Consulting firms have been delivering projects in the same way for more than 15 years and yet a 2010 study by the Standish Group revealed that 60% of ERP projects fail in some measure and 33% fail catastrophically. The technology being implemented is constantly evolving and we have reached a point where the so-called ‘Disruptive Technologies’; In-Memory, Mobility ,Social Media and Cloud, are shifting the role of IT from that of business enabler to business transformer. The markets in which our customers compete have never been more global, fast paced, or fiercely competitive.
So why do we persist with a delivery methodology that is slow, costly, and not entirely successful?
The 80:20 Rule – Part 1
The way a company buys stationery, pays employees, budgets, or closes its accounts at the end of each month is extremely unlikely to transform it from ‘also ran’ to a ‘leader’ in the market in which it competes. Let’s call these non-differentiating business processes.
By contrast, the way that same company segments its marketplace, manages interactions across multiple channels, and is able to differentiate its products and services are likely to have a significant impact on its success. These are differentiating business processes.
It is our experience that no more than 20% of a company’s business processes fall into this differentiating category. So why does the prevailing delivery methodology treat all processes as if they were created equal?
The 80:20 Rule – Part 2
The leading ERP solutions from Oracle and SAP each come with a set of best practice business processes, often augmented by implementation partners, proven over the course of thousands of implementations worldwide. On the plus side, adoption of best practice significantly helps to reduce implementation timescales and risk for clients. On the negative side, adoption of best practice simply puts the client on a level playing field with thousands of other companies. So when should we encourage clients to adopt best practice?
Adoption of non-differentiating business processes brings all of the positives and none of the negatives associated with best practice. After all, corporate success has never really been determined by the way in which a company buys toilet tissue. However, wholesale adoption of best practice for key differentiating processes threatens to turn those processes into non-differentiating processes and undermine a company’s ability to succeed.
So what are the implications of a new methodology? Focus only 20% of the time and effort on the 80% of non-differentiating processes. Don’t run design workshops and seek to recreate existing business processes. Instead demonstrate how best practice works and ask why it cannot work for the client. Focus 80% of the time and effort on the 20% of differentiating processes. Adopt a more agile approach to development and start on day one of the project. Don’t spend months designing and writing detailed functional and technical specifications, followed by months of development before the client first glimpses the new way of working. This all too often leads to a misalignment of expectations, delays to the implementation, and costly rework.
A Change in Resource Model and Skillsets
Classifying client business processes into differentiating and non-differentiating ahead of a project will enable a pre-configured set of best practices to be built offshore prior to the project starting. The gap/fit sessions where these best practices are demonstrated to the client will finalize configuration requirements and/or identify any minor developments needed. Both of these activities can be done offshore in parallel with these sessions.
The best and brightest from both the client and implementation partner need to be focused on the differentiating business processes. These resources must be capable of thinking outside the box, must be fully empowered to challenge the status quo, and must be prepared to leverage experience and expertise across multiple industries not just the one in which the client competes in. This group must not only know how the new business processes will work, but also how to effectively manage the business changes needed to take advantage of them. In short, this group must be capable of genuine business transformation.
The market in which we provide our services is increasingly competitive. Margins are under intense pressure, and clients are increasingly looking to us to tell them how to implement faster and cheaper but still drive significant business value.
The time for change is now so lets start thinking outside the box and change the way we implement. This blog is by no means the answer. Instead it represents a different perspective; one intended to provoke a response.
In an increasingly commoditized industry, isn’t it about time we changed our implementation process from being non-differentiating to differentiating to stay ahead of, and not simply keep pace with, our competition?