Too often today I see lots of hype around various social interaction methods in the enterprise. Companies talking about adopting things like facebook and twitter inside the organization. Some of this is just silly. Like somehow allowing employees to use facebook or twitter is going to help your business.  Collaborative initiatives that are divorced from a specific business purpose are disasters waiting to happen.

The future technology to IT to customer to market integration paradigm will require meaningful Web 2.0 technology to bring it all together.  But the real issue here is what do you want technology to do?

Here is my first pass at a systematic process for using technology collaboration tools for innovative products or services that are also customer focused.

Conceive

• Collaborate (technology integration)
• Gather intelligence and research
• Ideas (customer immersion narrative) [FN1]
• Socialize (customers, employees, other stakeholders)

Develop

• Prioritize (emerging trend or fad)
• Prototype (mock-ups, story boards, paper prototypes, actual working models)
• Pilot (finalize design, costing, materials or talent, etc.)

Market

• Market trial
• Refinement
• Sales Campaign

Where can technology enable and support breakthroughs in this process model?

Technology tools can support collaboration, gathering marketing intelligence / research, prioritizing, and potentially piloting (engineering, design, etc.) a new product or service.

 What are your thoughts?  Is this a process model worth exploring?

[FN1]  An upcoming article will explore this idea further.  There are a number of very interesting possibilities for innovative breakthroughs here.

For More Details on the Specifics of Collaboration, Social Media, Technology Integration, and a look at creating a Learning Organization see these posts:

ERP III – Is the Integration of Collaboration the Future of Enterprise Applications
http://www.r3now.com/erp-iii-is-the-integration-of-collaboration-the-future-of-enterprise-applications

SAP, ERP III, SOA — Learning Organizations through Social Media Collaboration
http://www.r3now.com/sap-erp-iii-soa-learning-organizations-through-social-media-collaboration

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What’s with all the “strategy bashing” of late? How could sound strategic planning possibly be a bad thing? Things have spun so far out of control that I recently had a CEO ask: “Is strategy still relevant in today’s business world, and if so, what role does strategy play in the overall make-up of a CEO’s duties and responsibilities? Let me begin by stating that strategy has never been more relevant than it is today. With all of the current emphasis on tactical execution I guess I understand how a question like this could be posed, but wow, what a sad commentary on the state of executive leadership when a CEO asks whether or not strategy is relevant. In today’s post I’ll examine the role of strategy in business, as well as the CEO’s responsibilities therein…

Strategy vs. Tactics, Instead Try Strategy AND Tactics

Let me be as blunt as I can – The issue should not be strategy vs tactics, but strategy and tactics. While separate functions and disciplines, one cannot prosper without the other. Strategy is what provides the tactical road-map, and it is tactical execution that validates and delivers strategy. The noise attempting to lift one up above the other is simply more unneeded rhetoric. The best strategy cannot succeed without tactical execution, and tactical execution is much easier to achieve with the clarity provided by a sound strategy.

With all of today’s emphasis on pleasing investors by meeting short-term financial expectations, it is not at all uncommon for many executives to press for better execution when what they really need is a better strategy. Conversely, other executives change strategic direction when what they should do is demand better execution. The truth of the matter is that a sound strategic plan can be executed with a high probability of success, whereas a flawed strategy is almost impossible to execute profitably.

The CEO Has the Ultimate Responsibility for Assuring Strategy Delivery

The emphasis for CEOs needs to be on creating long-term sustainable value for shareholders without sacrificing short-term tactical interests. While in most cases a sound strategy will allow a CEO to have his/her cake and eat it too, if you must sacrifice one over the other, you would be well served to place long-term interests above short-term objectives. History has shown us on many occasions that it is quite possible to win the battle and lose the war. CEOs must learn to fight the battles that need to be won, and not just the ones that are easy to win.

Please read the following statements very carefully…The CEO is often times the chief architect of corporate strategy, and has the ultimate responsibility for assuring the delivery of a strategy, which is consistent with the corporate values and vision. One of the primary duties of the CEO is to communicate, evangelize, and lead the company in the implementation of the corporate strategy. Absent an over abundance of blind luck, a company’s strategic planning process will be critical in the eventual success or failure of the enterprise. CEOs must view themselves as being completely accountable and responsible for the corporate strategy, regardless of whether they were the original architect.

While executives must learn to view strategy and execution as being inextricably linked, they also must come to understand that strategy should always drive tactics. The tendency for some CEOs to let tactics determine the strategy is the classic example of reactive vs. proactive leadership. It also represents a great illustration of letting the tail wag the dog. A lack of strategic focus in dictating tactical initiatives is a ready-fire-aim approach to leadership and will result in higher costs, a perpetual state of chaos, and places a higher emphasis on activity vs. productivity.

There is so much focus on execution these days that it is not uncommon for me to receive a few e-mails each week with headlines that read: “Screw Strategy” or “Tactics before Strategy.” While I’m all for exploiting trends, and I appreciate a good marketing hook as much as the next person, these e-mails from so-called business experts can be both misleading and dangerous to those readers who don’t possess the savvy to understand that they are just being pitched on a product and not being given sound counsel.

As much as some of my direct marketing friends wish it weren’t so, there are certain inevitable truths that do exist in business. Listen, I have no problem with creating velocity and leverage, but as fluid as business is today, most of the “short-cuts to success” being marketed today constitute form over substance. You see business is much like an algebraic formula, in that while there are certainly formulaic short-cuts that can be taken to solve an equation more quickly, the one thing that will provide an incorrect solution 11 times out of 10 is when the order of operation is skewed.

The Successful CEO Strategy Model

The following visual is one I developed more than 20 years ago, and the interesting thing is that it’s applicationally as sound today as it was back in 1988. The orange horizontal line that cuts the image in half is what I refer to as the leadership line. When working above the leadership line you are working “on“ the business in a true leadership capacity, and when working below the line you are working “in” the business in more of a management capacity.  While all good leaders spend time on both sides of the line, the most effective leaders spend as much time working above the line as possible. Follow this methodology and the ambiguity surrounding the “why” and “where” to spend your time will start to clear itself up. 

