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By
Paul Deis, CEO, PROACTION
In our second article on the 4 Essential Factors
that comprise the Path to Best Practices we focus on
the first Factor – Effective Enterprise Systems and
Processes. Having an effective software system
coupled with functioning business processes is the
starting point, the foundation for
performance improvement efforts.
If those who operate the company’s internal
processes must daily struggle with what the process
is, because it is so riddled with “exceptions,” must
constantly be seeing a supervisors approval, or
perform a do-it-yourself computer process with a
spreadsheet, to name a few examples, it is almost
impossible to achieve consistent, substantial,
predictable forward progress. These are Basic Best
Practices that must be established.
To form a solid foundation, a company’s enterprise
systems and business processes, (work flow), must
meet several basic criteria:
- Support the Business Strategy – how
well does the defined work flow, information
systems, and processes support specific elements
of the company’s articulated strategy and
objectives? Are there numerous disconnects or
workarounds? Are the steps so generic that there
is no obvious support for the business strategy?
Is the strategy itself articulated clearly?
- Be the System of Record – today, in
2006, the enterprise system’s software
functionality must encompass enough of the
business process to form the primary repository
of information for the company. It is the main
source of auditable, dependable, coherent data
about specific sales, customers, vendors,
products and other company-critical information.
With Sarbanes-Oxley, FDA, FAR, and other audits
of information, it is essential that it “all be
in one place.”
- Established Work Flow – the overall
work flow for the company must be coherent, not
riddled with “exceptions” or depend on
individual “hero” performance to work reliably.
Just as critical is that it must be documented,
and the documentation must match reality. Then,
and only then can continuous improvement
processes be initiated that can work well. If
each improvement effort must start with a “what
is going on here?” step, there will be little no
forward progress.
- Facilitate Communication – we have
found that in simple terms, information + work
flow equals communication, between people in the
overall sequence that comprises the business
process. Information about an order, for
example, moves through various stages until it
is shipped, with people at each step informed as
to what, specifically needs to be done.
Embedded Best Practices – A Reality?
Many ask us about Best Practices that “come with
software” – this means that if they buy a certain
software package, and implement it, the company will
benefit by adopting better information and work flow
methods. Or at least this is the idea.
We have found that while there is certainly a very
good portion of truth to this concept, in reality
there is a lot more to it than just “buy and
install.” Some variables:
- Fit the company? – there may be
unique aspects to your company that make
utilizing a “standard” business process
difficult, or require “force-fitting” to get
implemented. While it may make a “tough” manager
feel powerful to order something to be
“force-fitted” into use, we have been the follow
up to these all too often, and found that
something altogether else results. People just
end up working around the process they don’t
believe will work, weren’t involved in up front,
don’t understand, and above all, don’t feel any
ownership for.
- "Not invented here syndrome" – the
opposite of the fit issue is that the proposed
best practice may actually be a major
improvement, but people don’t want it because
they didn’t think of it themselves. We have
found this is simply another variation on the
ownership issue. If those who are “resisting
change” have the responsibility and are
meaningfully rewarded for achieving these
improvements, change will be their best friend.
So, if this is going on, dig beneath the surface
to identify the real issue, and you’ll usually
find it is ownership of the processes.
- "Standard" is too generic – some
so-called Best Processes are so generic as to
confer no real advantage for the user. An
example might be a generic sales order entry
process that doesn’t take into account any of
the uniqueness of the company’s product
offering. Yes, you can implement it, but will it
improve anything? Would something now captured
by the current method be lost in the process?
There are other factors, of course, such as the fact
that you will, at best, achieve only parity with
competitors or others by adopting the practices
created by others.
Selecting Enterprise Software
The decision to replace a company’s existing system
is one of the most difficult, failure-ridden
exercises that can be undertaken for a company. We
have never met a CEO or senior manager who
did not regard this effort as ridden with
“landmines.” Some of the Landmines:
- Focusing only on software cost
- Focusing only on detailed functionality.
