In today’s uncertain global environment, organizations and their executives need a clear path to a positive return on investment before taking on the cost, risk and heartburn associated with implementing new enterprise software.
ERP systems and other enterprise technologies can achieve a ROI by preserving, enhancing or creating a competitive edge for the implementing organization. Unfortunately, few organizations get to this state of utopia and instead struggle to realize the expected business benefits of their investments. Our 2016 ERP Report reveals that only 35-percent of organizations realize at least half of the expected business benefits of their investments in enterprise software.
Some companies do in fact realize business benefits, but they are more effective, strategic and deliberate in how they plan and executive their enterprise initiatives. Here are three ways that we see companies leverage technology to maintain their competitive edge:
1. First and foremost, manage your project as a business transformation initiative. The most successful clients we work with treat their projects as business transformations rather than simple technology refreshes. Your chances of failure and/or underwhelming results increase dramatically when you start with the technology and expect everything to fall into place accordingly. The more successful companies, on the other hand, begin with strategy (see point #2 below), people and processes, then allow technology to fall into place from there.
For example, our team is currently working with a large distribution company that is looking to grow from $250M in annual revenue this year to $1B by 2020. This is no small undertaking, and technology alone won’t get them there. But they will get there by effectively aligning their IT strategy, business process reengineering, organizational change, and ERP systems initiatives.
2. Begin with your strategic goals first, followed by how you will leverage technology to get there. Alignment of your various business transformation initiatives is made possible by a clear definition of your overarching strategic goals. When embarking on enterprise and IT strategy initiatives with clients, we typically begin by constructing a strategy articulation map, which defines how bigger-picture strategic goals translate into more specific enterprise, technology, people and process initiatives that will ultimately enable those goals.
When defining this strategy, it is important to not get too prematurely caught up in specific technologies or trends, such as single ERP, best of breed, SaaS or cloud solutions. Instead, start with your strategy and use that as a framework to narrow the playing field and define your overall direction. This also helps avoid the “analysis paralysis” trap.
3. Take the time to reengineer critical business processes. Not all business processes are created equally, so not all business processes should be reengineered equally. Instead, business process reengineering efforts should focus on those workflows that are most critical to your business success and are a source of your competitive advantage.
We recently met with a mid-size, engineer-to-order manufacturing and distribution client that views customer service and product lifecycle management as the keys to their success. With that in mind, they asked us to reengineer those business processes, but focus on more incremental improvements in other functional areas. This allows us to focus our efforts, cost and value on areas that will have the biggest impact – and deliver the largest sources of competitive advantage.
In this ever-evolving technological world, it is vital to leverage your enterprise system to help keep your competitive advantage. If you don’t keep up, you’re going to be left behind.