For those of you familiar with my work, you’ll see that I have consistently espoused that a bias toward action and tactical precision are essential to achieving sustainable success. However, I am also clear in my belief that misguided and ill-timed/advised tactics can also create huge problems for any business. The bottom line is that strategy matters, and that as a CEO, strategy is your responsibility. The challenges associated with leading corporate strategy initiatives are not easy, but neither is the burden of leadership. If you’re not up to task at hand you don’t deserve the title of CEO…it is harsh but true.

~~~~~~~~~~~~~~~~~~~~~~

Re-posted with author Mike Myatt’s permission, he runs a great blog at http://www.n2growth.com/blog/ and the original source for this post can be found here:

http://www.n2growth.com/blog/in-support-of-strategy/

Related Posts:

• Business Strategy and IT Strategy to Reproduce Apple Innovation
• The Real Reason Executive Participation Creates IT Project Success
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• Why SAP Projects Fail to Deliver ROI (and How to Change IT)
• SAP CEO Leo Apotheker’s Departure – What is SAP’s Future?

This series takes a look at the role of the CIO, the current technology landscape, where the gaps are, and this final piece looks at the emerging technology landscape and what the future holds. This is the last post on the future of business to technology alignment. 

This four part series covers the entire breadth of the business to technology landscape of the future –, IT organizational alignment, business alignment, and future technology alignment for success in tomorrow’s marketplace. 

What Does the Future Technology to Business Alignment Hold – Future ERP, SAP, and IT Value

A number of changes on the horizon will produce a number of winners and losers in the technology marketplace.  Those software companies, system integrators, and consultants who persist in delivering only solutions narrowly tailored to address operational concerns will find a shrinking landscape of customers to sell to, and the competition for the market space will drive prices down to commodity status.  Together with this, the CIO, IT Director, or IT Decision Maker who focuses on the operational side of the equation, or the lagging indicators will continue to face greater and greater cost containment requirements no matter how well the business or economy performs.  As the CFO and COO continue to press for getting more for less from the IT department to cover the cost side of the lagging indicator equation the senior level IT decision makers will find their career prospects more limited.

The way to propel an IT career forward in the years ahead will require a demonstration of business value within the overall organization.  The CIO will need to carry the torch for bridging the business gap between the business lagging and leading indicators of business health.  The important focus both now and in the coming years is on the demand side of the business equation.  That demand side is a focus on customer acquisition, customer retention, sales conversions, up-selling, cross-selling, and customer centered innovation.

A New Wave Technology Model for IT Decision Maker Success

This is a technology alignment model, it shows one possible method for CIO, IT Director, or other IT decision maker to achieve success in the demands to advance the business.  Keep in mind, this is NOT an organizational model, it is a technology alignment model or a business to technology map. 

This model represents the role of the CIO as the bridge between the lagging side of the business (finance, people, process) and the leading side of the business (strategy and sales).  In this model, although the CIO position appears above the CFO and COO organizationally they are generally more equally aligned, or, in many organizations the CIO may answer to the CFO.  The correct CIO role is one of technology integration between the lagging and leading sides of the business.  The CIO role with the use of technology is the “glue” between the two sides.  For the CFO who has responsibility for the CIO and technology spend the surest way to ensure company health and to promote business needs is to encourage the adaptation of the CIO role as a bridge between the CEO and CFO.  As is often the case, success here will cause the company ship to “rise” in the marketplace and a rising ship benefits all participants.

CIO Alignment and Key Responsibilities of the Future Business Aligned Technology Organization

The unfortunate reality is the CIO alignment in most modern organizations is almost exclusively housed in the lagging indicator category (see Part 2 and Part 3 of this series listed at the end).  The zealous focus on only lagging indicators, with its heavy reliance on cost cutting (through automation, performance improvement, etc) leads to cost cutting in the IT department itself. 

After things are working and then automated the IT department is pressed into maintenance mode because the business does not see the revenue generation prospects of technology–, they fail to see the possibilities of promoting customer retention, customer acquisition, innovation, and marketplace analytics. 

The technology map of the future will focus much more aggressively on the customer integration into the business process.  And collaboration activities will occur across the entire value chain, on both the lagging and leading indicator side of the business.  Future collaborative integration will produce new market intelligence, product or service innovation, early defect detection and correction, and other business possibilities which help to retain and acquire new customers.

The future of the successful technology application is going to depend heavily on the ability to drive innovation and process improvement around customer retention, acquisition, and product or service innovation.  There are already signs this is beginning to occur in some of the leading edge companies that this is the future of business technology.

Part 1:  What is the Proper Relationship for the CIO, CEO, and CFO?

In the first part of this series we looked at the changing business landscape and what it means to the CIO, IT Director, IT Manager, or other key technology decision makers.  From a high level the current global business competition, as well as economic issues are directly affecting the C-level executive requirements and the CIO – CFO – CEO dynamic.  This article reviewed how and where the CIO role is coming under tremendous pressure and how to change the current dynamic by more appropriately partnering with the CFO and the CEO.  This partnership is a critical business bridge between lagging business indicators of business financial and process health on the CFO – COO side of the business house and the leading indicators of sales and product or service pipelines on the CEO side of the business house. 

Part 2:  CIO, CFO, and CEO Alignment – Why ROI is Lacking from Today’s System Landscape

The second part was an overview of the current system landscape and its focus on business processes and the emerging trend of trying to focus on the customer.  This piece also looked at the future business landscape and how the technology focus and direction will be permanently changed no matter what happens with the economy and global competition.  Because the technology marketplace (business consumer) is becoming more sophisticated and more attuned to business / technology alignment, the IT dynamic is going through a structural change.  The whole technology sector is slowly moving away from the “operational excellence” value proposition to the “customer focus” and “innovation” areas of the business.  Very few of the consulting companies and few of the application vendors see this sea change and are doing little to address it.  This is the area of technology market winners and losers of the next 20 years.

Part 3:  Changing the Direction of SAP, ERP, and IT Applications to Focus on the Customer and Innovation

The third part in the series looked at current technology landscapes and how they are aligned and then looked at future technology landscapes.  A brief review of the supply side and the demand side of business shows that unless you have lots of customers (demand) to fill a bigger and bigger pipeline (supply) then your business model collapses.  While it is hidden during good economic climates, any disruption in those economic conditions which fails to fill the capacity pipeline points out the glaring insufficiency of the “operational focus” to technology.  During any economic disruption, or any reduction in demand from customers for your products or services the current technology model falls apart. 

Part 4:  Future Technology Landscape Alignment for the CIO, IT Director, or Key IT Decision Maker

The final part of the series looks at the emerging technology landscape and what the future holds.  It lays out an emerging technology landscape model which has some re-alignment and some components already in use by some of the world’s most successful companies.  A new alignment of technology with the customer facing processes, and the use of social or collaboration tools across the enterprise with a clear business objective is explored.  The driver for the future change will be because the business does not see the revenue generation prospects of technology–, they fail to see the possibilities of promoting customer retention, customer acquisition, innovation, and marketplace analytics.  The new technology model looks to change that dynamic.

Related Posts:

• ERP and SAP Business Case for ROI, Business Benefit, and Success
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• Why SAP Projects Fail to Deliver ROI (and How to Change IT)
• Using SAP to Improve Revenue and Profitability
• Using Key Performance Indicators for Building a Strategy Focused Organization

When the client is not heavily involved, expect plenty of project surprises and no ownership in the plan.  The ingredients for optimal success require active client participation at every stage of the project – from project planning to project closure.

Anyone that has been around ERP long enough understands meaningful client involvement in the project is critical for success. However, it never ceases to amaze me how many implementation projects start with the software consultants behind closed doors developing a project plan in a vacuum. They later unveil the plan as some artful piece of work and present it to management for sign-off.

Interestingly enough, even some of the best software consultants are guilty of this, and there are two big problems with this approach. First, it prevents the client from getting heavily involved to take more ownership of their project from the start. Secondly, it involves a blind leap of faith in your software consultants, which is never a good idea. No matter how much analysis consultants do, they will never be aware of all the subtle aspects of the organization or project that could have a major impact on the validity of the plan. This is one reason why ERP projects “fail to meet expectations” in the areas of software, time and cost.

ERP Project Ownership and Business Participation

The fundamental problem is “blessing” something is very different than “owning” something. When the consultants develop and present the plan (with only token client input), it is now the consultant’s plan, not the clients. This is often reflected in senior management’s message to consultants; “great, go forth and make it happen” and by the way, hurry up.

Though the plan is endorsed by senior management, in the meantime the internal project manager, project team, key managers and employees in the trenches are not buying it. The reason: They have legitimate concerns that no one cares to hear or address. This has very real consequences, not only in the quality of the planning deliverables (plenty of project surprises), but also from the standpoint of managing change and internal commitment to the project. In other words, we have cut out of the process key people within the organization that play a big part in implementing the plan!

First, many confuse the sales proposal (from the consultants selected) as a project plan (fixed price contract or not). As ridiculous as this may sound, it happens all the time. No doubt, it will contain statements of project objectives, scope, responsibilities, schedule, resources, risks, consulting cost, assumptions, etc.  However always remember, the acceptance of the sales proposal signifies the end of the sales process and it is just that; a sales pitch not anything close to a project plan (we can actually use or believe). At this stage of the project the sales pitches are over, it is now time to deliver!

Also keep in mind when some consultants develop a project plan (project charter, etc) they use “templates” and then attempt to fill in the blanks. Nothing wrong with templates as a starting point, but the plan could end up a lot of hollow words, pretty gantt charts and formality, with very little substance. This is about lack of project management experience and templates will never make up for that.

ERP Project Scoping and Planning Phases to Refine Project and Implementation Plans

Once consultants are selected and the client project team somewhat formalized, every project should have a separate and distinct “scoping and planning” phase with specific deliverables. This represents the opportunity to analyze the business processes, scope, current systems, and many other aspects of the organization in greater detail. I am by no means recommending “paralysis through analysis”, but you must do your homework or pay the price later in the form of rework, delays, and cost overruns.

The consulting project manager can help lead and facilitate the planning process working closely with the client team. In fact, if the consulting project manager does not add value in this area, he or she will probably not add value anywhere else. When done correctly, the benefit is getting the client project manager, executives, and the entire client project team heavily involved and more committed to the plan. In the end, this improves the quality of the plan and ability to execute it.

A good project planning process results in a final “baseline” for project scope, schedule, budget, etc. that reflects project objectives, reality, and is understood by all key stakeholders. In other words, it is now a plan we can believe and support. It also becomes a tool to measure progress and a “handle” to manage and control the project. A bad project planning process results in a plan that is tossed out the window and we are now operating in the blind or with a totally different reality. Worse yet, we start making dumb project decisions to “catch up” to a schedule that was bogus to begin with.

It has been my experience the project planning deliverables of scope, schedule, and the consulting budget have the most influence is setting the wrong project expectations. Therefore, in my next three blog entries I address these topics with the goal of helping the client avoid the subtle pitfalls while becoming more knowledgeable and engaged in the ERP planning process.

The next ERP Project Planning blog topics in this series include:

Part 2:  The Twelve Dimensions of Project Scope

Part 3:  Developing a Project Schedule (We Believe and Can Support).

Part 4:  Ways to Estimate or Validate the Software Consulting Budget.

~~~~~~~~~~~~~~~~~~~~~~~~~

Author Steve Phillips runs a Blog entitled Street Smart ERP - Visit his site for more great insight and commentary.

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This is the third part of an ongoing series on where the application technology market is today, including ERP vendors like SAP, Oracle, and others–, and where the market is headed.  The series provides insight on how to get ahead of the current trends and ride the wave that is building rather than getting swept away with it.  The current business trends and market forces for technology will reward the swift and adaptable who are able to address the key business areas that have been lacking in the technology space and it will severely punish those who lag behind. 

Today’s Technology Landscape and IT’s Alignment (or Misalignment) with Business Priorities

Far too long ERP and technology implementations have only focused on one of the 3 key value propositions, the pillar of “operational excellence” using things like process improvement or quality management.  This is a pure operational focus which ignores the critical components of business–, customers, and selling them the products or services they want.  From a business metrics perspective (or Operational business metrics and not Key Performance Indicators [FN1]) the focus on operations, automation, quality, and other business process management alignment with technology only deals with lagging indicators to business health and success.

Unless your products, services, or markets are commodity based, in the strictest sense of the word, this is a dangerous approach.  In the strictest sense it is like having tactics without a strategy.  In the end the consequences are usually disastrous.  They tend to be “knee jerk” and reactive rather than planned and proactive. 

The entire industry is filled with “consultants” and technology solutions to address current state business health and performance.  These only deal with lagging indicators that are “after the fact” and do not help business move forward.  Nearly all of today’s technology solutions, as provided by technology vendors and consultants, only address “operational excellence” propositions and do very little to address business value propositions or competitive pressures focused on customers and innovation.  With SAP in particular the functionality is available to address all of these business concerns but few consultants and even fewer vendors have any idea how to approach these key business areas.  They only work in the area and arena of business tactics, they have little understanding or idea of the business functionality related to competitive pressures, how to set it up, or even more basically, how to extract the key requirements from the business for scoping or blueprinting. 

“Tactics without strategy is the noise before defeat.” – Sun Tzu

Technology to Business Alignment Landscape – A Patchwork of Lagging Indicators is the Wrong Direction

Below is a graphic that shows the common CONSULTING DRIVEN application patchwork most CIO, IT Director, or IT decision makers are tasked with implementing and maintaining.  Notice that it is both a hodge-podge of systems, and creates a difficult to manage relationship that distorts the technology relationship with the business.  Notice that today most systems and technology work focuses on the lagging indicator side of the business, on the financial side, or on the cost control / efficiency side of the equation.  Current system integrator and consulting direction does not correctly align technology with where business is actually done–, at the customer facing points of interaction.  So, from a genuine business perspective can you see where the misalignment of technology is?

• EC = Enterprise Consolidation – inter-company or multi-company financials.
• APO = Advanced Planning and Optimization – advanced production and service planning, logistics, and supply chain capabilities.
• ERP = Enterprise Resource Planning – integrated back-office systems for managing sales, procurement, inventory, financials, etc.
• SRM = Supplier Relationship Management – vendor, procurement, and supply management including vendor marketplace bidding portals.
• SCM = Supply Chain Management – sometimes another “flavor” or style of APO, or sometimes additional transportation and warehousing functionality.
• BI (or BW) = Business Intelligence or Business Warehouse – data warehousing and reporting.
• HR (HRM, HCM) = Human Resources, Human Resource Management, or Human Capital Management – HR processing.
• CRM = Customer Relationship Management – usually a large contact management system the way most companies use them.

Notice that the current system integrator promoted technology solutions are not focused on correct [business and IT alignment], in other words, current approaches to technology are not “integrating technology and IT spend with business.” The current technology landscape that is promoted by software vendors, supported and implemented by system integrators, and understood by consultants contains only one area focused on leading indicators–, CRM.  In some instances, where the business insists, BI / BW reports may help to integrate data for meaningful leading indicator evaluation.  This only seems to happen when initiated by the business and not generally by the consultants.  And even in the area of CRM there are very few “consultants” who have any idea about customer acquisition or customer retention.  As a result most CRM applications are little more than glorified contact management systems.

Far too often today I see and hear technology consultants advocate for process improvements.  As if somehow that last mile of automation, or that last small amount of incremental improvement is going to somehow make a breakthrough in your company’s market position.  If you believe that, I’ve got LOTS of swampland in Florida for sale in an area where home prices were never touched and are still rising at double-digit interest rates every day!  Keep in mind that this statement and criticism of the focus on constant “process improvement” comes from an insider, a “process expert” in the supply chain area around Sales and Distribution as well as Materials Management.  So this criticism is not from an outsider and it even affects the entire range of solutions I generally consult in.  However one key difference is that I try to bring a dimension of those business concerns to every project I do.

