Why You Need a Strategic Roadmap

This post originally appeared on my blog at CIO.com here:

I have come across several companies recently who do not yet have an IT roadmap.

In each situation the technology leader has said they want to be more strategic: they have visions of tech that pushes the business strategy forward and they have heard great stories about cloud/mobile/digital/social/etc. Unfortunately, they work in a cycle of reaction that manages to short-term needs rather than strategic priorities and many cannot find a way out.

Enterprise software is a victim of this cycle. Since it’s complex and pervasive it requires constant feeding by the IT department. Because it’s used to support fundamental business functions users frequently request new functionality. This makes it difficult to adopt the newest, most exciting technologies available because the immediate priorities are always fixing what exists.

CIOs themselves recognize this. Steven Norton (@steven_norton) at the Wall Street Journal (@CIOJournal) summarized the Top 5 priorities for CIOs this year. Two of the five are directly related to strategic vision (the other three are all related to security and risk).

  • Be the change agent
  • Have a business-centric vision

The question becomes: “how?” The answer often lies in a new roadmap. A technology roadmap can help the CIO act more in line with the strategy of the organization. It benefits both technology leaders and functional leaders and encourages collaboration that results in true executive alignment on existing and new investments.

What is a technology roadmap?

A roadmap is the governing document that dictates specifically how technology will support the business strategy and help drive businesses priorities over the next 3-5 years. From what I have seen, the best roadmaps contain the following:

  1. A strategy statement with the list of the strategic priorities for the business (not IT-specific).
  2. A timeline of the initiatives and projects that will occur over the next several years with approximate start and end dates, durations, and sizes.
  3. A prioritized list of improvement opportunities. This is generated jointly by the business and IT and should be refreshed periodically.
  4. High-level justifications for each project. These should be robust for projects over the next 12 months and simpler statements for projects past the 12 month horizon.
  5. The estimated cost and duration for each project. This is specific and reasonably accurate for projects occurring over the next 12 months and can be vaguer for projects that go out farther than that.
  6. An owner for each project. This is the sponsoring executive or delegate directly overseeing the project. For projects in the next 12 months it should be the specific person and for projects beyond that it can be the owning executive.

To support the roadmap (but keep separately), I recommend technology departments keep up-to-date versions of:

  • Systems architecture diagrams of the whole enterprise including interfaces, manual data movements, and platforms (this is not an infrastructure diagram – this is just systems specific).
  • A systems inventory that is periodically updated and contains at least end-of-life dates, basic statement on usage, number of users, and system owner.
  • A running list of emerging problems the IT support staff is seeing. Good help desk software should be able to track this for you.

How will you use it?

The roadmap has three primary functions:

  1. The IT leader will use it to facilitate investment discussions with the rest of leadership. The IT leader will use the roadmap as a baseline when discussing new projects or priorities with functional executives. It will help leadership understand how to balance investment and project priorities and provide a way to visualize tradeoffs.
  2. The IT department will use it to improve planning for projects and resources. The roadmap will help them anticipate resourcing needs, plan assignments, software and vendor selection, and costs ahead of time, and make it possible to start visioning and planning with the functional owners well in advance.
  3. Functional leaders will use it to understand what is required of and will be delivered to their departments. It helps them clearly understand how they should balance existing roadmap initiatives with new requests. The roadmap will keep functional leaders aligned on strategic technology priorities across the enterprise. Active management of the roadmap will result in much better executive alignment and stakeholder buy-in before projects even begin.

Who benefits from it?

Technology Leadership

The roadmap is designed to structure the communication between the technology department and the functional executives in a manner that allows the IT department to:

  • Act strategically when making investment decisions and managing projects.
  • Make securing buy-in from business leadership a more structured processes which, in turn, makes it easier to earn buy-in from business users.
  • Negotiate more effectively with leaders or staff who request new projects or initiatives that require significant, non-operating effort.

Functional Leadership

The roadmap allows functional executives to be strategic when they request new or improved technology. They can use their functional strategies to begin working with IT leadership to determine which types of technology projects will be required to achieve their goals.

The roadmap provides transparent resourcing needs for when business staff will need to be assigned to IT projects, clear traceability to costs, and the detail for why those resources and dollars are required.

Most importantly, it provides a strategic, structured manner of governing changes to business needs as they arise. It makes sure there is a technology voice at the table when decisions are made that require IT support, and it encourages balancing priorities across the business, diffusing conflict before it arises.

Staff and Project Teams

The roadmap clearly spells out why the projects they are working on are important and, as things on the roadmap move or are re-prioritized, it forces the leaders to explain why and how those priorities are shifting. The roadmap encourages a clear and regular line of communication between leadership and staff.

The Bottom Line

The business needs to fully participate in the development process. In fact, if the CIO reports to anyone other than the CEO, I recommend the sponsoring executive sit outside of IT. Because of the strategic nature of the document and how critical leadership buy-in will be, it will need support at the highest levels of the enterprise.

If you are a technology leader: you need to push the executives to support the development of an IT roadmap to help you invest strategically and have structured conversations around investment with the other executives.

If you are not a technology executive: you should be pushing your organization to develop a roadmap so you can act more strategically in your area and benefit the business holistically with new investments.

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New Blog Announcement / How CIOs Can Use Big Projects to Drive Their Strategic Brand

As of this week, I officially have two blogs: The one you see here and one at CIO.com.

On this blog, I will continue to focus on a broad range of issues relating to growth, profitability, and technology-driven improvement across the business and continue to make it relevant for smaller and mid-sized organizations as well.

At CIO.com I will focus on enterprise software specific topics. My agreement with CIO.com means I cannot post the same content here for a few weeks, but I'll put up short summaries with links on this blog whenever I add something new. Today's inaugural post is for CIOs looking to enhance their strategic brand within the C-suite. 

An excerpt:

Enterprise software implementations are among the most expensive, visible and risky projects you will undertake as a CIO. They are also among the most strategically important and, as such, can help propel the CIO to the role of true strategic adviser to the C-Suite.

Click here to read this post and subscribe to the new blog.

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The New Era of Selling and CRM: In With the New...Again

Well, it looks like CRM is about to be overhauled again.

For a long time, CRM was mostly about contact management. It evolved to include more sophisticated tracking of touch-points and was able to track pipeline, forecast revenue, and provide data for incentive compensation. With the rise of internal sales organizations many solutions like Salesforce.com upped their game again and made it much easier for internal and external teams to collaborate on leads.

But now, sales is changing again and in some industries, it's already changed. Today's sales process is much more of a complex, social game and, as noted in this recent Forbes article, there are a variety of new competitors to the mainstays of CRM (ahem...Salesforce). There are a number of reasons why, but points two and four are the most important takeaways to me. *

If you're about to undertake a big, expensive CRM implementation it may be worth taking a step back to make sure you're solving the right problems.

