To ERP or Not to ERP

The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency.  The second is that automation applied to an inefficient operation will magnify the inefficiency. Bill Gates We’re entering a new world in which data may be more important than software. Tim O’Reilly That is the question.  The cost of a business process can increase dramatically if the right IT enabling tools are not used.  Enterprise Resource Planning (ERP) software, perhaps the most complex of all business software, is designed specifically to support business processes.  It is rare that an ERP will support the business processes exactly as required in its vanilla form and so tradeoffs must be assessed against the broader strategic context of the business.  For example: Single Platform vs Best of Breed:  Integrating best of breed, third-party software into a ERP, introduces new challenges: interface management, multiple sources of the “truth,” increased support costs etc. Vanilla vs Customised:  Should your company build part or all of its software?  If the software is not a strategic differentiator then you may consider changing your processes to suit a software application as is out of the box.  This diverts implementation costs from software customisation to change management. These are just some of the strategic questions which must be answered by the Executive Team as a whole and not left to the CIO...

Is Your Business Transformation Driven by Your Strategy?

However beautiful the strategy, you should occasionally look at the results. Winston Churchill Your Operating Strategy must drive the four key elements of Business Transformation: Customers, Process, People and Technology.  Keeping these in balance improves the delivery of dollar benefits. Whatever your Operating Strategy may be, any attempt to change the status quo must first start with a clear understanding of what the customer wants and how they want it.  Business processes must deliver exactly what the customer wants.  Engaging people throughout a change initiative gives them ownership of the solution.  Technology enables the automation of processes and business rules. So what is your Operating Strategy? Do you need to stabilise your operations for an expansion into, say, Asia? Do your current operations provide the platform into which to integrate an acquisition? Do your customers find it difficult to do business with you? Perhaps your customers are not receiving the quality of product or service that they expect?  Is delivery timely? Are you looking to reduce total operating costs? Are you looking to improve the flexibility or scope of your products without increasing the overall cost and so offer more to your customers (hence increase revenue and margins) Activation Do your current business transformation initiatives contribute to achieving the objectives of your strategy? Assess how each of your business transformation initiatives utilises each of the four elements: customer, process, people and technology.  Are one or more of these elements not considered sufficiently? What gaps remain in your Operating Strategy after all your current initiatives have been considered?   Resources “Strategy Maps”, Robert Kaplan and David Norton, Harvard Business School...

Five Reasons Why 80% of Business Transformation Efforts Fail

Those that implement the plans must make the plans. Patrick Hagerty, Founder, Texas Instruments CEOs initiate Business Transformation projects with all the right intentions.  Perhaps the cost structure is too high, the customer finds it difficult to deal with us or we need to standardise our operations for upcoming mergers.  Whatever the reason, business transformation is now acknowledged to be a strategic tool within the CEO’s arsenal. So why does study after study show that between 60% and 80% of transformations either fail to deliver their objectives or simply fail outright and are cancelled?  Why do extremely complex projects, such as landing a man on the moon or building the Sydney Harbour Tunnel, succeed while the transformation of a company of 500, 1,000 or 2,000 employs fails?  Reasons can include: Culture. The transformation is at odds with the organisation’s values, norms and behaviours and threatens the status quo.  Resistance to change may be overt or covert. Lack of Process-Centric Approach. An organisation’s business processes define what it does and delivers.  The McDonaldisation of the enterprise gives certainty that the customer is receiving the right product or service. Lack of Buy-In From Key Stakeholders. WIIFM – What’s In It For Me?  The needs of the stakeholders must be addressed.  The critical, supervisor level is often insufficiently engaged. Technology-Led. Technology is a tool, as are a hammer and a forklift.  Tools alone do not improve the bottom line or customer service.  They enable business processes that do. Insufficient Funding. A lack of rigour in the business case may underestimate the true cost of the transformation.  Underfunded transformations usually cut critical, people...