“[B]usiness executives said the top IT priority and most important business driver (cited by 53 percent of those surveyed) was acquiring and retaining customers. Yet how well did IT actually support that mission during the past year? Nearly 50 percent of the business execs judged IT’s performance as ‘fair’ or ‘poor.’ Another 5 percent said IT did not support acquiring or retaining customers at all. Business execs’ ratings of IT’s impact on managing customer relationships were equally bad.”  Thomas Wailgum, “Enterprise Software Unplugged,” February 20, 2009,  CIO Magazine online. http://advice.cio.com/thomas_wailgum/why_the_recession_is_marginalizing_cios

If the operational value proposition is not what the future holds, and if there are higher and higher costs but smaller and smaller returns on investment, where is the next big technology opportunity?  Think of it like this, if lagging indicators are like “supply” and leading indicators represent “demand” and you focus on improving the supply side but do nothing for demand you end up with a collapsing business model.

In other words, the process improvement or “operational excellence” model leads to lots of capacity and a need for more and more customers to fill that capacity.  As competitors across the board all have focused on these process improvements, and as they have all gained capacity, you must lower your prices to continue to fill the capacity pipeline.  This is the “supply side” of business when what is actually needed is the “demand side” where customer retention, customer acquisition, and innovative products or services are found.

The entire technology sector must focus on customers and on innovation, without customers there is no business and without innovation products and services are converted to commodities competing on price. IT has an opportunity for innovation and leading edge business solutions using technology, not technology solutions that use business.

[FN1]  Using Key Performance Indicators for Building a Strategy Focused Organization and Why Indexed KPIs are Critical for Business Performance and Success

Part 1:  What is the Proper Relationship for the CIO, CEO, and CFO?

In the first part of this series we looked at the changing business landscape and what it means to the CIO, IT Director, IT Manager, or other key technology decision makers.  From a high level the current global business competition, as well as economic issues are directly affecting the C-level executive requirements and the CIO – CFO – CEO dynamic.  This article reviewed how and where the CIO role is coming under tremendous pressure and how to change the current dynamic by more appropriately partnering with the CFO and the CEO.  This partnership is a critical business bridge between lagging business indicators of business financial and process health on the CFO – COO side of the business house and the leading indicators of sales and product or service pipelines on the CEO side of the business house. 

Part 2:  CIO, CFO, and CEO Alignment – Why ROI is Lacking from Today’s System Landscape

The second part was an overview of the current system landscape and its focus on business processes and the emerging trend of trying to focus on the customer.  This piece also looked at the future business landscape and how the technology focus and direction will be permanently changed no matter what happens with the economy and global competition.  Because the technology marketplace (business consumer) is becoming more sophisticated and more attuned to business / technology alignment, the IT dynamic is going through a structural change.  The whole technology sector is slowly moving away from the “operational excellence” value proposition to the “customer focus” and “innovation” areas of the business.  Very few of the consulting companies and few of the application vendors see this sea change and are doing little to address it.  This is the area of technology market winners and losers of the next 20 years.

Part 3:  Changing the Direction of SAP, ERP, and IT Applications to Focus on the Customer and Innovation

The third part in the series looked at current technology landscapes and how they are aligned and then looked at future technology landscapes.  A brief review of the supply side and the demand side of business shows that unless you have lots of customers (demand) to fill a bigger and bigger pipeline (supply) then your business model collapses.  While it is hidden during good economic climates, any disruption in those economic conditions which fails to fill the capacity pipeline points out the glaring insufficiency of the “operational focus” to technology.  During any economic disruption, or any reduction in demand from customers for your products or services the current technology model falls apart. 

Part 4:  Future Technology Landscape Alignment for the CIO, IT Director, or Key IT Decision Maker

The final part of the series looks at the emerging technology landscape and what the future holds.  It lays out an emerging technology landscape model which has some re-alignment and some components already in use by some of the world’s most successful companies.  A new alignment of technology with the customer facing processes, and the use of social or collaboration tools across the enterprise with a clear business objective is explored.  The driver for the future change will be because the business does not see the revenue generation prospects of technology–, they fail to see the possibilities of promoting customer retention, customer acquisition, innovation, and marketplace analytics.  The new technology model looks to change that dynamic.

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The first part of this series looked at What is the Proper Relationship for the CIO, CEO, and CFO?  The CIO role is already challenging and gaining in difficulty in today’s business environment.  And by all measures it looks as though things will continue to become more difficult and complex as time goes on.  Today’s CIO must not only keep up with technology, and business process improvement with automation, but must also become a “mini-MBA” in applying technology solutions to forward looking business strategies including customer acquisition, customer retention, revenue growth and profitability.  Although it is a monumental task it is possible.

Where technology can achieve solid ROI and breakthrough results in the enterprise are in the two key value areas that have not been well addressed: customer focus (beyond CRM) together with product or service innovation.

Want ROI?  The Next Wave in ERP Will Occur by Changing the Focus from Process to Customer

The heart of the business is the customer, without them there is no business. Today’s technology initiatives, whether they are with ERP products like SAP, various CRM offerings, or a whole host of other technologies and packages focus more on processes and on technology than they do on the heart of the business.  I’m a fan of visual models.  They help me to think through, adjust, and understand complex ideas in a simplified and high level manner.  For example, the simple model below represents today’s package application technology landscape in terms of the 3 key areas of business. 

• The large red bubble is the technology process focus on the value proposition of “operational excellence,”
• the orange block are the technology tools and systems that are typically applied,
• the smaller green bubble is the value area of “customer focus,”
• and the tiny center of intersection between business processes and customers in the blue block is the value area of “customer focused innovation”.

That is the sad state of today’s typical technology environment.

Customer Focused Innovation at the Process and Customer Intersection is the Ultimate Objective of a Change in Technology Focus

Successful package applications and technology application over the next couple of decades will dramatically alter this dynamic.  They will focus more aggressively on the customer and the innovation intersection between the customer and business processes.  Business processes will necessarily get closer to the customer and technology will be focused on the integration of the customer into business processes.  By doing so customers will have a greater influence over the types, quality, and availability of products and services.  The following model shows what I believe the next twenty years will develop as the winning technology landscape of the future:

• Although covered with technology, business processes become a secondary focus to the customer for technology.
• To enable this the technology landscape shifts to encompass more of the customer interaction with the business, potentially leading to ideas such as “mass customization.”
• The area of customer-centered innovation becomes much larger as businesses learn to integrate their customers deeper into their business processes.
• The customer naturally becomes much more important to the application of technology like never before.

The current state of the economy and global economic pressures have created a disruption in the classic technology model of process improvement and process automation.  Together with global competition and a potentially permanent change in customer purchasing characteristics winners and losers will emerge in the new technology arena.  As customers take center stage and innovation becomes more important just for business survival collaboration will become more and more important as well.  The transformation of business and technology will require new collaborative technology tools to build bridges between business, customers, and the product or service development areas.

Because of the pace of change, focusing on “best practices” and internal process improvement, or even extending processes is no longer enough. Business can rarely (if ever today) integrate, automate, and streamline to achieve marketplace success –, to one degree or another nearly every competitor is doing this or is quickly headed in that direction.

Business complexity and the breakneck pace of change turns yesterday’s breakthrough technology into today’s commodity; vendors are modestly integrated into the extended supply chain, all the way from raw materials to end customer delivery; customers are more sophisticated and have more options than ever through the Internet; competitors have worked to incorporate similar technology throughout their entire process chains by integrating, automating, and accelerating their processes.  As a result, business demand on technology simultaneously creates new opportunities and new struggles. 

Want BIG ROI for Your Technology Investment?

Part 1:  What is the Proper Relationship for the CIO, CEO, and CFO?

In the first part of this series we looked at the changing business landscape and what it means to the CIO, IT Director, IT Manager, or other key technology decision makers.  From a high level the current global business competition, as well as economic issues are directly affecting the C-level executive requirements and the CIO – CFO – CEO dynamic.  This article reviewed how and where the CIO role is coming under tremendous pressure and how to change the current dynamic by more appropriately partnering with the CFO and the CEO.  This partnership is a critical business bridge between lagging business indicators of business financial and process health on the CFO – COO side of the business house and the leading indicators of sales and product or service pipelines on the CEO side of the business house. 

Part 2:  CIO, CFO, and CEO Alignment – Why ROI is Lacking from Today’s System Landscape

The second part was an overview of the current system landscape and its focus on business processes and the emerging trend of trying to focus on the customer.  This piece also looked at the future business landscape and how the technology focus and direction will be permanently changed no matter what happens with the economy and global competition.  Because the technology marketplace (business consumer) is becoming more sophisticated and more attuned to business / technology alignment, the IT dynamic is going through a structural change.  The whole technology sector is slowly moving away from the “operational excellence” value proposition to the “customer focus” and “innovation” areas of the business.  Very few of the consulting companies and few of the application vendors see this sea change and are doing little to address it.  This is the area of technology market winners and losers of the next 20 years.

Part 3:  Changing the Direction of SAP, ERP, and IT Applications to Focus on the Customer and Innovation

The third part in the series looked at current technology landscapes and how they are aligned and then looked at future technology landscapes.  A brief review of the supply side and the demand side of business shows that unless you have lots of customers (demand) to fill a bigger and bigger pipeline (supply) then your business model collapses.  While it is hidden during good economic climates, any disruption in those economic conditions which fails to fill the capacity pipeline points out the glaring insufficiency of the “operational focus” to technology.  During any economic disruption, or any reduction in demand from customers for your products or services the current technology model falls apart. 

Part 4:  Future Technology Landscape Alignment for the CIO, IT Director, or Key IT Decision Maker

The final part of the series looks at the emerging technology landscape and what the future holds.  It lays out an emerging technology landscape model which has some re-alignment and some components already in use by some of the world’s most successful companies.  A new alignment of technology with the customer facing processes, and the use of social or collaboration tools across the enterprise with a clear business objective is explored.  The driver for the future change will be because the business does not see the revenue generation prospects of technology–, they fail to see the possibilities of promoting customer retention, customer acquisition, innovation, and marketplace analytics.  The new technology model looks to change that dynamic.

Related Posts:

• Business and IT Alignment – Integrating Technology and IT Spend with Business
• Why Indexed KPIs are Critical for Business Performance and Success
• Breakthrough Project Success: 3 of 4, Vendor Selection and Contracts
• CRM, ERP, BI, and IT Investment — Where Do You Find the Business Benefit?

Back in the late 1990’s, while at Grant Thornton, and then later when the management consulting organization was sold to Hitachi I worked on a comprehensive knowledge management model. 

This knowledge management model was used to advance the concept of a learning organization because that was a clear business fit for consulting companies.  In consulting  a consultant’s capabilities are directly tied to their knowledge, and that knowledge is a consultant’s, and a consulting company’s capital or stock in trade.

Back in 1997 and 1998 I worked through the model and developed a systematic approach, by using primitive collaboration and social media tools, to convert consulting into knowledge centered learning organizations. 

It relied heavily on:

• collaboration,
• cooperation, and
• information dissemination.

This was done by using the tools that were available at the time.  A systematic process was developed to capture, then synthesize, organize and disseminate the information and knowledgeable individuals throughout the organization.  By doing this a collaborative learning organization was developed. 