First issue: Your sales force doesn't like the software

  • Your sales force is resistant to using your current CRM system as prescribed
  • Your software is mostly glorified contact management
  • There are few value-added processes 

As you may have picked up on, the user experience is one of the attributes I value most in enterprise software. I have documented its importance a few times, like here for ERP software and here for its positive impact on talent and culture.

What I haven't talked about much yet is how good user experiences provides incentives to get people to actually use the software and to use it properly. In some cases this isn't as much of a factor. For example, accountants need to use the general ledger you provide since there isn't a way to do those tasks offline.

But CRM is different. Your sales people can do most of their jobs offline if they really want to. Other than management policies, strong-arming, and incentive compensation, there aren't too many ways to force them to use the CRM system as its intended.

The answer, of course, is to give them a set of tools that helps them do their jobs demonstrably better. If your sales team gets tools that help them engage customers like they were never able to, if it helps them quickly prepare for their meetings, if it allows them to get ahead of the sales process and increase the quality and sell-through of the leads they create, they will want to use the CRM tools.

One last thing: For the love of all that is good in the world, please give them something that's mobile. And not just a mobile website; choose a system with apps designed to be used on mobile devices.


Use a carrot instead of a hammer. Incent them with great tools.

Second issue: Customer engagement is lacking

  • You still rely on cold calling most of the time
  • You have no or little social media presence
  • You are not actively using content marketing
Around the world, customers enabled by the rapidly rising availability of mobile connected devices 3,4 are moving from product or service awareness, to research and then to taking action in a far shorter time than ever before
— A smarter approach to CRM: an IBM perspective (http://bit.ly/1EWooIL)

If customers are moving from awareness to decision faster than ever, then you need to establish awareness more broadly and more actively than ever before. Customers need to know you and like you before they are even ready to make a buying decision. 

In most industries, this requires content marketing. And content is only as good as far as you can get people to read it, so in many cases you need a strong social media presence. And it requires establishing connections with potential customers long before they need to buy anything.

There are, by my count, about 7 critical social media platforms depending on your type of business.

  • B2B: LinkedIn (personal and business profiles), Twitter, Facebook, Google+, Blogging platform (Wordpress, Blogger, etc.)
  • B2C: Twitter, Facebook, Instagram, Pinterest, some LinkedIn, Google+, Blogging Platform

How do you manage your interactions across all these platforms? There are certainly tools like Hootsuite that allow posting across multiple platforms but these won't help target or track them as closely as you need to. There are tools like SumAll and Klout that help measure and manage your impact. But how do you track it all?

New solutions combine CRM and social selling to help track all of this centrally and to measure its impact over time. I use Nimble for this. It centralizes the social media profiles of my contacts, provides opportunities to engage with them on social media, tracks all interactions over time, and makes sure my data follows me where ever I go online. It's not the only solution available, but it's my personal choice and it demonstrates the dramatic, recent evolution of the selling process.


  • You need to ask your sales people in order to find out about deals, their size, or their status
  • It is unclear which sales tactics are working most effectively for specific products, customers, or markets
  • You can't tell if the money you are spending on developing content is really worth it

With so many sales channels, you're going to make decisions about what content and which channels to invest in. And later on, you're going to want to know how they are doing. You'll need a way to measure this. This will be challenging with most of the big CRM platforms.

You'll also want to see your pending deals and, particularly for the big ones, be able to develop strategies to engage and close your biggest deals. This may involve developing new content, providing points of view, reaching out to develop new relationships and sharing a lot of information with your own people. You need to make sure you have tools that can bring this together.


If you don't have CRM yet, it's time to give it another look. There are more great products that do more great things than the last time you evaluated it. They add more value to your sales team than they every have and help your sales people sell in ways they probably can't right now.

If you have a CRM solution but are looking to change, don't default to a new system based on benchmarks or reputation alone. The assumptions in this space are quickly becoming outdated and those reputations and benchmarks are often not based on the new realities of selling. Go through a real selection process that takes into account how you sell today, how you think you need to sell tomorrow, and what your salespeople think they need.

Don't go full-boat on a new solution all at once. The new solution will (and should) be much different than what you currently have. Adoption is likely to be a challenge. Instead, pilot something you think will work. They all have settling in periods and you'll need to give your people some time to work with it and get comfortable with the functions. Finally, invest in training and change management. It will take time and effort to onboard people to the new processes.

Finally, you need to care about social. It isn't just for announcing new babies and sharing pictures of your food. Social can have real, meaningful impact to your businesses. At least have a conversation with someone who can explain how and when this technology can help drive revenue for your business.

For the record, I don't give much credence to point 1 in the Forbes article. NetSuite is taking customers from a number of different vendors, but competitively it's the same as it ever was. Businesses who strongly value the integration of CRM and ERP or prefer the "one throat to choke" mentality will continue to look at integrated single-vendor systems (just like Oracle or SAP in the past).

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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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The Culture of Successful Projects and the Superbowl

As has been noted ad-naseum today, last night's Superbowl commercials were decidedly more subdued than in past years and many brands made a clear pivot to conveying more "authenticity" in their brands. I would like to think this is a good thing, but there were a few brands who...well, let's charitably say they didn't do this very well.

The worst sequence of ads reminded me of the characteristics of dysfunctional project teams. It came from InBev's Anheuser-Busch who managed to turn themselves in a bully with three commercials. I couldn't help but think how emblematic they were of my least favorite managers and implementation partners. Let's go through their sequence:

First, they aired a commercial intended to convince people to return to Budweiser by mocking craft beers and the people who drink them. Full disclosure: I am a bit of a craft beer fan. What you'll usually find in my fridge is either from Two Roads (Probably their "Road 2 Ruin" double IPA) or from our local Stamford brewery, Half Full. Let's first say that this campaign doesn't make any sense: Budweiser is in the process of aggressively buying craft breweries and marketing them as "craft" brands trying to win back some of the 15% of the market that hundreds of local breweries have taken from them. But then, they try and do that by mocking - without any relevant content - the people who enjoy these products. It's a really unfortunate, bullying approach.

This is Heidi. See, we love dogs!

This is Heidi. See, we love dogs!

Then, that lost puppy commercial. Trust me when I say that my wife and I love puppies like everyone else in America. We have a dog. She was a puppy once and we enjoyed that. I "like" puppy pictures on Facebook when my friends welcome new canine members of their families. I legitimately enjoy puppies. Despite this, my wife and I looked at each other after this Budweiser ad and said "That was basically offensive." It felt like Budweiser was trying to manipulate us into liking them - not that they were making an authentic connection. It was focused on creating a tenuous emotional connection to their logo rather than anything to do with their product. It didn't work for us.

