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A fair and crucial question that affects your staff, infrastructure, initial and on-going costs.
The platform and development environments of more and more IT Business Solutions (ERP, CRM and POS) are open and provide standardised development environments in order to better interface with another software application. SOA (Service Oriented Architecture) is a major contribution to developing cost effective interfaces and mitigating stability and availability risks.
At the same time, this enables software vendors to develop within the IT Business Solution and therefore provides the same business functions and logic in the same database and interface.
With that in mind, what factors do determine whether the development of an interface or development of new functionality within in the IT Business Solution is better?
My thoughts on this in priority order are:
- Enabling people
- Business risk
- Initial cost and recurring cost (development and licenses)
Enabling people
Let’s not forget that businesses don’t gain insights, make decisions, close deals or invent new products and services.
People do.
Your staff is the most valuable asset to your business. Software is instrumental to enabling your staff to get the best business insights, make the best decision and bottom-line to be effective, productive and to excel the business.
Keep that thought, determine now what is the best for your staff, different applications and therefore interfaces or one interface? This might well be the case but keep the business flow into account, what does it mean for staff to complete a business process that interlinks with this separate application. Does it affect the productivity? Can it create errors? If it is a complete separate process than this specialised solution might be well the case if not, do understand the consequences and the cost of the problem that might occur.
Business Risk.
Business risk in terms of stability and the availability of the interface. An interface means per definition more complexity and extra efforts from a platform and possible database maintenance perspective and business reporting. Having tools in place that monitor the transport of the information and alert staff if transport of data fails.
It should not be a showstopper; it should be a factor to take into account to make a considered call.
Initial cost and recurring cost.
What are the different cost components of these two options?
I hope this provides you some rich insights on whether an interface is the best for your people and therefore business or an integrated business solution?
People have different needs with regard to processing and reviewing data based upon their roles in the organisation. Therefore it may be preferrable to have different environments (user interfaces) in which to enter, process and analyse business information. More and more software vendors (try to) embrace this philosophy.
Traditionally IT business solutions (e.g. ERP and CRM) were the central repository of entering and source of getting information out to analyse the business.
The last couple of years software vendors have been focussing on getting the information out of the IT Business Solution in such a way that it provides benefits to organisations such as:
- Enabling confident decision making in an environment that is easy and familiar to use;
- Fitting with IT systems that business already have invested in such as Microsoft Office and Server systems and therefore reinforcing and leveraging your existing IT investments;
- Supporting collaboration to enable people to work more effectively across departments, companies and supply chains.
In 2005 AMR brought a report out and stated based on a study that 85% of the staff in an organisation are Non-ERP users however need information out of the ERP system to perform their job more effectively.
For example since 2004 SAP and Microsoft have been working hard on letting SAP and the Microsoft Office system working closer together. More information on this you can find here: http://www.duet.com/about/index.aspx
And since 2000 Microsoft has been working hard on letting their Microsoft Dynamics ERP and CRM applications natively work together with the Microsoft Office and Server systems. More information on this you can find here: http://www.microsoft.com/dynamics/en/us/fits-systems.aspx
The diagram shows the mapping of an ideal solution environment based on the different needs people have. The challenge that software vendors have is to let information entered in the IT business solution seamlessly flow through to other solution environments. Out of the box interoperatibility, choice of platform and security methods are key to this.
The diagram might help you to evaluate how software vendors that you have selected embrace this strategy and what the skill sets are of your implementation partner(s) to realise this within your organisation.
In my previous blog I mentioned briefly the concept of “The Pain Chain”. The Pain Chain is a part of a methodology to determine the Key Business Requirements (KBR’s) of your business. The methodology is from the Infomentis Group - http://www.infomentis.com/
It is a methodology that is used by some of the software vendors to explore with you the business challenges and KBR’s. In this blog I focus on an element that you actually could use yourself to prepare yourself for an IT Business Solution software vendor/ implementation partner selection.