Early Collaboration and Social Media Efforts that Started to Produce Results Shortly After Y2K

Even the most knowledgeable, talented, and proficient consultants get stuck sometimes. It is the nature of dealing with complex business and technology problems, sometimes you need a little help.  We recognized the need in the business to have dynamic but high quality tools, templates, and resources available to consultants.  And at the same time we also recognized the need to be able to tap into other knowledgeable experts within the organization on a moment’s notice, even if we didn’t know the individual to realize they had the skills we were looking for.  And above all it had to be simple and almost instantaneous.

It had to be, the right knowledge, right now!

We wanted a structured method that was fairly simple and intuitive to create a collaborative environment.  After looking at our technology landscape right after Y2K we started to use MS Exchange Public Folders, Outlook Shared User Folders, e-mail, and MS Messenger. 

A Simple Collaborative Solution Using MS Exchange Public Folders and MS Messenger

We developed an MS Exchange folder structure that matched our client project needs and sales force needs for tools, templates, resources and our own best practices on demand.  The beauty of MS Exchange was that the Web Access version allowed our consultants to leverage public folders through the web interface from anywhere, just like they were using MS Explorer / MS File Manager.  The public folder structure was the perfect fit because there was little to learn beyond the new folder hierarchy.  Dragging, dropping, and opening files in this MS Explorer like interface was intuitive and took no time to adjust to.  This was immensely helpful at some client sites where security is very high so that only the client’s computers or hardware were allowed on the client’s corporate network.  In other words, where access to internal resources would have been limited or non-existent this allowed for ready access to anything that was needed.  Add to this the MS Exchange folder permissions are robust making security meaningful.

Together with this we used MS Messenger, but rather than just having an employee’s  name that an employee in one part of the country had never worked with or even heard of, we applied their key skill to the logon name.  From a standard list of key skill codes for SAP (SD, MM, PP, FI, CO, AM, CRM, SRM, APO, etc.) we placed that in front of the person’s name so that it automatically grouped like skills, and placed the skill reference first in a list of over a hundred resources.  In an instant if you needed some input from a seasoned Sales and Distribution person you would just look on the list for those names starting with SD_Employee_Name.  SAP practice users were then exposed to each other all over the United States by their skill codes so that even if they did not know the user, if they had a question of a colleague or peer they could just ask in real time. 

There was also a regular weekly publication containing special “tips and tricks” for productivity or functionality.  This was simply sent through e-mail and a copy stored in the knowledge management folder in MS Exchange.  It could be referenced at any time in the future.  This created a reusable knowledge repository that allowed the quality of the tools, templates, resources, presentations, and other material to be continually advanced and quickly reused.

When I left we had just started on the internal forum posting initiative.  This was to provide a central location to capture knowledge sharing or information discussions in a searchable database.  Using open source content management systems and open source integrated forums our goal was to create a central communication collaboration hub to capture and exchange ideas, custom coded solutions, and best practices.  With the many available add-ons to the open source CMS systems we considered adding an internal high level project management status tracking system and resource request system for senior level managers to gain near real-time visibility to the status and resource needs of all of the many projects taking place all over the country.

This was a very practical way we leveraged existing technology and built the structure and processes around it to add business value.  It enhanced the customer value proposition by providing better and faster customer solutions, more customer focus, and better internal employee interaction.  In other words, this whole solution was low cost and used existing collaboration tools to advance business interests.  It helped to promote end client satisfaction because of the nature and ability to gain “the right answer right now.”

The real issue is not to use collaborative tools in the enterprise just to collaborate.  They must serve a business purpose and a business need.  The business enterprise is not a social club, but social tools can be used to serve the business purposes or goals. 

Refinements, Enhancements, and New Dimensions to Collaboration and Knowledge Tools

I’ve often joked that I get paid a lot to take the ideas and information that is already in an employee’s head and present it to the company as the solution to their problem.  The difference between my approach and others is that I have no problem telling the company that the answers are right there with their own people.

As the efforts and my research on the subject matured I wrote a piece about my perspective on this issue as it had matured and called it “SAP, ERP III, SOA — Learning Organizations through Social Media Collaboration.”  That article laid out a way to integrate social media tools like Forum software into the SAP help system.  What this means is that end users can capture real time information about the system, or shortcuts, or requests for simplification or other useful information and disseminate it to the organization.  This also provides a method for workers in any department or area, in real time, to provide feedback that focuses on the company value proposition or competitive pressures.  Here is the model I produced:

1)  Raw Information:  The unstructured data, ideas, “crib notes,” and thoughts that we all have.  However in this instance, it is the raw information surrounding the job or responsibility that the individual performs within the enterprise.  Sometimes these are the “workarounds” to get something done when you run into obstacles or roadblocks, other times they are just shortcuts, techniques, to perform a job or function.

2)    Organized Information:  This is the process of capturing and classifying that raw information.  This is where the “knowledge bases” and other types of information systems come in.  Many enterprises make it this far. Sometimes these are the “workarounds” to get something done when you run into roadblocks or obstacles.  Other times they might be the shortcuts or techniques to more efficiently perform a job or function.

3)    Acquired Information Experience: This is the interaction with the organized information.  This can be through search functions, employed taxonomies, reports, or other methods of accessing the organized information.  This is after the capture of the information in steps 1) and 2) above, and involves its wider availability than in the individual who originally developed or “held” the knowledge or information.  Few organizations or enterprises make it much further than this.  However, this is the beginning of the true learning organization.

4)    Applied Experience (Knowledge!):  This is the practical application of the organized information after it has been acquired.  Whether this acquisition is through word of mouth, training, or some type of information management system (that is wrong named a knowledge management system) or through a “knowledge base”. This is where the cost savings, revenue opportunities, continuous process improvement opportunities, and real competitive advantage begins to come to fruition.

5)    Refined Experience:  Simply the continuous improvement process of updating the existing organized information (or “knowledge base”) with new things that have been learned. 

This knowledge model I created in the late 90’s seems to be pretty well accepted today [Fn1].  Notice it is very different than an information model because knowledge by its very nature requires information together with the context of application and experience.

The ERP III future will rely heavily on delivering on the value propositions of customer focus and innovation. 

It is my belief that both of these pillars will occur through the use of corporate collaboration tools–, but only corporate collaboration tools that are focused on the business goals of capturing critical “knowledge” and information around these two key premises.

Customer Focused Lessons from My Former Life as a Customer Service Rep After High School

Several years ago before starting SAP consulting work I used to do customer service work on the phone.  I can’t tell you how many times a customer would have a great idea, or a valid concern related to our products and services.  It would have been ideal to capture and take action on some of these ideas.  In fact, as a young “kid” I used to bring some of these ideas to our management and nearly all of them were ignored, or hushed, or told “I’m sure we already tried that…” and on and on.  Basically, the customer service rep, your company’s “face” to the customer who knows them the best is often ignored.  Sales people certainly don’t listen to the poor “lowly” customer service reps.  But often they know the best what the customer is actually looking for.  The key is to find ways to capture their knowledge and high points of their interaction with  customers that relate to innovating new or better products and services, or solving recurring problems, etc.  Collaborative tools are a great fit here.

The same is true for your company’s engineering and sales departments.  The same is true for your manufacturing areas, your distribution, your supply chain, your finance areas, etc.  Creating common collaborative communities of interest is a great way to advance your company’s value proposition and deal directly with competitive pressures.

Why Enterprise Collaboration Tools have Not Yet Taken Off

 One reason is, in a word, geeks!  I know, I am one (not really, but trying to fit in here :- )

Too many organizations undertake the introduction of social media for the purpose of introducing social media into the enterprise.  Again, this is like having information without the context of application and experience.  That information is NOT knowledge, nor are collaboration tools which are divorced from a specific business purpose very productive (if at all).

So, for example, Facebook, MySpace, and Twitter may NOT fit in your enterprise.  And frankly I can not think of many enterprises where they would fit.  However, being able to capture employee, customer, and vendor knowledge or suggestions or input or criticisms and making sure they are published internally to the right people may make a huge difference for your company.

Why Consultants and Collaboration Evangelists Have Not Shown Much Progress

Niether consultants nor business has learned how to use social media to drive business value.  There are few consultants out there with a coherent or even minimally functional method for business to use collaboration tools to propel a company’s key value propositions.  Even if you move down one layer beneath the value proposition to the competitive pressures in the marketplace these “social media mavens” there is still no coherent method for social media use.

It doesn’t have to be that way…

In my prior post “SAP, ERP III, SOA — Learning Organizations through Social Media Collaboration” there are 9 steps noted toward the end of that post on exactly how to use open source forum software for developing a learning organization.  This same concept can be generalized and applied to knowledge capture activities around innovation or customer experience.  The way you use these forum type tools inside the company depends on what your goals are, but the instructions for use are there.

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[FN1]  The knowledge model I produced was based on a synthesis of a number of sources I had studied at the time to try to bring some clarity around the confusion between “information management” and “knowledge management.”  At that time, or possibly earlier, there may have been someone else with the same ideas and a similar model but I couldn’t find it then.  So if someone else can claim *earlier* authoriship I won’t dispute it.  I produced my first version right around Y2K.

Related Posts:

• SAP, ERP III, SOA — Learning Organizations through Social Media Collaboration
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• CRM, ERP, BI, and IT Investment — Where Do You Find the Business Benefit?
• SAP CEO Leo Apotheker’s Departure – What is SAP’s Future?
• The Real Reason Executive Participation Creates IT Project Success

Most ERP projects are filled with promises of software knowledge transfer from the consultants to the client. Yet once a project is over, in many cases, the client is clueless when it comes to making software configuration changes, and may even struggle with performing basic transactions in the system. So what gives?

In spite of all the lip service given to knowledge transfer, the problem is there never was a real strategy to make it more than just a dream. Secondly, when push comes to shove this once important concept of learning suddenly becomes something we worry about later (and of course, it never happens). This is similar to consultants building a spaceship to get you to Mars with the understanding we will not plan the return trip until after you get there. In other words, there are business consequences for assuming software knowledge will somehow automatically cross-pollinate. Some of them include the following:

1. Paying consultants to do project task that the client could (and should) be doing. Without a certain level of software knowledge, it will be difficult for the client to fulfill even the most basic project responsibilities. Beyond that, what incentives do consultants have to transfer knowledge? Like I have said before, the less you know the more money they make!

2. Fostering resistance to change. When it comes to change management, many times we are our own worst enemy. It is not hard to imagine why employees refuse to buy into something they do not understand (no matter how great it sounds). When consultants are running the project (because the client team hasn’t learned a thing), understandably many employees will view the project as a ticking time bomb (and try to get as far away from it as humanly possible).

3. Software quality will suffer (and this is not just a perception). Lack of software knowledge limits the ability of the client team to become proactive in the design of new business processes and software. In this case, unless the consultant is superman (and they never are) it is a given something very important will slip through the cracks. On the other hand, a client that has a decent understanding of the system can at least ask the right questions or spot things that maybe wrong with the software.

4. Paying consultants to camp out for years after the initial go-live. After all, someone must hold the hands of untrained users and make simple software configuration changes required by the business. A similar issue exists with regard to the clients ability to implement new releases without an army of consultants.

5. The software remains static while the business needs change. The reasons: a) no one internally is aware of what the software is capable of doing; b) no one internally understands how to make the changes, c) the alternative of hiring consultants cost too much. In the end, this all boils down to a failure to leverage your software investment. In the meantime, users are told to live with the software and “work-around” the functionality issues.