Finally, AB aired the obligatory "drink responsibly" commercial also containing, for some inexplicable reason, a dog. How about a wife and kids? Maybe families of someone else on the road that night? Anyway, I actually didn't have much of an issue with this ad in isolation but found it to be problematic in their sequence.

So, in about 90 total seconds, InBev AB:

  1. Mocked everyone who doesn't like their product
  2. Tried to emotionally manipulate us into liking their corporate logo with a commercial that had nothing to do with their product
  3. Insisted that they are good guys because they want people to be "responsible" with their product and protect their dogs or families, or something.

Insult your opinion. Try to break you down emotionally with messaging unrelated to the main topic at-hand. Protect themselves from blowback by insisting they are good guys and only have your best interests at the top of their mind. Sound familiar?

This happens on big, hard projects all the time and it's the best leaders and managers who can craft a culture that redirects these tendencies. It only takes one person on the team who embodies AB's approach to damage everyone on your team. This will not only damage the mentalities of the people on your team, but create an unhelpful, unproductive and highly political environment that will make it difficult to get meaningful things done. 

There are many approaches to avoiding this type of team culture, but I'll outline five of my favorites here:

  1. Repeat early, often, and in every venue, that all opinions are important. Thank people for sharing their opinions even when they are not necessarily productive. Eventually be direct (and nice) about your viewpoint, but during the process of developing it be thoughtful about every idea and opinion. Avoid mockery or belittlement at all costs and never, ever condescend someone because of an opinion they provide. Assume they arrived at their opinion thoughtfully and probe it - don't seek to discredit it.
  2. Avoid the blame game. Things will go wrong. People will make mistakes. At least once (probably more), someone on the team will make a mistake that requires everyone else do a lot of work to correct it. That's unfortunate, but it will happen. These projects aren't hard because they require everyone to work hundreds of hours towards linear goals: they are hard because there are hundreds of interlocking decisions, ideas and goals that have to interact perfectly. The biggest sentence to avoid: "How could this happen?" There is almost never a productive answer that will help you move forward. The answer is that it's because people are people and you're asking them to do something difficult. One of my favorite quotes to use here comes from HBO's "Too Big to Fail" - [paraphrased] "If you want to go back in time and figure out what happened we can do that later, but right now we need a solution and we need it quickly."

  3. Keep the main thing the main thing. Be the person to redirect the conversation. People will try to use their version of Labrador puppies to sway others to their point of view. Don't let them. You need to be the person to (again, nicely) redirect the conversation to the main question you are trying to answer. There will be lots of good stories, lots of interesting ideas and lots of ways to never solve your hardest problems. State the intent of every conversation or meeting and make sure the dialogue is productive and stays on track.
  4. Meet people where they are. Make authentic connections by being interested in their interests. Do not force generic tropes or mindless sentimentality on them - make an impact by listening to their stories, picking up on queues about their interests and openly expressing interest. I had a client with a division in the Netherlands during the 2010 World Cup. Many of us Americans knew very little about soccer, but some of our team members talked to our Dutch colleagues about the game, its cultural implications, why it was important to them, etc. Many of those discussions turned into real friendships which, in turn, led to a wonderful, productive work environment. It's only because those were real conversations. 
  5. Own it. This is repeated so frequently that I hesitated putting it on this list, but I've seen this at so many clients I feel it still needs to be said. After Russell Wilson's game-ending interception last night, Pete Carroll went to the media and completely owned the turnover. It wasn't a bad pass, there wasn't anything wrong with the route or the receiver, it was a play that he wanted to run that just didn't work out and that was his decision. I loved that. When things go wrong and it starts to point back to you or one of your team members, don't say "well yeah but I'm a good guy because I want you to drink responsibly and I do nice things for people all the time and I give my time to charities and I donate to my alma-mater and...and...and." Just own the mistake, apologize and move on. People will respect it and forgive the mistakes.

No matter what AB's Superbowl ads were, I wasn't going to suddenly start drinking Budweiser. But I could have at least enjoyed the ads and not thought less of the company. Instead, they embodied everything bad about poorly run projects.

Poorly run projects are just awful: they wreck careers, they destroy people's self-confidence, they industrialize an organization's worst cultural tendencies. They represent horrible opportunity cost because good projects can serve as the spark to turn companies around.

Don't run your projects like Anheuser-Busch. Run them like a carefree Labrador puppy trekking back to his best horse friend after sleeping on a not-so-smart craft-brew fan's couch the night before because he had integrity and cared about being responsible.

See what I mean?

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Evaluating Your Finance Function

Does your finance function stack up to your scale?

One of the early functional areas that businesses outgrow is their finance function. The processes, systems and skills that are required to track, maintain and report on organizational finances as companies grow change dramatically. Think of finance as the core of your enterprise – not most critical, but certainly most foundational. Absent a strong finance foundation, it is very difficult to scale, grow and integrate your other functional areas and it makes your management of the business enormously more challenging and less discrete.

Today we will examine three common challenges within your finance function. This is not intended to be an exhaustive list of every problem you may encounter. Instead, these are some of the most common issues that occur and, more importantly, the issues that are most visible to non-finance executives. The solutions may be simple, they may be wide ranging. But once you know where your challenges are, it becomes much easier to establish a clear path to resolving them.

1. Your business makes a lot of manual journal entries

Why it’s a problem

Manual journal entries are error-prone, are not recorded on a timely basis and do not provide adequate control over your books. Since most categories of journals should be automatically generated during the course of business, they often indicate underlying issues with your systems and processes.

Other forms of this problem

a) you have non-accountants submitting requests for journal entries; b) your accountants are doing a lot of offline calculation (probably in Excel) to generate the journal entries (revenue recognition and asset depreciation are common areas for this); c) when something doesn’t look right in the general ledger, it is hard to locate the backup documentation

Common manual journal entries:

Revenue recognition, asset depreciation, lease payments, payroll, purchasing accruals, inventory valuation, receivables backlog

How to diagnose

Look at your previous three months of manual journal entries. If the number of entries is relatively limited, then you probably do not have a major issue. If there are many entries for the same category, you have an isolated problem that you can probably address on its own. If the entries are spread across multiple categories or there is not a distinct pattern for why the entries are occurring, then you have a bigger issue to address.

