People are beating the transformation drum pretty hard lately, and for good reason: If a business is going to be in a position to compete into the future, then making changes around the edges isn’t good enough. Ultimately, the best course of action is a top down transformation. How the business executes on a daily basis is key. And while we’ve often focused in our blog on the importance of processes and people over technology, there’s no denying that the latter will, at some point, have to see some significant changes if the business transformation is to be successful.
One goal of business transformation is to execute every process digitally. But the key to this is to make sure that the technology employed is driven by the processes. With the average age of ERP systems sitting at seven years old and aging, it’s not hard to see why technology will ultimately be in the cross-hairs. To get to fully digital, with process-driven technology, one has to enter a transformation project with a clear business strategy but with with no preconceived notion about what the final technology environment will look like, One also has to enter with eyes wide open knowing that there is likely to be great push back at the recommendation of changing technology. For as much as people complain about the software they use every day, the thought of changing is even more disagreeable.
So why is technology the biggest roadblock to your transformation, particularly when it is almost always the impetus for the change? There are 3 primary reasons: the heavy investment involved, customization from the old ERP system, and changing the culture of use from that old system.
Heavy investment throughout the company
The technology used throughout a company is no small line item. Many companies invest hundreds of thousands of dollars over the years, if not more on technology. Not only is there an initial cost, but also there is maintenance which also comes in many forms. If your company has not had some sort of regular investment in this area, then I would bet heavily that your company is one that has moved increasingly to the use of manual processes as systems fail to work with each other. The cost and risk of purchasing the system alone, if not properly selected and sized for your company, can be a roadblock. Choosing the wrong system or a failed implementation is nothing short of disaster. This can cause discord between departments and a downright deer-in-the-headlights effect when faced with that final decision.
But the fun doesn’t stop at the investment of an ERP system alone. There is also the investment of time and resources from the professional team who takes time away from their daily schedules (with very full plates) to evaluate, the system, and then work with the company, implementers and professional advisors throughout the implementation process. And finally, the company has to allow a considerable investment for training, both initial and ongoing. The system won’t work if everyone in the company doesn’t use it – and use it properly.
Customization in the previous ERP system
Most systems have been customized to a degree, some are heavily so. Each customization makes it very difficult to upgrade to the next version because custom code will not be supported by the new release. Therefore any custom code needs to be rewritten to fit. You can see how burdensome this can become and why so many companies are running un-supported releases or soon to be un-supported releases (N -1, -2, -3, etc.)
One solution to this is to analyze the processes that require this customization during your business transformation. Moving to a system and adjusting processes that work better with best practices can reduce or even eliminate this issue. The catch, of course, is making these changes without jeopardizing the processes that are unique and vital to the success of your business. This can be done, but it needs to be done right.
Systems within company culture
Your ERP system is infused within your company culture. This may be very clear or it may be subtle, but it is there. ERP becomes part of the culture of a company because it touches everything (at least it should touch everything) within the company . The good, the bad, the language you use, the routines, etc. are all part of your daily lives and you become very comfortable with them. Regardless of how much anyone within the company complains, people would rather stay with what they know than go through the pain of changing. The right change management will make the difference here and it is well worth the effort.
In the final analysis, there are several obstacles that stand in the way of successfully completing a transformation project and technology is one of the more difficult to overcome. As you embark on the project, you need to keep this in mind and be ready to address objections as they arise. Overall the benefits of a business transformation far outweigh the challenges; you just need to be prepared to jump those hurdles.