"The Pain Chain" is a concept to very easily visualise the challenges your business has. What the cause of these are, the consequence as well as the relationships of these between departments and organisation level (e.g.: operational, management, executive). It is an extremely powerful visual tool (map) to get to the source of challenges and discuss with the right people how they could be potentially solved. The solution could be a process change for example of or an IT business system change. In case you are starting the journey of selecting a new IT Business Solution, this map could guide you which IT Business Solution fits your business the best for now and the long term.
How do I start to create “The Pain Chain” map.
What you need is the following:
- Three questions to ask to the people that should be interviewed to get the map in place
The three questions are:
- What are your current challenges (pains) in regards to perform your job and what business processes do they impact?
- What is the cause of this challenge? (Note: here you discover if the issue is caused by another level in the organisation and/or department, I also call this “down the pain chain” and you discover the “tactical pains” (TP) here. Examples of these are:
a. I have no way of accurately recording forecasts;
b. Our procedures are too manual;
c. We can’t view information in real time;
- What is the consequence of this challenge? (Note: here you discover what the impact is of this challenge and for who in the organisation, I also call this “up the pain chain”. There are different type of so called consequential pains (CP); strategic, financial, internal and political.
Let me give you a simple example;
You are working in a wholesale distribution organisation and we start at the Warehouse Manager and ask him/her the first question. The answers you get is:
- Inventory is not accurate (TP)
- Too many wrong items in stock (TP)
When you continue the journey and ask the Purchase Manager about these TP’s what the consequence is than you discover the following:
- Inventory costs too high by 15% compared to budget.
This is a consequential pain as a result of the TP’s.
When you than ask the Director of the business, his/ her answer is:
- Improve profit margin by 15%.
This is the actual Key Business Requirement (KBR). If you put these answers on post-it’s, sort them in a hierarchy than you start to get the so called “Pain Chain”.
It is important that the KBR’s are measurable. With selecting the software solution, you should focus on letting the solution fix the TP’s. With the pain chain it becomes than clear how that impacts the rest of the organisation.
I hope this helps your business to discover what the KBR’s are and by what TP’s and CP’s they are feed.
“The cost of the problem”; what does that mean? How can you discover it in your business? And how does it help you to qualify which IT Business Solution is the right solution from a capability perspective and investment justification perspective.
We could state that overall the core objectives of implementing an IT Business Solutions is (not in particular sequence)
- Improve productivity of your staff (do more with less or at least the same);
- Improve the products and/or services you deliver to your clients and partners in the supply chain;
- Enhance your position in the market by being more competitive (e.g; agility, adaptability, richer business insights that can drive your business in the best direction).
The outcomes of these objectives should result bottom-line in two results:
- Saving of cost;
- Increase profitability.
Based on these two measurements the well-known term Return on Investment (ROI) can be calculated afterwards. Afterwards….? I should be able to do this upfront so we can justify the investment and select the best IT Business Solution for now and the long term.
I cannot agree with you more.
Question is; how do you get to this point? One of the exercises business could perform is to analyse “the cost of the problem”. The cost of the problem analysis provides you with the information:
- What the problems are in the business, how they relate and how much it the business cost currently.
- A valid list of challenges to verify how the potential new IT Business Solution could solve these and what the investment would be in order to solve.
How? My tip is to let your departments write down their top three challenges they currently face and let them articluate this into cost and or time aspect. Cost could be related to the amount of time it takes to perform a certain activity that could be performed much faster if…, errors that occur and the consequence of that (extra time, missing out on revenue), losing sales due to not having certain information available etc.
Many occasions I have visited companies (prospects) that are out there in the market select (maybe ‘find’ in this case is the better word) a new IT Business Solution. They are aware on a high level why they are looking for a new IT Business Solution and many times have their requirements outlined in the most detailed level. A budget has been established (based on what?) however cannot exactly pinpoint the challenges they have in their organisation currently, how they impact other departments, what the cause and consequence is of them and most importantly what it currently cost the business to deal with these problems. We call this in the IT Business Solution world a map of “The Pain Chain”. More on this in the next blog.
Once you have this information available you have a decent framework to go out to the market and select (not find) an IT Business Solution that meet your requirements, solve your current business challenges and understand how much time and money it will save the business and therefore what the Return on Investment will be once this solution has been implemented.
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