Possible Solutions

For one, you should evaluate your chart of accounts and make sure it is structured appropriately for your business. Many companies start with a simple chart of accounts and then grow to the point where it no longer provides enough data or structure for accurate reporting. Then, evaluate the integration between the general ledger and your various sub-ledgers (receivables, payables, fixed assets, project accounting, inventory, etc.). If there is manual intervention required during the transfer of financial data between these systems and the GL, then you have a systems issue you need to address. Finally, evaluate your overall finance strategy. If the system is not able to generate the accounting entries you need, it’s probably time to start looking at alternatives.

2. Reporting takes a lot of time and some desirable reports aren’t possible

Why it’s a problem

Reporting and analytics should be your easiest, most accessible tool for managing your business. If you can’t review your key metrics on a regular-enough basis, your ability to effectively manage your business suffers. Lots of time generally equates to lots of effort which means lots of error-prone, manual work.

Other forms of this problem

Let’s briefly distinguish management reports from operational reports. Operational reports are used by your managers to execute the operations of the business on a day-to-day basis and are not what we are addressing here. Management reports are used by leadership to make decisions about how to run the business and these are what we are discussing here. If your set of monthly or quarterly reports is variable (i.e. the exact same reports are not generated every month/quarter/year), if your reports change in form or format based on monthly or quarterly activity, if your finance department needs more than a few days to close the books and generate reports, or if you want to see some new types of reporting but they cannot be generated with your systems or numbers, then you have a problem that should be addressed promptly.

Common problem areas

Profitability and margin reporting is a common pain point for growing businesses - it’s fairly complicated and requires highly structured underlying data. Budget-to-actual reporting tends to maturate later on for many businesses and forecasting is often cobbled together from several imperfect sources of data (note: forecasting usually matures faster in manufacturing environments while lagging in professional services). It is unusual for basic P&L and balance sheet reporting to be an issue – most businesses have this down pretty well. If you have issues with this type of reporting you should probably address them immediately. In addition to being your only true source for good numbers, it probably means something unpleasant lurks beneath the surface.

How to diagnose

Look at your management reporting and see how replicable it is. Talk to the accounting department about how and on what platform they generate these reports. Talk to an expert about what reporting you should, reasonably be able to generate for your type and size of business and ask your managers to put them together. If you can report on most of what should be required then you’re probably in good shape; otherwise it is likely you have some technology/talent/process issues to address.

Possible Solutions

Solving your reporting issues may or may not require changes to your software. Many business actually possess the necessary tools but need to resolve issues in underlying business processes or data structures. This is less expensive to fix and can often be executed in-house, although you probably need some basic outside guidance on structuring the project. If you do not have a strong reporting platform and your finance systems are very old, then you may need a multi-step roadmap to fix the underlying systems and processes before implementing a more robust reporting platform. The good news is this can be done along with better operational reporting and sometimes real analytics so you won’t be fixing just one problem – you’ll be setting yourself up for more exciting management tools as well.

3. You don’t really trust your numbers


Why it’s a problem

I probably don’t need to elaborate on this one

Other forms of this problem

a) If you have questions for the accounting department after reviewing your monthly/quarterly/semi-annual reports, the answer is frequently an adjustment in the ledger and reissuance of the reports that is required. b) It is not uncommon for your summary financials and the expected numbers from each department to not match up (inventory levels don’t seem in the ballpark of what your warehouse manager expects; PO accruals don’t seem to match what the purchasing manager thinks they bought this month, etc.). c) Your outside accountants have a hard time figuring out your numbers each period from the materials you provide.

Common problem areas

This could happen anywhere in the business, but start by looking at areas that a) have an offline process and toolset; b) Have a high monthly volume of transactions; or 3) Have the most people touching the transactions

How to diagnose

Have departments sign-off on the final accounting numbers for each period. If you currently only “close the books” annually or semi-annually, begin to move towards monthly or quarterly close cycles. Although they will be more frequent, they will also be less work and it will be much easier to perform a root cause analysis on any issues you find. After doing this, then start to see how many discrepancies you have on a regular basis.

Possible Solutions

This is more than likely going to start with a systems solution. The hardest part of performing root cause analysis on questionable numbers is finding all the data you need to back it up. The transactions for those numbers are the result of a process somewhere in your business and having a platform for that process that integrates with your finance systems will make your numbers more reliable, generate them with less effort, and cut overhead.

Closing Guidance

One thing to note on finance systems in general: the number of technology solutions available, level of automation that is now considered “normal,” and leading practices that have emerged over the past 4-6 years have substantially changed the expectations of a “corporate” finance department. The next tier of possibilities for your business are more exciting than anything in the recent past – real, insightful analytics, understanding customer profitability based on social media data, operational and sales automation. These are all tools that can dramatically improve how your business grows and can allow your best people to add more value than ever before. Start by improving your core finance operations and then understand how you can begin taking advantage of the new technology available to your business.

Have you encountered any other major problem areas in your finance area? Post them in the comments!

It’s always valuable to get a new perspective on your finance function and Ronan Consulting Group is here to help. Contact us today at info@ronanconsultinggroup.com or (203) 313-9480 to talk about what challenges you are facing in your business and understand what your assessment, diagnosis and improvement options are. 



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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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Lessons from San Juan: What I Learned About Consulting on Vacation

With a long weekend and a new baby due in March, my wife and I decided to cash in some of the airline miles and hotel points from my Big-4 years and take a mid-winter getaway to Puerto Rico. 


Before I get into my consulting takeaways, let me say: this was a great vacation. We stayed at La Concha on Condado beach in San Juan (A Marriott property, for any of my consulting friends looking to burn some points). I can’t say enough good things about the property and location: it’s a great blend of stylish and family-friendly, close enough to local restaurants so you don’t need to eat at the hotel, and has a great beach and pool area. San Juan itself is a vibrant city full of great food, music and people. We will be back.

It was also new: my wife and I don’t take many beach vacations and this was our first beach “resort” experience, our first time in Puerto Rico and our first time on a fly-away vacation with our 2.5-year old (he has flown a number of times, but not for a vacation). I love to see how unfamiliar places operate and this was no exception.

The three principles I found most interesting were:

  1. Owning Problems in the Beach Economy
  2. Not-so-Cutthroat Competition in the Bar Economy
  3. The Danger of Crowdsourced Information

Lesson 1: Ownership In The Beach Economy (aka Own Your clients' Problems)

Take ownership of your Clients' Problems and your Clients will take care of you.

On our first morning we ate waffles. A tanned gentlemen pushed two shopping carts – one empty, one filled with well-used boogie boards – down the sidewalk past the park where we were sitting. He appeared on the beach a short time afterwards, his empty cart now filled with fresh coconuts. He was the coconut guy. He walked to every chair on the beach selling fresh coconut water for $5. For each sale he would take his machete, chop off one side to make a flat bottom and then chop the other side to a point with a small hole through which he would put a straw.