6. As employees change jobs, leave the organization and new ones are hired, consistency in user procedures and knowledge of the system slowly erodes. This is inevitable considering no one can explain the big picture or the original software design intent. Therefore, new users are not trained correctly or simply do the best they can (we are now back to sub-optimization).

7. Modifications are made to the software to support needs that are already addressed by the software (right out of the box or with a few configuration changes).

8. After several years of struggling with the software, the organization finally hires an employee from the outside with the expertise to provide needed support. Unfortunately, if this was done prior to implementation, they could have saved themselves a lot of money and grief.

9. Outsource the application support with the hope that the problem goes away. Don’t kid yourself, if no one internally can make sense of user requests (from a software design and set-up standpoint) or, better yet, actually make configuration changes, outsourcing may cost more than you think (service or change orders).

Knowledge transfer is not a one-time event, but a project management “thread” that runs throughout the project cycle. It requires a strategy and attention to execution. In other words, the consultants and the internal team must be managed with the objective of knowledge transfer in mind. The following is a list of items to consider in any knowledge transfer strategy.

1. Select application consultants that have implemented their assigned modules on at least three other projects (with at least one in a similar industry, scope and degree of complexity). Otherwise, there may not be much knowledge to transfer. Also, they will spend most of their time trying to figure out the software(at your expense).

2. Select application consultants with good oral and written communication skills. Understanding software is one thing; but if the consultant does not communicate very well this is a real issue that undermines the goal of knowledge transfer. In addition, a consultant that simply does not say much may also be a consultant that does not know much.

3. Understand that rapid deployment or fixed price consulting engagements can work against you. These type of projects may (or may not) result in a faster or cheaper implementation; but they are definitely more consultant and date driven. This means the client may not have the chance, and the consultant may not have the time for knowledge transfer.

4. Put together an internal project team that has the desire and ability to learn the software. The core skill set includes understanding your business processes, business systems analysis skills (process oriented, logical thinker, problem solver), willing to roll-up their shelves and dig into the software. Like I always say, if you do not have employees with the right skills, get them. You will need them longer than you think.

5. Establish clear expectations with the team and consultants that knowledge transfer is a key priority, a shared responsibility and progress will be measured. For example, add a “knowledge transfer status” segment to the agenda of project team meetings and executive steering team meetings. Schedule one-on-one discussions with each team member and consultant to discuss specific issues and develop get well plans.

6. Do the “formal” project team training (but do not reinvent the training wheel). This training is normally conducted after the software is acquired but before the design phase. When done correctly, classroom style training for the project team is of considerable value since it lays a solid foundation for continued learning. However, when poorly planned or executed, it is a waste of time.

As general rule, for many reasons I prefer courses offered by the software vendor (not those delivered by the consultants you might have working on your project). First, vendor training programs are developed by those with expertise in both formal teaching methods and the software. These courses are also time tested; in other words your team will probably not be the first to take them. They are typically conducted by a professional trainer (who has done the exact same class many times before) with a pre-defined training agenda, lesson plan, data and supporting materials. This usually means a more comprehensive coverage of the software capabilities, consistency, smoother delivery, a software perspective other than that of your consultants, and access to up-to-date training materials.

On the other hand, when consultants deliver the lesson plan and training there is a greater risk that the opposite will be true (narrow scope, poor quality, etc). This is not necessarily an issue of bad consultants. The need to reinvent the training wheel is typically the reason for problems with this approach. Secondly, do not under-estimate the time required by the consultant just to prepare for a class. This is one reason why training delivered by consultants may end up costing much more than vendor training. Finally, many consultants are overly accomodating and are willing to customize the training beyond what is reasonable or advisable. Classes may be customized to the extent it is no longer really training, but instead a premature design or testing session. Remember, the goal at this stage is to learn the software capabilities and basic transaction processing, not test or determine how it will be used. The truth is no one at this point has enough information to design or test anything.

7. Plan courses to maximize learning for the dollars spent. When scheduling classes first take only the basic courses required for each module. After the team has have worked with the software for a while (with the assistance of your consultants), take the advanced functionality (if you need to). With this approach, the student has a chance to absorb and reinforce what was learned during initial training and, as a result, should be better prepared to take the advanced topics and probably will have more specific questions.

Finally, do not send a cast of thousands to project team training (the idea is the project team will train others). The key people to attend the courses for a given module include the module team lead, the power user (functional analyst), the internal consultant (if you have one), and the IT developer (supporting the module). Recognize it may be appropriate for a few others to attend such as the dept. manager (not formally on the team), power users from other highly integrated modules, etc. However, as a general rule, training only those on the project team is the best use of time and the training budget. That is why they call it “project team training”!

8. Take the software configuration classes. When offered, these courses get into the parameters; switches and setting that makes the software do what it does. The point is, most classes focus on end-user transaction processing, but the software configuration classes get into what is behind the curtain (but are not about writing programs). These classes are very important because if the goal is to wean yourself from consultants this will not be possible unless the team eventually understands how to maintain the software set-up. The list of attendees for these type of classes is shorter and includes the module team lead, power user and IT support.

9. Set-up a playground software environment. When the team returns from training, there must be an environment immediately available for them to reinforce learning and do some self-help follow-up testing. Taking advantage of the playground should not be optional but mandatory for the team.

10. Develop a realistic (yet aggressive), schedule to transition consultants into support roles. When developing internal software expertise, typically at first the consultant has primary responsibility for initial software set-up and other application activities (based on client input). However, as the internal team gets up to speed and confidence grows, there must be a plan to transition primary application responsibilities from the consultants to the client module team. At this point and thereafter, the consultants play coaching and support roles. This transition should occur as soon as it is realistic to do so and targeted for specific project milestones / dates. Depending on the client team, it is not unheard of to start this transition after the design phase or after the software is configured(construction phase). At the very latest, the internal team should take primary responsibility once formal testing begins.

11. Make sure the internal team (client team) is available for knowledge transfer. It is difficult for any consultant to educate a client that fails to show up for meetings.

12. Insist that consultants give homework assignments to the project team. The assignments should require the team to work with the software on their own with some meaningful expected outcomes (reviewed by the consultant). Most people learn by doing, struggling a bit and making a few mistakes. In fact it is good to have the client work on assignments when the consultants are not around. If the team does not have these type of experiences on their own, the consultant will become a crutch and an excuse for not doing anything.

13. Require the internal team (not consultants) to perform software demonstrations, design reviews, and management presentations. This is not about throwing your team to the wolves. However, if you expect nothing from the team that is exactly what you will get. These activities should be part of any implementation methodology and must start early and occur often. When the internal team knows they will eventually take the lead for these activities, it drives the perceived need to learn, gets them moving out of their comfort zones, expedites the process and is a good gauge of learning progress. These type of activities also helps the team build confidence in their own abilities.

14. Take advantage of all learning resources available for your specific ERP system. This involves some self-help (a very necessary part of learning) and includes web communities, memberships, and white papers (obtained from the consultants or software vendor). These type of white papers (not to be confused with marketing “white papers”)are very useful since they explain the step-by-step details of setting up the software to perform certain functions.

15. The client team should create most of the project documentation relating to software usage and set-up. Examples are work procedures, end user training materials and system documentation that include screen shots and explanations. The premise is if the client is required to do documentation (with the quality reviewed by the consultants), the client will learn many things in the process.

16. The client team is expected to train all end-users prior to go-live. Again, if you are to train many people you will probably feel the need to learn the software. Keep in mind, consultants play training support roles. (what is required to transfer knowledge to the end-user is a different topic).

17. Put the client team on the frontline of post go-live support. There is no better incentive to learn the software then knowing you will field the real world questions and issues once the rubber meets the road.

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Reposted completely, and with permission from my friend and author Steve Phillips who runs a Blog entitled Street Smart ERP - Visit his site for great insight and commentary.

The original post can be seen here:

http://it.toolbox.com/blogs/street-smart-erp/erp-consultants-is-the-promise-of-knowledge-transfer-just-part-of-the-sales-pitch-36252

Related Posts:

• Opportunities for INNOVATION SAP, HELLO?
• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• SAP Development Landscape and Systems: Misguided Practices Carry Huge Costs
• Some Reasons SAP Projects are Over Budget and Over Time
• Planning For a Smooth Go-Live: Part 3

Even though the timing of Apotheker’s departure is a little unusual I can not say I am surprised by it.  If I look over the landscape of a CEO’s job responsibilities (sales, strategy, etc.) and compare that to Leo’s short tenure I don’t see any direction coming from the top.  Leo Apotheker came in at a difficult time, but even in the midst of a global economic downturn it is still possible to succeed.

Setting aside some of SAP’s maintenance fee mis-steps there just hasn’t been a compelling forward-looking vision for SAP.  SAP has done little to inspire the marketplace, and the introduction of alternative maintenance players like Rimini Street means that SAP MUST innovate and create a compelling message.  And even if some argue that SAP has provided some compelling message, I’m an SAP insider, working on SAP projects since 1994 and *I* don’t know what that message is.

To that end, I even penned a plea to SAP calling for innovation and market leadership.  That posting, entitled “Opportunities for INNOVATION SAP, HELLO?” [FN1] laid out some clear, but relatively simple application changes to the ERP flagship product from SAP.  Although well received by a number of SAP insiders it is doubtful that those in key decision making roles will adopt much, or even any of the application improvement ideas.

Where SAP is Missing a Key Business and Market Opportunity for Leadership

In reading through a post on the CIO Magazine blogs (“ERP Costs: 3 Signs Companies Are Wasting Less Money” [FN2]) on Panorama’s comparison of Saas with tranditional ERP it would appear that Saas is not all it is cracked up to be.  SAP has completely missed the boat here on not capitalizing on the GENUINE shortcomings of Saas ERP compared to on-premise ERP solutions like SAP.

Saas ERP is implemented over 35% quicker (11.6 mo v. 18.4), but cost only 10% less to implement (6.2 v. 6.9 ann. rev), and even though CEOs may be slightly more satisfied (< 3% difference, may be margin of error?), business is more disappointed (23.5 sat v. 42.9) and Saas is more often over budget (70.6% vs. 59%).  If this were a head to head comparison by the SAME measures on premise ERP applications have been measured by this would be considered an utter failure and an unmitigated disaster.  But the technology trade publications tend to be eerily silent on this.  Where is SAP’s market leadership in pointing this out?  And on top of that, what about the security issues involved as well?

• It is implemented over 35% faster but only costs 10% less?
• CEO satisfaction difference is marginal so that unless the sampling size is massive (which is doubtful) it falls within a margin of error.
• Businesses are about HALF as satisfied with Saas solutions as they are with on-premise solutions?
• Saas blows the budget about 17% – 20% MORE often than on-premise ERP?  (The % difference between 59% and 70.6% as a proportion of the 59% on-premise budget score).
• Off site (off premise) access and security troubles plague Saas and “Cloud computing” models.
• Another layer and level of contracts and service level agreements which must be correctly navigated.

When you look at the facts and strip away the hype on-premise ERP solutions win hands down.  Even with the on-premise ERP results, by comparison to Saas they look wonderful.

