ERP Evolution needs Innovation & Leadership
I have overseen the selection and implementation of ERP systems for more years than I care to remember. And with hundreds of ERP successes under my belt, and losing a fair number to the competition as well, it is clear to me that two factors are still frequently missing in ERP evolution: validation and leadership.
In the early days, it was easier: systems were needed to handle new tax regimes and legacy software just didn't comply. Or, even more straightforward, the need for efficient administration had reached a point where it had become a matter of business survival. However today - with the world of business moving faster, and technology creating more opportunities than barriers - the complexity of ERP decisions has increased many times over.
Of course the supply and on-going delivery of software solutions for your business rely on demand. Not just the demand for a stable and accurate system keeping everything in order, but also the demand for new ideas. The evolution of ERP software needs those demands from business in order to generate progress. As with any other industry, there will be innovators that balance the risk and reward to pioneer new directions. There will be those that recognise a new directional trend and jump in to enjoy the same benefits as the successful innovators. And ultimately, the industry will evolve in that new direction as the trend becomes mainstream. But who are the innovators and how do they innovate?
Listening to conversations during and after ERP implementations could be almost amusing if it wasn't for the money involved:
- “I would have thought any ERP system would ... (do everything I can think of afterwards).”
- “Your system doesn't do what I want.”
- “Our old system used to do it this way.”
- “None of our other clients want this (feature).”
- “You didn't tell us about this before we started.”
Let me start by saying that implementation of ERP systems is one of the hardest tasks in the software world – expected by clients to be somewhat standard in delivery but with extraordinary results. However, the questions above still frequently appear and it all comes back to one thing, lack of validation at selection time.
With many choices of systems, each with its own set of ‘innovations,’ it can be hard to determine what will be best for your business. Many organisations decide what they need in a system before they go to market. Many others want to see what is out there before they make up their minds and will use their discoveries to better determine their needs. In my opinion, it doesn't really matter how you go about this process as long as you validate the decisions you make - and you make them for the good of the business. I don't mean ticking off a prepared list, adding up numbers of conformity or getting a 3rd party to decide for you. I mean validating the reasons for making a change: establishing whether that change will deliver tangible results for the business – and ensuring you can validate that the system you are selecting will actually help you make that change.
In order to validate properly, you need leadership.
When it comes to an ERP project, there will always be many experts involved - all with their own set of skills and all very much a necessary part of the process. But one of the most important skills is leadership - and that comes from the very top of an organisation. Despite all the technical aspects of software, success is unlikely unless the intended results are clearly defined and validated through leadership. And of course, those results can take many different forms from "minimal disruption to the day-to-day business" of "a 10% reduction in inventory". Some measurements are particularly important, as they will actively drive focus on key outcomes - and here leadership also comes into play, keeping those outcomes alive during and after implementation.
Some results are only achievable over time and this means that the business really needs to take ownership of them: not just taking responsibility for achievement, but also ensuring the implementers are targeting the right outcomes. Technical people focus on technicalities, so they need guidance and leadership. Sure, they have done it before and you are relying on them to do it again, but if you don't take that leadership as a business then you will only achieve what others expect to deliver. Ultimately you control your own destiny.
Now we reach the really exciting bit, well I find it exciting! Not all systems can achieve your goals; in fact, I would say if they can - then your goals are just not ambitious enough. Because better business is driven by better systems and the key to delivering better systems is innovation. I believe that real ERP evolution comes from innovation that is ultimately driven by the business itself making demands to achieve results. Software vendors might try to position themselves as the most experienced, the most innovative and as leading the way. But I contend that it is business, through validation and leadership, which drives innovation in the ERP world.
So, I say to business, don't give your responsibility away to software vendors: and I say to ERP vendors, never stop listening to business leaders.