Afterwards, he sat in the shade with his shopping carts, chatting with the hotel’s beach attendants, renting out boogie boards, and occasionally walking around the beach with a coconut or two in one hand looking for follow-up sales and newcomers. Every beach I've been to has a beach economy– the lemon ice cart, the necklace and hat sales merchant, the hair-braider, etc., so in that sense this wasn't particularly notable.

He was also the unofficial lifeguard. The beaches and the pools did not have lifeguards. Signs said the surf was rough and you swam “at your own risk,” but there wasn't any official person to save your life if you experienced aquatic issues. Apparently, our coconut guy decided since this was his part of the beach, he would fill this role. When people swam too close to the jetty or too far out, he blew a whistle and asked them to swim down shore. He asked people to stop boogie boarding or surfing in dense crowds. Most notably he feverishly grabbed a board and swam out to help a distressed swimmer twice during our few days there. There didn't appear to be a financial reason to do this – certainly none of us beach-goers would have thought he was responsible for our safety and I did not see him ask for or receive any tips for this work. It seemed like he decided it was his beach and so he was going to take care of it.

Over several days, several other people walked down to our end of the beach selling fresh coconuts. Invariably, they would walk down with four or five in their hands and leave with the same number. It was as if everyone at “our” beach tacitly agreed that we had “our” coconut guy and that was who we would buy from. 

Coconut guy established his market, made relationships with the influencers (the hotel’s beach attendants), and took ownership of the non-hotel operations of the beach. He made sure that he attended to us, his clientele, and in return we purchased coconuts exclusively from him.

Lesson 2: Competition is Over-rated (aka A Rising Tide Raises All Boats)

Make decisions for your business first. If other parties benefit along with you – even if it’s your competitors – then all the better.

On our third night we decided to go into town. One of the bellhops at our hotel (during a conversation that was another example of La Concha’s excellent service) directed us towards an area with a number of bars and restaurants the locals enjoy called La Placita. The restaurant he suggested had a 2.5 hour wait – ironically both affirming his recommendation and guaranteeing we would not be dining there – so we found another restaurant with strong local reviews and put in our names for the more reasonable half-hour wait, during which we stood in the street with a number of San Juan residents and watched a live band at one of the bars. 

Let me pause here and describe this area. The center was the farmers market. Although the market was closed, there were walk-up bars on each of the four corners of the building, all with long lines. On the plaza surrounding the market were hundreds of residents socializing and drinking and then on the streets that intersected with the plaza were probably 15-20 restaurants and bars, nearly all of which offered outdoor dining. The band we watched was the only live band in the area. The bar who hired them, Taberna Los Vazquez, placed them inside the building, but since all of the walls were open basically anyone in the area could listen.

Our 2.5 year-old loves live music. He probably thought dinner was a break from watching the band rather than the other way around. As we stood on the street listening, we got to talking with a number of people around us. Person after person said this was the best place to come watch live music “for free” in San Juan. The crowd became denser as the evening wore on and by the time we returned after our wonderful dinner (Asere– highly recommended, get the ropa vieja), the street was dozens of people deep with an audience.

Ok, sounds like a pretty cool place to visit. So what? The people in Taberna were there for the music. But most of the band’s audience was drinking something they purchased elsewhere. That isn't to mention the hundreds of people sitting outside at other restaurants eating and drinking and listening to the music. Well over half of the people enjoying the band had no direct financial impact on the people who were paying them.

In many cities, you walk through restaurant and bar districts and see enclosed places with bandstands and, sometimes, cover charges. At these venues, the owners do everything they can to fully capture the benefit of the live entertainment and keep it for themselves. Taberna Los Vazquez took a different approach. Live music was an important part of the atmosphere of La Placita. This atmosphere brought thousands of people to the area. It didn't matter the other businesses in the area were reaping the benefits of their band. That bar created much of the atmosphere that they also benefited from. So what if they were not the sole beneficiaries of the music?

Ruthless competition – particularly competition built on exclusion – is dramatically over-rated. It reminds me of years ago when I was working with Dunkin’ Donuts. One of their senior franchise territory managers told me that when a Starbucks goes in next to a Dunkin’ Donuts, the Dunkin’ business actually increases. I think we spend a lot of time worrying about what the other guys are doing, how they are going to compete with us, and how we can take their market share. We tend to jealously guard our information and intellectual property. While there are cases where this may be appropriate, in no way should it be the default. We need to understand what is right for our business, our people, and our customers. If other parties benefit as well, then all the better. 

Lesson 3: The Limits of Crowdsourcing (aka Beware of Benchmarks)

Just because a restaurant has great Yelp reviews DOESN'T mean it’s the best restaurant for you. Transfer this concept everywhere. Apply liberally.

Write here...

Our hotel was in a tourist area. It was one of many resorts on this stretch of Avenue Alcevido and counted among its neighbors a CVS, Walgreens and Ben & Jerry’s. As a result, Yelp was actively used for the restaurants in the area. Many of them had great reviews. These included the two Italian restaurants, two of the three burger restaurants, the Ben and Jerry’s and three “American-style” places.

But we were in Puerto Rico – home of, presumably, the best Puerto Rican food on the planet. We weren’t interested in eating Italian food – we can get plenty of that at home. So we asked for recommendations from locals and found many of the popular native restaurants just didn't have as many reviews. We ended up eating a lot of really good food (including a Cuban restaurant, in fairness)

The lesson here: before following your peers to the crowded middle, make sure you place it in your own context. We wanted to eat mostly Puerto Rican food. Someone else may have wanted seafood or burgers or Pina Coladas and they would have made different decisions. It didn’t mean we should ignore the reviews altogether, but we had to understand how they related to our goals – and this required reading some of the reviews and discerning the point of the view of the authors.

This re-affirms one of the cardinal sins of management consulting: beware of benchmarks. They can be instructive but they are overused and overemphasized. Nobody but you can know whether or not setting goals based on industry benchmarks or finding an implementation partner based on analyst reports makes sense for your business. Accepting that benchmarks matter because they exist, let alone accepting they are accurate because of the company that did the research, will lead you on an efficient and unrewarding march to the middle. 

Think your average close cycle is too long because the benchmarks say they are? Ok, so look closely at your sales and marketing operations. But that doesn’t mean they are inappropriately high. Maybe you build deeper relationships with your customers. Maybe half of the companies included in that benchmark manage revenue quarter-to-quarter so they accept deeper discounts to get faster sales but you manage your revenue stream on a longer-term basis and keep your discounts low. Unless you are a commodity product in a perfectly competitive market the benchmarks available to you contain innumerable nuances in the data and, therefore, should only be cautiously factored into your decisions. Otherwise you’ll be eating pretty good Chicken Parmesan with a beautiful view of the Caribbean Sea.