And SAP has done nothing to address this in the marketplace.  SAP has also done little to really address the usability of their software other than to provide a technical toolkit (GUI XT) to allow customers to create their own front ends.  MUCH more could be done. 

SAP could today “apple-ize” their user interface and end user experience to be more intuitive and more responsive to end users.  I’m not referring to an IPod, or IPad touch interface, but more of an intuitive look and feel that would make a user’s daily tasks simpler and less confusing.

What Does the Future of SAP Look Like?

• SAP will need to define and articulate to the marketplace a clearer message about its value proposition and its differences. 
• SAP should focus on end-user experience and a more intuitive user interface to help reduce the change management, adoption, and transition pain.
• SAP should refocus its application landscape messages, its sales messages, and its strengths on business solutions rather than package solutions.[FN3]  Too much time and attention is spent on application features by the SAP literature and sales force and not enough on what those features mean to business.
• SAP MUST develop an internal reference database of EVERY consultant who has ever taken a course, or been certified with them.  For far too long the company has allowed fakes, frauds, and cons to lie about certifications or training and SAP has not provided any way to verify these claims.  It is long past time for SAP to provide a “transcript” of courses and certifications for end-customer use when a potential employee or contractor comes to them.

These and many other straight forward solutions would help to generate marketplace buzz about SAP’s enterprise application suite and provide customers reasons for a purchase or upgrade.

[FN1]  http://www.r3now.com/opportunities-for-innovation-sap-hello

[FN2]  http://www.cio.com/article/531863/ERP_Costs_3_Signs_Companies_Are_Wasting_Less_Money

[FN3]  Over the years I have heard so many SAP sales reps and sales presentations that focus on this SAP application or that SAP application rather than addressing a business need or actual business requirements.  This is a classic sales No, No.  All these sales people do is describe features rather than explaining to the business what these features mean to the business in terms of benefit.  For way too long many in the SAP sales force have relied on the SAP name.

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• The Real Reason Executive Participation Creates IT Project Success
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• Using Key Performance Indicators for Building a Strategy Focused Organization

The CIO role in business has been changing almost as fast as technology itself for the last decade.  In the past it was enough to focus on business processes and automation.  It was enough to satisfy the business needs for operational excellence.  By doing this successfully the CIO was given carte blanche, often times large budgets and significant latitude in how best to apply technology budgets.  Those days are quickly fading and today many IT departments and IT organizations are becoming internal vendors to internal customers with “charge backs” to the internal organizations.  They are becoming little more than an internal cost center and “overhead” to the rest of the business.  And this re-alignment of the technology organization is creating significant budget pressures leading to staffing gaps.

Together with these pressures, the CIO and IT decision maker is being pressed to deliver more with less.  More than ever before there is pressure for all levels of IT decision makers to deliver business results–, those results that are focused on customer acquisition, customer retention, revenue growth, and innovation.  What this means is that the CIO or key IT decision maker must focus on being a bridge to the different sides of the business like never before.  The CIO who is able to properly partner with, and integrate into the business as a whole will rise above their peers and be successful.  Those who can not will find budgeting and staffing more and more difficult. 

Today’s CIO has a big job, as this Booz Allen insight article from 2002 [FN1] noted, to succeed they must:

• participate in corporate planning and strategy sessions,
• align and integrate technology initiatives in terms the business understands — speeding products to market, enabling growth, and reading costs and risks, etc.,
• make the case for technology spend and budgets, in business terms, with competing C-level executives,
• develop internal knowledge and collaboration networks.

There are answers, and there are solutions to the CIO quandary about business and IT integration, however, before getting to the heart of the matter let’s take a look at the different roles each position traditionally plays in the enterprise.

CFO (and COO) Alignment is Correctly Focused on Lagging Business Indicators

Intuitively and structurally the CFO role is focused on company finances and company health.  This would be a company’s lagging indicators in terms of business metrics where both operations and finance intersect.  If the company as a whole is doing well then these lagging indicators will show that after the entire process is complete and customer cash is collected and vendor bills are paid together with employee salaries, fixed expenses, variable expenses, etc., etc., etc.  They are lagging indicators, after the entire process is complete, of whether or not the business is healthy and headed in the right direction.  But these lagging indicators are not the best focus.  If you wait until you have ALREADY ARRIVED at your destination to figure out if you took the right path you may not be in business very long. 

To survive in today’s global economy a business must know early on where to make course corrections to stay on track.  Business no longer has the luxury of waiting until the financial results are in to figure out if things are headed in the right direction.

CEO Alignment is Focused on Strategy, Business Growth, Sales, and Marketing

Once again intuitively and structurally the CEO role is focused on future strategy, sales, marketing, and business growth.  This would represent a company’s leading indicators in terms of business metrics.  If the company has:

• New customer prospects in a healthy pipeline
• A steady stream of customers being converted from the pipeline into orders
• A growing backlog while process performance is static or improving
• Existing customers buying more or higher margin products and services

then these leading indicators of future growth and prosperity look good.  These kinds of leading indicators demonstrate future company performance and have been largely lacking from the technology equation.

The CEO, often through the interaction between the sales, marketing, engineering / product development areas also bears the responsibility for new products or services. 

What is the Proper Role of the CIO in the Organization for Business and IT Integration?

Enter the CIO, they have focused on process improvement, automation, and those items related to a company’s fiscal health and performance.  Few technology leaders or technology projects have addressed the leading indicator side of the business equation beyond installing CRM applications (mostly as huge and expensive contact management systems).

In a nutshell, the CIO role, and the IT staff in a properly aligned organization must be business-centric first and they must address business events from both a lagging AND leading indicator perspective.  The most successful CIO will become the bridge between the CEO and the CFO, and thereby integrate business leading and lagging functions with technology.  In other words the successful CIO must find ways to integrate the operational and sales side of the business.  And not just integrate them, but do so in such a way that technology investment and technology spend becomes focused more aggressively on the “demand” side (customer sales and innovation) rather than on the “supply” side (operations, processes, and automation) of the business equation.

This graphic shows not only the proper CFO/COO, CIO, and CEO level alignment, it also illustrates the burden that the most successful CIO and IT decision maker will carry.  Future CIO success with technology in the business will require a more holistic or complete focus on business demand.  The CIO role is becoming larger, and yet more difficult at the same time that the IT organization is under more and more financial and budget scrutiny.  What this means for the CIO, IT Director, or other IT decision makers is that if they do not have an MBA or other formal business training themselves they may wish to look at enhancing their IT departments and IT organizations with true business analysts who also know technology (or can learn technology).

IT organizations and technology budgets that fail to address both sides of the business equation (lagging AND leading indicators) experience:

• significant budget cuts,
• a move into “maintenance mode,”
• their organization support model converted to an internal vendor to internal customers with “charge-backs” for services provided to the organization,
• being closed out of partnership with the business.

As the business as a whole pushes back on what they see as a very expensive IT department they will find their own internal ways around the budget hits from IT.  Internal company departments will avoid budget hits from these “charge-backs” by doing things themselves whether that means manual processes or developing some measure of internal IT autonomy in some of their tech savvy departmental employees.

What Can IT Decision Makers Do to More Aggressively Address Business Needs?

There are a number of approaches that can be taken and a number of requirements that will be needed for a changing job role.

1. Engage the CFO / COO and the CEO in discussions about supporting their business needs.
2. Find ways to actively and directly integrate part of the IT staff into key business departments.  For example, should the Finance, Operations, and Sales departments each have their own dedicated IT staff members?  Or how do you take a limited staff and create a responsibility matrix to maximize business attention on these key departments?
3. Invest in business analysts, those with business degrees or a business focus, who know or can learn the key technologies to support the business.
4. Define and develop a technology strategy execution team consisting of at least one senior level VP or Director from Finance and Operations (appointed by the CFO / COO), Sales, Marketing, and Engineering (appointed by the CEO), and Technology (appointed by the CIO).
5. Have the strategy execution team work together with any of their own key resources to define top level KPIs for IT to business integration.
6. Revisit current KPIs, departmental goals, and metrics to ensure that technology and IT are aligned to these important business measurements.
7. Use the underlying metrics and business goals for the KPIs as the source for both reporting and technology initiatives.

[FN1] Boochever, J., Park, T., Weinberg, J., CEO vs. CIO: Can This Marriage Be Saved? Booz Allen Hamilton, Strategy Business Online, July 17, 2002, retrieved online February 6, 2010 at http://www.strategy-business.com/article/20571

Part 1:  What is the Proper Relationship for the CIO, CEO, and CFO?

In the first part of this series we looked at the changing business landscape and what it means to the CIO, IT Director, IT Manager, or other key technology decision makers.  From a high level the current global business competition, as well as economic issues are directly affecting the C-level executive requirements and the CIO – CFO – CEO dynamic.  This article reviewed how and where the CIO role is coming under tremendous pressure and how to change the current dynamic by more appropriately partnering with the CFO and the CEO.  This partnership is a critical business bridge between lagging business indicators of business financial and process health on the CFO – COO side of the business house and the leading indicators of sales and product or service pipelines on the CEO side of the business house. 

Part 2:  CIO, CFO, and CEO Alignment – Why ROI is Lacking from Today’s System Landscape

The second part was an overview of the current system landscape and its focus on business processes and the emerging trend of trying to focus on the customer.  This piece also looked at the future business landscape and how the technology focus and direction will be permanently changed no matter what happens with the economy and global competition.  Because the technology marketplace (business consumer) is becoming more sophisticated and more attuned to business / technology alignment, the IT dynamic is going through a structural change.  The whole technology sector is slowly moving away from the “operational excellence” value proposition to the “customer focus” and “innovation” areas of the business.  Very few of the consulting companies and few of the application vendors see this sea change and are doing little to address it.  This is the area of technology market winners and losers of the next 20 years.

Part 3:  Changing the Direction of SAP, ERP, and IT Applications to Focus on the Customer and Innovation

The third part in the series looked at current technology landscapes and how they are aligned and then looked at future technology landscapes.  A brief review of the supply side and the demand side of business shows that unless you have lots of customers (demand) to fill a bigger and bigger pipeline (supply) then your business model collapses.  While it is hidden during good economic climates, any disruption in those economic conditions which fails to fill the capacity pipeline points out the glaring insufficiency of the “operational focus” to technology.  During any economic disruption, or any reduction in demand from customers for your products or services the current technology model falls apart. 

Part 4:  Future Technology Landscape Alignment for the CIO, IT Director, or Key IT Decision Maker

The final part of the series looks at the emerging technology landscape and what the future holds.  It lays out an emerging technology landscape model which has some re-alignment and some components already in use by some of the world’s most successful companies.  A new alignment of technology with the customer facing processes, and the use of social or collaboration tools across the enterprise with a clear business objective is explored.  The driver for the future change will be because the business does not see the revenue generation prospects of technology–, they fail to see the possibilities of promoting customer retention, customer acquisition, innovation, and marketplace analytics.  The new technology model looks to change that dynamic.

