How do we decide whether to keep, replace, or enhance our systems?

Great systems can add tremendous value to your business. They make processes more efficient, control risk, deliver a better customer experience, and produce superior data and insight. Poor systems are inconvenient and sometimes devastating – demoralizing employees with red tape, offering a difficult and frustrating user experience, leaving data fragmented and inaccurate, and creating confusion with customers.

If your systems aren't adding the value they should, what should you, as a leader, consider when making decisions to keep, replace, and enhance your systems that maximize the possibility of success?

Systems are a lot more than just technology and business processes. They are behavior patterns, incentives for collaboration, institutionalized cultural norms, and tacit expectations for how your people should be efficient and effective. Successful systems account for:

  • Psychology - why do people think this way?
  • Sociology - how are groups of people behaving?
  • Tools - what do we use to do things better?
  • Management science - how do we measure what's happening?

They are of course also rooted in business science, mathematics, and core technology.  They amplify both desirable and undesirable behaviors and, in turn, either accelerate or hold back your business growth.

The success of your business systems will be determined by three main factors:

  1. How well the technology and processes fit your business strategy
  2. The quality and capabilities of the technology
  3. How well your users adopt

Understanding where your business stands with each of these will help you choose the best path forward.

For purposes of this article, “systems” refers to both the business processes and the technology used to support them.

Fit to the business

The basic question is: did you choose a reasonable solution up front? There are few legitimately bad software packages and also few that will exactly fit your business processes without modification. The question is not “Is the system perfect?” but rather “Did we make the right trade-offs and decide to change the right processes when we selected (or designed) the software?”

To be clear – if a system failure is because of a major deficiency in this area, you will probably need to replace it. If the deficiency is minor, see section 2 for a few ways to address it.

How do you ensure business fit?

A rigorous system selection will force your team to collaboratively decide on the most important requirements up-front and agree on major process changes. Systems projects are a litany of trade-offs – what needs to be perfect, what areas can you change your process to fit the system, and what processes are worth spending more effort and money on (e.g. customizing the system or purchasing a separate bolt-in). The thoughtfulness of these trade-offs are what will set the implementation up for success.

Do not skimp on the selection process. Some of the most expensive implementations are the result of the cheapest selections. Analyst reports will tell you general quality and focus of products, but not how appropriate they are for your business. You need to get inside your business, uncover its operating priorities and biggest value drivers, and match them with the systems you are considering. This takes a little bit of money and a lot of time from your best people – but it’s worth it.

Technology and Functionality

The base technology is usually fine – if it doesn’t “work” it can usually be fixed with some professional help. Custom software can be more challenging or more expensive, but these systems can be fixed as well. The good news is that in the new world of enterprise technology, there are many more options than those offered by your primary vendor to support your most valuable areas, mitigate major risks, or make a challenging system more palatable for your users.

Example: ERP

ERP systems are sprawling technologies that do a lot and ask a lot of their users. The accepted approach to ERP used to be to standardize business processes to the functionality of the package, adjusting only when absolutely necessary. This maximized the vendor’s ability to support the solution and tried to concentrate investment in the most important areas.

This isn’t necessarily the case anymore. There are more niche solutions, software is easier to build, and most platforms play nicely with each other. It’s more important to choose the right ecosystem of technologies that give your business flexibility and in the aggregate add the most value than it is to standardize on a specific package.

If your platform is mostly successful but failing in a small number of critical areas, is it possible to simply plug those holes with secondary applications? This is often easier, less disruptive, less expensive, and more effective. Odds are good that you can avoid a wholescale replacement.

In these cases, you should perform selection processes for add-ons where the base system doesn’t fit the business. This can include features like subscription billing, customer support, portals, analytics and reporting, or workflow applications. Not all packages do these things well, but there are many third-party products that will play nicely with your other systems and dramatically improve these areas.

User Adoption

Your users will ultimately determine the success of the solution. Assuming you made acceptable trade-offs, made reasonable assumptions, and have a fundamentally sound, supportable ecosystem, your users are responsible for the consistency, efficiency, and innovation the new systems drive.

If you don’t think your current systems are adding value, ask yourself: How much is due to poor technology and how much is due to employees resisting using it correctly?

Fixing user behavior is challenging. Most of it is set in motion during the implementation itself. When a system has been deemed a failure, it can be hard to recover. Good project managers will help manage these user expectations in the immediate aftermath of an implementation but this can only last for so long. If things spiral in the months following a go-live, sometimes this can be a lost cause.