- Not conducting a formal requirements and
issues study up front.
- Undocumented business processes (no “before”
picture).
- Using a selection processes that is promoted
as largely automated.
- Buying too much complexity.
- Decisions based on biased advice (from
either internal or external sources).
- Decisions based on limited information.
- Emotionally based decisions.
- Not considering ability to implement and
“live with” what is acquired.
And my personal number one landmine – lack of
ownership. A selection team that does not have
ownership of the decision, either for the selection
or the successful implementation of what is
selected. If someone else makes the decision –
“corporate”, a consultant, the IT director, a very
loud-mouthed, dominant team member, The CEO, a Board
member, investor, the CFO, or anyone other than
those who must, in the end, succeed in their jobs
with the new capabilities, the chances for failure
to hit budget and schedule targets, as well as never
realizing the imagined benefits, go through the
roof.
Numbers vary, but between 50 and 75% of all
enterprise software implementation projects
encounter serious difficulties in implementation –
large delays, cost overruns, and of course the
worse, is just never realizing significant benefits
from the effort. The downside is truly frightening
to some – outright failure, bankruptcy of companies,
or at least serious, major disruption of their
ability to function – these have all happened often
enough to be very real possibilities for anyone.
Conversely, if you get the ownership right, the
risks are not trivial, but at least reasonable
success is almost assured, because the team members
will make absolutely sure they can succeed with, and
will clearly envision how they will fulfill their
responsibilities with what they are selecting.
Best Practice – Software Selection
Since having an effective enterprise system and
processes that utilize the software properly are the
foundation of the Path to Best Practices, the
question that follow would be “what is the Best
Practice way to select and manage enterprise
software? While this is the subject for another Best
Practice article in and of itself, here are the
basic elements of the selection activity that, when
present, form a Best Practice:
- Team ownership – (we’re getting
redundant, again) Only the team should perform
the selection process, and make each step in the
decision process.
- Objective, fact, based, step-by-step
process – instead of one big, hairy
decision, break it down into a series of
understandable steps. Develop the appropriate
level of detail for each sequential decision.
Focus just on each step, ignoring for the
moment, those prior and to follow. Insist on
objective, independent data to support each
step.
- It’s a business decision, not a
technical one – best made by business
process owners. Use business due diligence
thinking at all key steps, especially toward the
end.
- Business strategy driven – understand
where your company is going, how it will get
there; use this to define the critical success
factors that the software must be ableto support
well.
- Similar company long list - Generate
a long list of established, stable vendors that
have a large portion of their installed base in
companies similar to yours – size,
characteristics, business model.
- Focus on differentiators – decisions
between alternatives are not made by reams of
data points where all options are the same.
Eliminate these and pay all of your attention to
the truly vital few – the major, key functions
that must go well for the business strategy to
work well, and push the detail functions and
factors into the background.
- Utilize outside help – at least to
some degree. The best role for outside support
is in the role of a facilitator, a coach in the
process, to keep the team on track, out of the
“weeds”, and support the objective, fact-based
process. Not having a coach is a lot like a
baseball team that is “self-directed.” You
cannot do something and simultaneously observe
how well you are doing it with any accuracy.
- The process is what generates the result
– establish it, stick to it rigorously, and
you’ll be standing on solid ground with the
final decision.
In conclusion, getting your enterprise software and
process foundation in place and on solid ground is
essential to moving along the Path to Best
Practices. The PROACTION web site has additional
information on enterprise software selection, and
about the
SoftSelect methodology that we use which
supports these Selection Best Practice details we
have articulated here.
In subsequent PROACTION Best Practices e-Newsletters
we will continue this discussion, exploring each of
these 4 factors in more detail, and other closely
related topics.
Also, you can, at no charge, participate in a Get
Started Webinar, and receive free White Papers on
various topics of interest to you. We encourage you
to explore these paths today.
We welcome your feedback and comments. Send us your
questions and we’ll answer them in a future
Newsletter.
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