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• Tactics, Strategy, ROI, TCO and Realizing Business Benefit from SAP
• Why SAP Projects Fail to Deliver ROI (and How to Change IT)
• CIO, CFO, and CEO Alignment – Why ROI is Lacking from Today’s System Landscape
• Business Strategy and IT Strategy to Reproduce Apple Innovation

Recently I was reading an article on CIO.com (where I also contribute).  The basic premise of the author was that IT is already integrated with business and all of the hype about business to IT alignment is overblown.  This is not entirely true.  As I commented:

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Software modifications must be discouraged but sometimes they make perfect business sense. Remember, software exists to support the business, not the other way around.

As an inexperienced project leader back in the 1980’s, I once informed an executive at a large aerospace manufacturer we were going vanilla with our enterprise software implementation. Absolutely NO software modifications or enhancements allowed I proclaimed! His response stayed with me and still rings true today…

“Steve, you mean to tell me we are going to allow a one million dollar software package dictate how we run a fifteen billion dollar business?” I was lost for words. Finally I said, “if we modify the software, future upgrades could be more difficult to implement”. His response “so what, I need to run my business”.  The lesson is…..you need what you need. Software is intended to support the business, not the other way around.

Make no mistake; if you can really go vanilla do it. I am not encouraging software modifications because they take time and cost money. However, regardless of what the sales people tell you, no software package is infinitely flexible and configurable. At the same time, we all know software must address the key business requirements. This “zero tolerance for modifications” philosophy is fine for those that do not have to live with the software limitations. So what is a project manager to do?

In many cases, software modifications are not a huge deal when properly controlled and managed.  After all, no one writes a single line of custom code until at least the project manager and the executive sponsor say so. In other words, proposed modifications should be well defined, business justified (vs. alternatives) and then approved by senior management (with a full understanding of project impact).  When executives approve a mod in this manner, they have made a conscious decision to expand scope, incur additional cost and extent the project schedule. There is nothing wrong with this since they did it for good business reasons.

The religion that software modifications are universally evil comes mainly from the software industry. In fact software vendors can make you feel like a criminal when you sheepishly tell them you modified the software (dumb old me). The reason is vendors want clients to upgrade their software and do not want mods or anything else to get in the way. The idea is to sell the client related software and plenty of consulting services with each upgrade.

While software modifications increase the difficulty of software upgrades, in many cases this issue is over-blown. This is particularly true when keeping the number and complexity of mods under control. First, whether we like it or not, many organizations never upgrade their software. Others may do it only once over the entire life of the system. Also, there are upgrade tools available today that make the process of retrofitting custom code much easier. Finally, do not assume the promise of future software functionality will replace the need for mods. Even if the functionality is delivered, do not be surprised if mods are required to make it work for your organization. Software vendors use buzzwords to describe functionality but when you take a hard look; many times the functionality doesn’t go far enough.

I will not discount the fact that some software vendors refuse to address customer issues associated with modified programs, and for good reasons. However, most vendors will assist when the issue is critical and push comes to shove. Also, keep in mind that some vendors will fully support custom modifications as part of their business strategy. Furthermore, the risk of compromising support from the vendor becomes less of an issue when enhancements are designed to minimize the impact on existing code and tables. Finally, no custom code should go into production unless it is thoroughly tested and then tested again (and maybe again).