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Three ways to think differently in 2015, Part 3 of 3: Technology and Talent

Technology and Talent: The under-rated link between simple tools and employee happiness

In the running of a company of whatever size, the hardest thing to manage is usually this: the delicate balance between the necessity for centralized control and the equally strong need for employees to have enough autonomy to make maximum contributions to the company and derive satisfaction from their work. To put it another way, the problem is exactly where within the company to lodge the power to make different kinds of decisions.”
— Thomas McCraw, American Business, 1920–2000: How It Worked

The tools organizations use have a direct impact on the quality of life of their employees. Good tools make people’s work lives better; bad tools make them much worse. Yet, hard-to-use tools continue to take center-stage for a significant portion of companies’ users. Why are we still accepting poor usability as a matter of course in the enterprise? Today we will discuss some of the reasons for this and look at several techniques to help you and your peers in leadership prioritize their people when making technology decisions.

The McCraw quote above is a broader expression of why companies often choose to implement technology: the need to establish control over business processes. This is most transparent in ERP implementations where the very concept is rooted in establishing more controlled business processes. Something we used to say about ERP systems is that even though they make some individual jobs more difficult, there is benefit to the overall organization that outweighs it. This type of thinking is still used to justify avoiding customizations or third-party bolt-ons that would make an individual’s job easier. These turn into “process fixes” which, translated to normal human language, means shifting unpleasant burdens away from the tool and onto the people doing the work. [I redacted an Uber joke that was here – we’ll open that can of worms another day]

Big technology implementations are really hard and take an enormous amount of people’s personal attention and effort. The reason people are generally ok with this is because they think they will benefit from the changes. But too often, when you look at less successful implementations, you see that things actually became more difficult for a substantial number of people.

The Problem with Complexity

Making people's jobs harder, of course, creates problems with “efficiency” and “effectiveness” and “productivity” – the pinnacle of talent management insight. All of these certainly suffer as a result of lackluster tools. The nice thing is that all three can be measured and discretely improved and they’ve been discussed extensively in research related to technology projects. In my mind, they also are only important to a point. Many companies who are focused on these metrics have reached a point of diminishing returns by now anyway.

There is an outcome that you cannot really measure: the connection between the tools and people’s happiness in their jobs. In most situations, people will not draw a direct connection between the clumsiness of their jobs and why they aren’t terribly happy performing them.

There are many reasons for this. Job happiness doesn’t represent a single factor – there is a complex matrix of factors that are weighted differently for different individuals. There are personal and professional reasons, tangible and abstract; physical and metaphysical; social and individual. Talent surveys do their best to pinpoint the source and quality of employee satisfaction, but even the people who create those surveys will tell you that establishing causality through them is an inherently flawed science. Fundamentally, most research agrees that a primary source of people’s job happiness (“satisfaction” is a loaded and misleading buzzword that I try to stay away from) is their feeling of personal connection to the overall mission of the company, and their belief in that mission.

Rosabeth Moss Kanter (@RosabethKanter), a professor at Harvard Business School, has done some wonderful research in this area. Among my favorite of her quotes is the following from a 2011 article called “How Great Companies Think Differently” (which won the McKinsey award for best business article that year). Kanter posits:

…people can be trusted to care about the fate of the whole enterprise—not just about their own jobs or promotions—and to catalyze improvements and innovations without waiting for instructions or sticking to the letter of a job description.
— Kanter, “How Great Companies Think Differently”

She prefaces this with a lengthy examination of why self-organization is desirable and why you don’t want to pigeonhole your people into overly rigid work structures. When the tools and processes people are using consume most of their time, they do not have capacity to accept change, let alone drive it. When those activities become visibly disconnected from the overall institutional mission, we need to expect they will lose a feeling of connection with the enterprise, experience less happiness about their jobs, and this will likely snowball into a number of symptoms of disconnected employees.

Arguments in Defense of the Status Quo

There are common responses to this critique I have had client leaders use as an argument against disruptive change. None of them are focused on the user. 

  • “Our retention rates are above industry averages, therefore our employees’ job satisfaction is acceptable.”

This is an incorrect attribution of causality. The assumptions in this statement include a) industry average retention rates are acceptable. Industry benchmarks can be directionally helpful, but some industries are way behind when adopting change; b) there is adequate mobility in the local market for people to change jobs at will. This is not true for many areas. Retention rates are important for a lot of reasons, but unless your tools are so bad that they are driving people away (which at this point in history would mean using UNIVAC-cards), they don’t really indicate satisfaction with tools one way or the other.

  • “Our HR surveys say our satisfaction rates are high!”

Great! This is important. It also probably means you’re compensating for your weaknesses in other areas. Like you’re giving lots of compensation and a whole bunch of PTO to people may be masking the fact that they really don’t like their jobs. The dimensions these surveys measure tend to move as a group. This doesn’t discredit the importance of the surveys and your ratings, but we need to recognize there are limits to measuring human attitudes. 

  • “Our leaders have many years of experience at our company – we promote from within so they understand the complexity truly required in our business.”

This is also great for many reasons, but it doesn’t really speak to the potential problem. This can also mean that people have accepted your processes and tools as “normal” even more and may be less likely to think changing them is feasible.

What do we do about it?

In general, enterprise technology is too complicated. There are young companies trying to change that (@Netsuite, @Zuora, @Zendesk, @SlackHQ, @Asana just to name a few), but solutions that are currently used at most organizations are overly complex. The complexity of those solutions is made up of three factors:

  1. Business processes
  2. System capabilities (including their relationships with each other)
  3. The cycle of inertia

Business process and system capabilities are complexities that most business leaders understand well. The cycle of inertia is harder to grasp and what, in my experience, leads to the least user-centered enterprise systems. Paradoxically, it’s often the users themselves who advocate for this cycle and their leadership that promotes it. 

The cycle of inertia is as follows:

  • Evolution: Organizations do things in a certain way and change it gradually over time to accommodate immediate business needs
  • Stabilization: Because they are no longer immediate needs, they stop simplifying and innovating how they do these things which eventually leads to an unnecessary amount of complexity in the business. This complexity is absorbed by the people who do the work as it is integrated into their jobs
  • Improvement: When the time comes to evaluate “improving” these things, there is resistance to change because people know how to do the more complex processes really well and they perceive the change as risky to their personal value. The improvement is stripped down to accomplish incremental benefits in the areas of most immediate importance to the users.
  • Inertia: Once the “improvement” is implemented, it ends up creating even more complexity because the incremental improvements add variation to the number of processes, data or systems. Since the organization has convinced themselves it is required for their business, they interpret this complexity as maturation. The cycle starts again.

