting or business intelligence tools.

Similar gaps existed for electronic payments (58.3 percent to 43.9 percent) and handheld/mobile devices (47.9 percent to 39 percent).

So if these cooperatives are realizing the benefits of new technology features, why are they not adopting them?

The answer, as you might expect, usually lies in the time and money needed to implement new software.

When asked what the primary reason for not adopting new technologies, 37.8 percent of respondents said the benefits do not justify the costs.

A surprising second place answer to the question, however, was that their current providers do not offer them.

So if these cooperatives realize the importance of new technologies and their current providers do not offer them, then why not switch providers?

The survey showed that cooperatives have reservations about switching software providers as well and again, with time commitment a leading concern.

Time required to implement new software (68 percent) handily beat out financial concerns as the top barrier to switching for respondents.

Others noted the time required to research new providers, the risk associated with moving data and the long-term investment in their current provider.

Only 24 percent of respondents answered available capital, proving that many cooperatives have the money to switch provider and adopt new technologies, but fear the change will affect daily business operations.

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