So what do you do?

It depends on how bad it is. Sometimes a few loud user groups end up coloring the organization’s perception of the entire system. You need to put a laser-focus on these groups, solve their problems while giving them ownership, and slowly bring them back into the fold. At the same time you need to roll-out incremental improvements demonstrate momentum to improve the business.

If the system isn’t being adopted because people don’t understand it, this can be easier. Start with aggressively pursuing stakeholder buy-in from senior leadership. They need to re-inforce with their staff how important it is to use the system as intended and to identify additional training requirements. This needs to be combined with a rigorous enhancement process that uses stakeholder feedback to improve the system.

If this is the core problem, have an independent professional work with your users on assessing the source of the system’s weaknesses. They will cut through the noise and the politics and be able to tell you the heart of the problem. This is very difficult for anyone who had a stake in the original process.

And remember that the users’ complaints may be right: Maybe the system was the wrong choice or was not implemented well. Given that they have the most detailed view of the solution, they may have valid points in this area. In these cases, the details matter. Understand the specific issues instead of the broad complaints and have someone help you understand if they can be resolved or not.

Remember: it doesn’t matter what the users should be doing, it matters what they are doing. Blaming users doesn’t accomplish anything while giving them resources, listening to them constructively, and supporting them accomplishes a great deal.

In Summary

If you feel your business needs technology changes, look at your systems holistically. Understand the processes, the system possibilities, and the cultural needs of your users. Ensuring all of these elements directly support your growth strategy will greatly improve your business and ensure you can be successful as you grow over the long-term.

Most of all, get an independent opinion. It may end up saving you a lot of money and aggravation, and will certainly help confirm your best path forward.

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System Selection and the Future of Enterprise Software

Today's entry will be (uncharacteristically) brief because Gartner produced an excellent report on this topic that says much of what I want to convey about the future of enterprise tech.

Gartner's point of view on what they are calling "post modern ERP" can be found here. It is worth your time. (h/t to @John_Hoebler for bringing it to my attention) 

I fully agree with Gartner's view on this topic and it meshes with my experience in many of my full-lifecycle enterprise software implementations. For a few clients, the monolithic model has worked reasonably well, but for many - particularly in software, high-tech, services, and media - monolithic ERP has been a clumsy fit for substantial pieces of their business.

Now organizations have more options available to them. The enterprise software landscape is much more distributed than it used to be. The cloud has enabled many new, innovate enterprise tech companies to deliver products that are highly tailored to a single purpose or function (keeping in the spirit of the weather here in the Northeast, "snowflake systems", if you will). There are great solutions that now cover your most strategic functions. Some examples:

  • If you offer bundled services and the billing module of your ERP solution can't do the revenue recognition required, you can now use Zuora
  • If you have a customer service division that now needs to handle both products and services, there are options like Zendesk that can be used for all your call center operations regardless of the product or service that's stored behind the scenes in your inventory or order management systems.

Your ability to reduce the operational overhead of running these solutions - largely by hosting them in the cloud (usually public) - and turn your investment and people to more value-added activities like managing more integrated ecosystem of solutions and systems will be a greater determinant of your future success as an IT organization.

My point is this:

Software selection and project visioning is more important than ever for new ERP solutions as well as new software that supports any major business function.

New federated ERP models will force companies to carefully select the solutions to bring into their ecosytem based both on their fit to the business and their ability to seamlessly integrate with the core of the enterprise. My advice: don't short-change yourself on the selection process.

  • The decision on your systems will no longer be about the level of fit of every module of an ERP solution to your business processes and how much customization will be required. If it's a clumsy fit to order management but supports the rest of your business, try to find a better order management option.
  • Your should not automatically take a "no customization" route to your enterprise software implementation just because it creates IT complexity. If processes will be substantially sub-optimized by a clumsy process to fit an ERP platform, you should look to see if there is another solution available
  • More native integrations will be available and figuring out which systems and which cloud providers work best together will not be an important part of the selection process
  • Long-term TCO is no longer an adequate measure of a system's costs. If you are sub-optimizing business processes and making people's jobs more difficult to do, you are understating your TCO by ignoring the opportunity cost in these areas. (e.g. forcing data management responsibilities on a sales force because they are the entry point for customer master data)

Systems selection will be about the business goals you are trying to accomplish through ERP and how the systems will integrate with and support the best solutions for every other part of the business. It cannot, fundamentally, be just about the needs of the core area owning the implementation: it needs to also consider the relationship with the rest of the business and their systems.