The bigger the project and more people are involved, the harder it is to avoid this cycle. The only really effective way to overcome fully counteract inertia is by strong leadership support, but there are a few questions you should ask that can make it more likely you will be successful.

Key Questions to Ask

When talking about a prospective project, planning the project, and undergoing design, always ask these questions:

  1. Is this process absolutely necessary for our business? Can any steps be removed or variations be eliminated? The goal is to simplify. Even if the business says they need a certain process, make sure you understand what the intended outcome of that process is. Users are usually correct in insisting they need to do things in a certain way to meet their requirements; the real question is are the requirements important in the first place.
  2. What part of our business mission does this feature, software or process support? If it can’t be easily mapped – if it’s clumsily shoehorned into a part of the mission statement or if its relationship to strategy is heavily assumption driven (e.g. the strategy says we’re growing our services division and we’re assuming those services may be custom products, but that has never actually been established) then it’s not important enough to put effort into.
  3. Is the new system, bolt-on or customization required to make the system easier to use or to support a critical business process? Do not purchase additional software if it doesn’t make things significantly better from a usability or functionality standpoint. If it’s going to be supporting a specific business process, refer to question #1. It it’s critical for the business process but doesn’t make things easier, look for another option. Every additional piece of your ecosystem makes things become geometrically more complex to support. Make sure it’s justified by making the business processes simpler.

And one special question. You know if this applies to your organization. For systems that are replacing Excel or Access: Is the new system going to be easier to use than Excel and/or Access? Excel-intensive operations yield really smart Excel users. People who are great at Excel are not going to want to switch to a system with basically the same functionality they have today but without the flexibility Excel provides. Make sure the system adds value to the user experience – not just to the enterprise.

Technology Characteristics to Prioritize

These three technology characteristics have the most substantial impact on usability and the perception of usability. Weigh these strongly when evaluating a new solution anywhere in the business.

  1. User interface: Does the interface look like something employees use at home? This is too often minimized in the interest of functionality or cost. Make no mistake: for systems, form is function. If the interface isn’t as friendly as Amazon or Zappos or Zillow, it will not be considered user-friendly. Be specific and don’t be afraid to be critical. As a side-note, when working with smaller vendors don’t be afraid to communicate your ideas on how the products can be improved. Many startups will work with you on improving their products and actually rely on that type of feedback.
  2. Mobile: Will the system by available to my employees on more than one platform and does it at a minimum allow, at a maximum encourage mobility? This assumes you have a hardware policy that allows laptops, tablets and smartphones for these employees. If you have any group that is still tethered to their desks, think very long and hard about whether it is truly necessary. Mobility doesn’t just mean working from home; mobility means the ability to work in flexible teams around the office, hold group working sessions and, when necessary, work from home, hotels, airports, etc.
  3. Integration: Do the activities supported by this software interact with other groups or systems? If so, is that integration native or at least buildable? It needs to be. If you are integrating a system that will require users to complete dual entry or run reports to make the data portable you’re purchasing the wrong system.

In Summary

Improve people’s tools and give them a path, a method and a reason to continue to improve them and they will be happier with their jobs. Happy people yield positive results for them and for you and good tools multiply improvement. Strive for simplicity, humanity and continuous real improvement in your tools. Who knows – maybe your job satisfaction ratings will even improve.

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Three ways to think differently in 2015, Part 2 of 3: Beyond Enablement

Beyond Enablement

On Tuesday we looked at using your exception-handling process to conceive and drive strategic improvement. Today, we will look at how pre-planned projects should be positioned to maximize their strategic value.

Something I used to tell people is that technology is not a good in-and-of itself, instead it is valuable as an “enabler” for improving something. As a result of my years doing massive transformation projects, I no longer believe this is an adequate explanation. While it’s true that a new tool or redesigned process can enable improvement or growth, if that’s the only thing it’s doing you’re missing major opportunities. If you’re going to go to the effort of doing a substantial project, it should actually propel you forward – not just enable something.

The issue with "enablement"

Some years ago I had a client who brought my team in to analyze, plan and ultimately implement a large systems transformation project. The core of the project would be replacement of a very old, cobbled-together ERP system that was no longer supported, but it would also include a number of enhancements to various boundary systems like CRM, data management, and warehouse management systems. In addition to core benefits like saving on support, less downtime and some replacement savings, the business case included a number of high-value opportunities like such as a) Automating inventory replenishment to match projected demand; b) Enhanced project profitability reporting; and c) When it was being sold to the business, executives and ultimately the board, the main selling point that the project would “enable” change in the enterprise. This was a mistake.

This messaging was interpreted to mean the project would enable them to operate their business a little better because the technology was newer, but wouldn’t substantially change the nature of their operations. As a result, as leadership responded to issues, new requirements, staffing shortages and budget constraints, higher-value “transformational” pieces of the project were shelved and it gradually devolved into a systems replacement project. This resulted in several high-value pieces of the business case going unrealized (they never tracked actual results to the business case either, but that is a post for another day). The project was successfully implemented and everything that was ultimately designed worked really well, but there was still a lot of value on the table. So what should we have done differently?

Why is the language important?

When I think of successful technology investments, I want them to drive the strategy forward. What we should have said was the project would help “drive strategic improvements into multiple areas of the business” or that it would “propel the change that was required for them to react to new market conditions.” Although it sounds like an overstatement, either of these would have been absolutely true. Most importantly, it would have changed how the executives and business leaders reacted to project exceptions:

  • They would have been more eager to put their best people and most influential leaders in key positions since they would be setting and executing strategically important parts of the business
  • They would have been more aggressive about insisting on changes to their processes and job responsibilities
  • The project would have received more visible and more powerful executive
  • There would have been more accountability for justifying the cost of the project by measuring actual benefits

Evolving to technology projects that "drive"

When I think about these projects now, I look at them in four ways:

In the pictures below, the orange dot represents the area the project will impact. The other dots represent four related but distinct areas of the business.

Replacement projects

Some system is outdated or incredibly unreliable so it needs to be replaced or upgraded. See my post from Tuesday on how to make this project more of a game changer. I won’t re-hash this again today

Enablement projects

How does the new solution improve its focus area?

Example: If you’re replacing a project accounting solution, does it make the function of project accounting easier and more accurate?

Improvement projects

This is sort of the “enablement” bucket. Am I improving this immediate area and making it easier for other areas to improve as well?

Blog 1.6.15 tech drives improvement_1.png

Example: When I implement a new project accounting solution, can I make it so the project values are visible to my receivables department and then train them to prioritize billing and cash collections by backlog and revenue? 