Always schedule and budget with the understanding that some mods could occur. Do not have a line item called “software modifications” (this is politically incorrect and sends the wrong message-again no one is encouraging mods). Bake it into miscellaneous, contingency, or related project line items.

~~~~~~~~~~~~~~~~

Editor’s Note: 

Steve Phillips runs another blog at the IT Toolbox and offers some really great insight on doing technology projects.  Visit his site for more info.

http://it.toolbox.com/blogs/street-smart-erp

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• Breakthrough Project Success: 3 of 4, Vendor Selection and Contracts

As I’ve written before not every metric for business or processes is a KPI.  Too many IT systems and too many companies define a departmental goal as a Key Performance Indicator creating unnecessary friction between other departments or areas of the company.

By using a weighted index you significantly reduce, and in some cases eliminate the competing requirements.

As part of a continuing effort on using key performance indicators for building a strategy focused organization I’m offering this illustration.

Fictitious Company ABC Inc. Indexed KPI Example

Let’s take a simple but very common example of how Key Performance Indicators are misused in business.  Using some very generic and very simple numbers to illustrate the problems with all of these “goals” being called Key Performance Indicators we will look at widget company ABC Inc. 

ABC Inc. has what they call a “KPI” metric for Production throughput of 100 units.  The production manager is given a goal to boost that metric to 110 units for a 10% increase in productivity.  This is what is measured and this is how the department is provided bonus incentives.

ABC Inc. has current on hand inventory of $1,000.00 and they likewise want to reduce inventory carrying costs by 10% or to $900.00.  Again, reducing on hand inventory is what the inventory management department is measured on and provided incentives for.

Right away there is an immediate conflict between production and inventory management.  If either of those areas gets out of synch it can create a bit of a mess.  Now, let’s look further. 

ABC Inc. has a delivery department that is provided incentives to ship orders complete, 100% correct first time.  Now there is a conflict between shipping and production as well. 

Because production is narrowly provided incentives for throughput they will naturally try to optimize their scheduling to ensure greatest throughput, not necessarily the best process for fulfilling customer orders.  Production scheduling and customer service and inventory management and shipping are now in conflict because their “KPI” measures are at cross purposes–, they have competing goals.  Because inventory management has stock levels driven down there is insufficient stock to ship full trucks and therefore you incur additional freight and shipping charges. 

This type of example is COMMON throughout business all over the world.  It is routine in business to have these competing goals, where incentives are provided, which many companies (and even software vendors, consultants, etc.) call key performance indicators.

That illustration could be continued to any number of process areas of any business in the country.  The idea is that if everything is a KPI then you create unnecessary competing demands and in some cases “mutually exclusive requirements” that can not be fulfilled. 

Many times one department will meets it goals and another department which is a dependent area in the same process chain will not, then you have a mess.  For example if production meets throughput requirements but inventory management is unable to reduce on hand stock you could end up in an inventory buildup problem.  Production capacity is increased while stock reduction is not improved.  Production may increase capacity by producing the “easier” products that do not line up well with customer orders and then shipping gets backed up.  Or shipping / customer service and inventory management may drive production requirements and then reduce production throughput meaning that while the orders that get shipped are at 100% complete, far fewer orders are shipping and revenue is dropping.

A KPI Index is the Answer to the Metrics and Goals Many Call Key Performance Indicators

As you can see from these examples a weighted index of each of these measures combined into a single KPI is more meaningful.  If bonuses or incentives are paid on the overall increase in the indexed KPI rather than the discrete departmental goals (other than possible merit awards) you are more likely to create inter-departmental cooperation.

Let’s say as a business you have a low backlog but high inventory carrying costs.  You may wish to weight each of the departmental goals accordingly.  This way you are still moving toward improvements in each area but are focusing attention on the areas that matter.  In this example you may wish to weight your on hand stock and 100% order fill rate higher than your production throughput.  By doing this you are providing the correct index for the overall business needs. 

By using the index and tying pay for performance programs to the index rather than a discrete departmental measure you cause the company to pull together in the same direction.  Instead of having disjointed goals which sometimes conflict with other departments each area would automatically pull together to push the overall KPI higher.  If full truck deliveries are weighted higher than inventory reduction and production throughput then all areas would focus on that issue together.  However since they are also measured together, and since their measurement also contributes to the overall KPI score then these departments would try to find ways to achieve their own goals with an eye toward the higher scoring area(s).  This would encourage more teamwork and innovative process thinking rather than the silo focus that departmental goals create.  In other words creating the indexed KPI also creates cooperative dependencies between departments.

By using indexes and weighting them according to the importance to the business you are directing your company’s energy where it is the most meaningful.  Together with this you may wish to craft and communicate a policy that the weighting for each area will be revisited and may change either quarterly or annually depending on business needs and circumstances. 

It is important to keep in mind that if your KPI(s) are used for any type of pay for performance program that you communicate reasonable expectations of weighting changes.  Without that clear communication and expectation setting in the beginning you will quickly lose your employees’ trust and undermine your KPI initiative.

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Series Introduction Note:  The next 3 parts of this series contain step by step instructions and pointers on managing the RFP process (Part 2), conducting the vendor selection (Part 3), and then how to use the blueprint process to correct any discrepancies and lay a solid foundation for succes (Part 4). 

If you are an IT decision maker and you’re tired of pressure to achieve results that your system vendors or integrators can’t seem to deliver, use these steps to get the most for your money and achieve breakthrough results. Much of this article can be applied to any major project effort your company undertakes.  While some of the suggestions offered here can seem harsh or difficult from a people management perspective they can make a huge difference in your career prospects, credibility, and any future budget requests. 

Neutralizing the vendor proposal scams, clearing the smoke and looking past the mirrors for your ERP, SAP, or technology project requires a little clarity up front before you start your vendor selection.  It is possible to achieve breakthrough business results using technology and business software systems like SAP if you approach your project with the right perspective. 

That Brown Smelly Stuff they are Selling is NOT Chocolate

Promises, promises, sales scams, smoke, mirrors, and vendor proposals, you’ve heard it all before–, the sales pitches promise you a chocolate pie but all you get is some very expensive, and very smelly, dark brown fertilizer.

What these sales pitches never tell you and never deliver on is the “how” to make all of those chocolate pies.  As former General Electric front man Jack Welch calls it “the secret sauce.”  Sure, they describe some super-special secret sauce, they tell you all about their wonderful “Willy Wonka Chocolate Factory” but they only describe a fictitious place, an imaginary state of being. 

Fairy Tales and Vendor Selection Promises

I’ve been on lots of projects where someone dreams up what I call “mutually exclusive requirements.”  These are things that are completely contradictory, they are the old “either / or” logic gates.  You can have one, or the other, but you can’t have both.  Lots of presentations have the sales person delivering tons of promises that no one can deliver on.

Then reality sets in after you’ve signed the contract and the sales person leaves.  A strange odor begins to permeate the whole project.  But this usually happens very slowly over time so that you go through the “boiling frog” syndrome.  You smell a little here and a little there, but like most people you get used to it and think this is just the way it is.  You dismiss early signs that there may be something wrong, or you chalk it up to isolated incidents.  After you transition to a live environment and it is too late you suddenly realize it was not a chocolate pie you were getting but something else that is brown and smelly. 

When someone on the project has to deliver on the sales person’s promises some members of the vendor selection team are no longer involved in the day to day project delivery of those sales promises–, even if they are they often forget everything that was promised.  They only remember a few of their pet peeves they saw or heard during the presentation.  When the sales person describes lots of what sounds like chocolate you end up with lots of brown smelly stuff that is NOT the chocolate you were promised!

After the sales pitches and the promises what you end up with are blown technology project budgets, blown technology project timelines, and buggy custom-coded solutions for “off the shelf” packaged applications.  Fear not, there ARE things that can be done to reduce these results that are so very common with technology projects.

And even if you are misled by a vendor there are still things that can be done after you start with that vendor to ensure you don’t get taken.

SAP, ERP, and Technology RFP – Getting the Most Out of Your Technology Investment

There are several opportunities in early stages of your SAP, ERP, or other technology project to lay the ground work for genuine breakthrough results.  Along with the breakthrough results these early steps can help to set the tone and foundation for a very successful on time and on budget project.  There is just no reason for companies to continue to get taken by some of the unscrupulous or questionable practices in the technology and IT marketplace.

Even after you have selected your system integrator or implementation vendor you still have several chances to make sure they deliver their very best–, the very best tools, resources, and quality of workmanship.  If you change out questionable consultants early in your project then you will set a clear expectation of the caliber and quality of resources you will accept from your vendor.  Doing this early is the best time before they can do any serious damage.

General Patton once said that “War is Hell!” and business in today’s global economy is WAR!  The question you need to ask yourself is if you are in a war in the marketplace do you want raw recruits who are going to go through boot camp at your company, on your dime?  Or do you want veteran Navy Seals, Marine Snipers, and Airborne Rangers?  Raw recruits are usually cheaper, and that experience from those veterans comes at a cost, but who do you think will give you the best chance of winning the war for marketplace position?

Let me tell you, that Marine Sniper will hit his targets at 1,000 yards, but the raw recruits will not only miss, but in doing so will also give away your position and open you up to attack.  So in the end you decide which is more important.  You decide if it is better to take your chances or to take steps to make sure you’re not paying Navy Seal prices for raw recruits.

There are three key events or timeframes early in the project when you can create the best environment for breakthrough project success.  Two of these areas have no risk and at all and one of them contains a moderate amount of risk.  These three key events are:

1. During business case development, RFP creation, and first pass rough project scoping.
2. The actual vendor selection process, vendor proposal reviews, and system integrator contract.
3. During and at the end of the blueprint process.

These key events contain several ways you can take control of your own business destiny and help to ensure the technology investment you make will move your business forward.

Four Part Series:

Achieve Breakthrough ERP, SAP, or IT Project Success: 1 of 4
Breakthrough Project Success: 2 of 4, IT Vendor Proposal RFP
Breakthrough Project Success: 3 of 4, Vendor Selection and Contracts
Breakthrough Project Success: Part 4 of 4, Last Low Risk Chance for Results

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• Breakthrough Project Success: 2 of 4, IT Vendor Proposal RFP
• Breakthrough Project Success: 3 of 4, Vendor Selection and Contracts
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• Effectively Scope Your SAP Project
• SAP as a Change Enabler

We won’t cover a detailed breakdown of RFP sections or RFP strategies but we will hit on some of the high points.  These high points together with a few ways to neutralize some of the vendor sales strategies can help to ensure you are getting the very best vendor or resources for the job.

This stage is probably the most intense for any company considering a technology project.  There is a lot of preparation to get a solid RFP that can set the stage for breakthrough results and solid payback for your technology investment.

The key foundational activities for a good RFP include a solid business case, a clear statement of scope and then the development of the RFP itself.  Some guidance can be found here in this article on and ERP and SAP business case for ROI, business benefit, and success.

What Type of IT Vendor, System Integrator, or Implementation Model

One other thing to consider during the RFP process is what type of vendor or implementation model you are looking for in your proposal.  There are a number of vendor options and each has their strengths and weaknesses but a review of the pros and cons of each is for another day. 

You may wish to employ a well established system integrator; a “boutique” consulting firm; or completely manage the project with your own selected staff of contractors; or you may want to consider a hybrid approach.  If you are considering the contractor route, of staffing a project yourself, you might wish to review the screening methods to find the right consultant Part 1 and Part 2.

You will also need to determine your project implementation model.  Will you do a pure time and materials approach, or fixed fee, or time and materials with penalties for under-delivery (over budget, over time) and rewards for over delivery (under budget, early), or time and materials with cost controls, or a blend of some of the approaches.

You may wish to include the characteristics of the experience of the consultants you want in your RFP as well.  For example you might insist that you want the team leads to all have small and mid-sized business (SMB) implementation experience and they should have done production support work.  Why are those important?  In my experience the SMB consultants have the deepest module and troubleshooting experience.  Consultants with production support experience understand ahead of time some of the problems a company will face after go live and can address it during the implementation portion of the project.  This site has several articles related to the important considerations around go-lives.  At the end of this post I’ve included a list of articles from my experience doing production support about the areas I have seen over the years that cause the most pain after you go live. 

Since consultants will be guiding your business, dealing with sensitive company information, and helping to set a new direction and focus, it is important that you are getting the consultants you are paying for and not the fakes, frauds, or con artists that are out there.

Dealing with System Integration Vendor Proposal Methods

Bigger system integrators tend to rely on the “wow” factor of fancy customer lists, huge size and scope, and other factors which may not always translate into a better solution for your business.  In the end, you have to ask yourself, what really matters to you as a company?  Is it flashy presentations that show off how great the vendor is, or is it the ability to deliver real results for your business with the people they bring to the table?  Sometimes it will be the large vendors or system integrators, but sometimes it won’t be.  The real question then is how do you make sure you are getting what you pay for whether it is one of the “Big X” vendors, a smaller boutique firm, or even staffing and running your own project?

Here are some steps you can take to help neutralize some of the sales pitches and focus on what really matters–, which vendor can really deliver the best results?

1. Determine in advance a list of business requirements you want the technology spend to address.  These should become the basis for your whole project, the guiding reason for the technology spend.  Understanding the business goals which are behind any of your company KPIs is important to help focus technology investment.




2. Develop a rational scoring protocol that addresses how well a vendor adhered to your RFP, scored section by section, and weighted to what is important for your company.




3. Set a slide presentation limitation.  Say, no more than 50 total slides for the actual presentation and no more than another 50 slides for an Appendix of supporting information.  If a vendor is unable to capture the important items to your company and its results (rather than touting how great they are) in 50 slides they may not be the best fit.




4. In your RFP it should be spelled out explicitly that customer qualifications and customer references can ONLY come from the specific resumes of the consultants being proposed for the project.  Ignore all the “gee whiz aren’t we special” because we have so many great customers our company has worked with.  If the customer list doesn’t represent the skills and talent they are proposing for your project, why do you care who else they have done business with?  You may also wish to note that any deviation from this will be scored harshly after all, who really cares if they have worked with every one of your competitors if none of those consultants will be working on your project?




5. During the Vendor presentation require an actual demo of some of the system functionality.  This will help to ensure that they vendor is bringing actual knowledgeable consultants to the proposal because they will have to take the time with some of their internal resources to be able to set the demo up and to have some of their knowledgeable consultants on site to show you the system functionality and to answer questions. 




6. Ensure that the vendor provides the implementation tools and samples of each of the templates and resources they use for the project.  Offer to sign an NDA to eliminate any of their arguments about “proprietary” information.




7. Include a provision in the RFP that unverified or unverifiable claims of business benefit will be scored harshly.  You may wish to note in the RFP that if a statistic or a reference to benefit is noted anywhere in the vendor’s presentation, whether on paper or during any oral presentation that it must be supported by an authoritative or verifiable source otherwise including it will be scored against them.  Unfortunately it is a routine practice for vendors to “promote” questionable or unverifiable “results” statistics and throw numbers around to try to persuade you.  The practice is fine so long as it is legitimate.  If a vendor claims they helped company “X” gain “Y” benefit then insist that you need a verifiable source for BOTH the benefit and for how the baseline for the benefit was established and then how the change was measured.  You may even wish to include such a provision in your RFP to the vendor so they know up front what your expectations are for their “claims of superiority.”




8. Make it a requirement that the system integrator or staffing firm provide an affidavit attesting to verification of consultant skills and background.  A lot of attorneys can draft a sound verification affidavit covering the due diligence used for screening project resources.  If you are a public company your executives have to sign off on financial statements under penalty of the Sarbanes-Oxley legislation (in the U.S.) so you might as well have your implementation vendors do the same.  If they won’t do solid background checks or verifications why do you want them at your company?




9. Have an explicit contract provision that your implementation vendor may only provide contract resources from the vendor’s direct staffing partners.  That contract agreement should spell out that those staffing partners may not use additional staffing partners more distant.  The reason is that as you move further away from the immediate implementation vendor, and as each partner takes their “cut” of the rate, you end up with more and more fakes.  After you begin to move further away from your prime vendor, everyone’s “cut” begins to reduce the final rate to much less than a normal market rate to the end contractor and any contractor with real experience will only go so far in rate concessions even in a down economy.  As a result you only attract fakes, cons, and liars.   




10. Include a provision in the RFP that asks the vendor to describe their process for handling less than ideal or less than optimal consulting resources.  Be sure that provision includes specific language noting that you would like to know their approach and policies on credits as well.  In this provision of the RFP make it explicit that this section will be scored heavily so that it may affect the overall decision process if the policy is not adequate.  You may even wish to go so far as to note that even if the vendor scores well they could be disqualified for not having a reasonable policy here.

The idea with this and all of the other tactics and techniques you intend to use is to set a clear expectation about the quality of the resources the vendor provides and the quality of the project you expect.  By doing things like this from the beginning and carrying them out throughout the early stages of the project you will set the stage for success and have the greatest opportunity to achieve breakthrough results with your technology investment.

For obvious reasons there is a heavy emphasis on getting the right resources.  After all, the people delivering the project and influencing or affecting the direction of your business are more important than the vendor behind them (so long as that vendor is reputable).

After developing your RFP the next stage is to determine the list of vendors you wish to submit to.  And you may even wish to throw in a couple of “wild cards” to the normal vendor selection just to get a different perspective from another type of vendor on how they would do your project.  The more knowledge you gain early in the process the more sophisticated of a client you will become.  The more sophisticated you are as a technology customer the better your results will be.

For those breakthrough results ask yourself what is important to you as a business, and what you believe you need to achieve that.  Be sure to build those expectations into your RFP somewhere and score them accordingly.  In the end what really matters in all of this is are you getting what you expect?

Some of the Biggest Production Support Problems with your SAP Project to Avoid:

Planning For a Smooth SAP Go-Live: Part 1
http://www.r3now.com/planning-for-a-smooth-go-live-part-1
(introduction, security and authorizations)

Planning For a Smooth SAP Go-Live: Part 2
http://www.r3now.com/planning-for-a-smooth-go-live-part-2
(master data, data transformation methods)

Planning For a Smooth SAP Go-Live: Part 3
http://www.r3now.com/planning-for-a-smooth-go-live-part-3
(process issues, blueprinting, testing, and change management)

Planning For a Smooth SAP Go-Live: Part 4
http://www.r3now.com/planning-for-a-smooth-go-live-part-4
(custom development, costs and consequences of inexperienced developers)

Four Part Series:

Achieve Breakthrough ERP, SAP, or IT Project Success: 1 of 4
Breakthrough Project Success: 2 of 4, IT Vendor Proposal RFP
Breakthrough Project Success: 3 of 4, Vendor Selection and Contracts
Breakthrough Project Success: Part 4 of 4, Last Low Risk Chance for Results

Related Posts:

• Achieve Breakthrough ERP, SAP, or IT Project Success: 1 of 4
• Breakthrough Project Success: 3 of 4, Vendor Selection and Contracts
• ERP and SAP Business Case for ROI, Business Benefit, and Success
• Effectively Scope Your SAP Project
• Competitive Pressures and Value Propositions, Is Lean the Answer?