Elegance used to be defined as the single solution or smallest set of solutions that can enable your business. Elegance now means the ecosystem of solutions that fit your business so well, they can truly help drive your strategy forward.

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Dear Tech Buyers: The Customer Experience Matters!

It’s a new day in enterprise technology buying!

Today, Dion Hinchcliffe, Chief Strategy Officer at Adjuvi, tweeted a brilliant WSJ post authored by Bain partners Chris Brahm and Michael Heric [WSJ subscription required - find the link on my twitter account to read for free]. In my mind, it should be required reading for anyone with influence over a technology buying decision. Their point basically boils down to this: The average enterprise software user experience is lousy, big software vendors don’t really care because they have strong relationships with analysts and IT buyers, and they lock customers into long-term contracts on solutions that have crazy high switching costs. But this is changing rapidly. Now, it isn’t just IT making software decisions. Business executives and non-IT users are gaining more influence over buying decisions – one Bain survey that suggested that an entire third of this purchasing power has moved out of IT.

Here are my favorite quotes from the post:

for software, they [end users] complained of long and complex installations, poor integration and generally clunky functionality and interfaces.
Another common mistake we see is telling sales teams just to extend their IT sales efforts to business buyers…
IT buyers are accustomed to evaluating a technology’s features and functionality…Business buyers are more focused on outcomes…

Traditional enterprise software packages have a number of knocks against them: long implementations, middling fit to a number of business processes, massive infrastructure requirements, complexity that is very hard to change once it’s in place, and most of all bad end-user experience.

The reality is that newer software vendors (Think @NetSuite, @Workday) are now ahead of the big guys in terms of user experience. Big vendors have long-term contracts in place that still go out many years into the future and they have multi-year product lifecycles for major releases. They have not been incented until very recently to address many of these areas. In fairness, the large vendors are now rapidly catching up, but only after facing stiff competition from fast-growing competitors.

So what does this mean for those running selection processes - particularly when the sponsor is outside of IT? This has particular relevance for companies too small to have a fully mature internal IT capability and who have been making buying decisions without a strategic IT executive for years. 

It means there are substantially more good options in the marketplace to choose from and you should look at them carefully. You probably want to bring in someone to help you navigate the complexities and nuances of all the products that are available and come up with a good short list. The cost of doing this up-front will be easily offset by the money you save on licensing and implementation and downstream integration costs.

It means that there is no reason to rate big vendors higher than small ones just because of size. I would recommend setting a minimum threshold in terms of user base or longevity in the marketplace and give no additional credit to companies who exceed it. Scale in this area does not mean as much as it used to, and it may actually begin to damage the quality of your experience.

It means that you really need to understand the length and complexity of implementations. If an implementation seems too long (after you add 20-30% to the initial estimates) or too resource intensive, be sure to use it as a point of comparison with your software options. Newer, more agile packages and some of the most recent offerings from the big guys have addressed this. It really is possible to put together good solutions out of many small projects now, and integration is much less problematic and much less costly than it used to be. Don’t be afraid to go more best of breed either.

It means the buzzword “cloud” should really just be a given at this point. There are small, specific niches of the market that still need on-premise solutions, but the vast majority of companies have no reason to host their own software or to deal with upgrades. For more on this topic, take a look at John Hoebler’s excellent posts here on major cloud benefits and here on why you want to avoid upgrades.

It means you need to get real users in the room to help choose new software and do not allow them to de-emphasize the importance of the user experience. If the software is hard to use; if it makes people’s lives harder and complicates how you do business, the savings on IT maintenance and licensing will not amount to much. Research like the article references shows you’re not alone and the software vendors are being forced to catch-up. Choose partners who are showing a real effort to improve in this area.

Finally, it shows that the difference between business and IT continues to diminish. Your technology folks need to talk in terms of business strategy and operations and your business folks need to be fluent in technology. If you don’t yet have people who can tie these together, you will need to find someone who can help in the short-term and who can help you build these capabilities internally within you existing organization. While it may be an area you can hire consultants for on a project-by-project basis now, your long-term effectiveness will depend on your own people being able to sort through the complexities and priorities of these decisions on their own.

Thanks to Chris Brahm and Michael Heric for the great article and thanks to Dion Hinchcliffe for bringing it to my attention. As I said at the beginning, this should be required reading for any executive with influence over technology buying decisions.


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