Projects that drive strategy

These projects drive the implementation of high-level strategy into the business and force the organization to implement, track, and improve on this strategy. These would achieve holistic transformation across the business and, in addition to achieving its core mission, force meaningful change in other important areas

Example: if your business is a products business but sees most of its future growth on the services side, when I do the project accounting project in points 2 and 3, do I change the expectations of my accounting department to not only track costs for engineering projects but also be able to report on profitability, labor time and expense, automatic estimate-to-complete, etc.? Then can I also change how projects are sold, staffed and billed based on historical data to make them more profitable and improve their quality?

Now is the time to re-frame the conversation

Technology is now going to be part of all strategic decisions you make. This year, all executives should understand how it interacts with your overarching strategy to make sure you're getting the most value out of your investments. Each investment has the ability to drive you forward; not simply to enable incremental improvement.

Last in the series, coming on Friday 1/8: Technology and talent: How tools should improve your people

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Three ways to think differently in 2015, Part 1 of 3: Strategic Reactions

Happy new year and welcome to our first blog entry!

This week I will look at three new ways of thinking about something you will undoubtedly spend time and money on this year: technology.

  1. Strategic reactions: Exception handling as a means of driving strategy – 1/6/15
  2. “Enabling” vs. “Driving”: The issue with treating technology as an “enabler” – 1/8/15
  3. Technology and talent: Improving the experience of work through every technology project – 1/9/15

Strategic reactions: Exception handling as a means of driving strategy

The way the discourse around technology operations unfolds is always similar: you can either spend money reacting to problems (IT Operator) or growing the business (Strategic Driver). The problem with this reductive conversation is it understates three realities:

  • Even if you're driving strategy, you will still need to react to issues;
  • Technology will probably drive the implementation of your strategy whether it's incidental or intentional; and
  • Most businesses do not bifurcate responsibility for technology operations and technology strategy.

It is unlikely you have the luxury of technology that runs itself without any exceptions and therefore be allowed to fanatically pursue all your strategic goals. On the other side, you will necessarily need to engage in a technology project over the next 12 months to either keep up or to "enable"/“drive” strategic business improvements (more on this on Thursday). The question is how do you do execute the latter while managing the former?

Framework: Visualizing Reactions and Strategy

A more constructive conversation, in my mind, is one of tradeoffs that recognizes the strategic potential of any solution. Consultants sometimes use "process maturity" analysis to help executives understand where on the scale of reactive to strategic their technology decisions fall. This approach is that it implies a binary relationship between solving problems and driving strategy. This does not reflect the reality of how technology, which is now pervasive in every direction of your business, needs to work. You will have more issues to deal with in the next 12 months than you will have projects to drive: this is a guarantee. Great executives will make this work for their strategy. 

I am a proponent of speaking in terms of gradients rather than discrete scales. There are necessary tradeoffs you will need to make, sometimes prioritizing strategy and sometimes prioritizing operations. That’s ok. Is it possible to make some of those operating decisions also drive strategy, either in the short or the long term? Frequently you will find they can.

So rather than a straight-line or x/y axis maturity matrix, I prefer this visual: 

  • Dark blue represents basic operations, or “running the trains on time.” This makes your business work pretty well without substantially improving underlying functions 
  • Light blue represents incremental improvements that will either add up to something significant when combined with future improvements or will make it easier to do something big in the future. This can include adding functionality or reducing complexity.
  • Orange changes the game. This represents fixing a problem in a manner that transforms another function and allows you to achieve a strategic imperative.
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As an example, let’s take a seemingly minor problem that may arise for many companies this year: 

Your accounts receivable (AR) department receives a payment from a customer but it’s missing an invoice number. They go to apply the payment against an invoice and find there are two records for similarly named customers, each with open invoices. What should they do?

For simplicity’s sake, let’s say there are five issues this raises (in reality there are more):

a)    Immediate functional problem: cannot apply the cash
b)    Future functional problem: this will happen again in AR if the customer record issue is not resolved
c)    Operational problem: the operational efficiency of all processes associated with duplicate customer data will suffer inefficiency and potentially ineffectiveness
d)    Cross-functional problem: if these records exist in other systems (e.g. CRM, order management, etc.) then upstream processes will be affected
e)    Strategic problem: Meaningful customer analytics are severely compromised or not possible

First, you will need to figure out which invoice to apply the payment to, solving problem (a). This will probably require the AR department to contact the customer and do a little research. This is simple operations for them now. They’re going to do this anyway, regardless of our conversation. But now the question is how to address (b), (c), (d) and (e).

Pure dark blue: Combine the customer records into one, consolidate the invoices to that single customer, and resolve any data conflicts that arise (e.g. duplicate invoices, multiple shipping sites, missing DUNS numbers, etc.). This addresses (b).

Dark blue moving to light blue: Consolidate the master records for this customer and then, thinking this may be an issue for other customers as well, run reports and figure out if there were other records this applied to. This address (b) more thoroughly, begins to address (c), and makes solving (d) easier and, therefore, more realistic.

Purer light blue: Look at other systems that use that data like your CRM systems to see if the same issue needs to be resolved there. This will address (c) and make it possible to address the rest of (d).

Light Blue moving to orange: Create a customer data management responsibility where someone in the business is responsible for proactively monitoring customer data, resolving issues, and over time working with a technology partner to automate duplicate identification, merges, etc. This address (b) and (c) completely and may substantially address (d) although this will also introduce some new process complexity that will need to be analyzed.

Orange: Implement a data management solution that can manage the customer data across all functions. This will improve the sales team’s ability to accurately identify and track leads, allow integration between social media and customer transactions, provide efficient lead-to-order-to-invoice-to-cash conversion, and serve as the foundation for great customer-based analytics. Odds are, customer-based marketing and spending analytics are on your strategic radar. This will address (e) and, in doing so, drive new ways of thinking, analysis and decision into all customer-related business operations. 

As you can tell, there are unlimited variations of each of these approaches and they all have different complexity, levels of effort, costs, and time horizons. But as an executive you need to make sure the business operates at all, operates at least reasonably efficiently and reasonably well, all while furthering your strategic goals. Maybe you do all of the dark blue things now because they are low effort and low cost, but begin the process of planning and prioritizing a project to address the orange potential.

The main point is, you’re reacting to an issue in a manner that furthers your strategy and demonstrating to the business, through step-wise improvements, that bigger investments in previously ignored, seemingly commoditized areas can result in game-changing improvement.

You never let a serious crisis go to waste. And what I mean by that it's an opportunity to do things you think you could not do before.

Up Thursday: Moving from an “enabler” mindset to a “driver” mindset for technology decisions. A.k.a. Making Technology Investments Matter.


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