Key Drivers for Business Results

Business Leads and Technology Supports

There is a misconception in the ERP market that says technology is the key enabler to business maturity.  In a previous blog (ERP is Only Part of a Business Solution) I discussed the supporting role ERP plays in a business solution.  Business processes and people have a far greater influence on business process maturity and business results.  Let’s clear up this misconception by examining two areas that have driven its general adoption.

 

Is Technology changing Business?

I do not believe that technology is changing business but rather technology is finally catching up with leading business practices.  For example, back in the early nineties I read a book on the e-business revolution.  The major premise of the book was that technology was transforming existing business models into an e-business model.  The book provided an example where inventory stocks could now be checked in retailer stores and inventory orders could be generated to maintain a desired stock level.  The book explained that this is an emerging requirement due to new e-business technology.

I have to humbly disagree with this analysis.  The above requirement had always been a desire of business.  I remember back in the early fifties when my father would make the rounds as a salesman to his retailer customers to see their inventory and manually created orders to maintain the retailer’s inventory levels.  Many businesses did not perform this process because (a) it was manually intensive work, and (b) it reduced focus on higher priority business activities.   Technology is now providing a cost-effective vehicle to accomplish this business requirement.

Build It and They will Come

Everyone has heard the phrase “build it and they will come”.  Several internal IT and external Implementation Partners & ERP vendors have used new technology as the value proposition for ERP implementations.  This philosophy may have worked in the era of “green screens” and emerging client/server technologies but it does not work in today’s world.  Technology driving Business is like putting the cart before the horse.  I recently talked with a customer where the IT organization and ERP vendor took the above approach for implementing new Business Intelligence (BI) software.  The business users felt limited and constrained by the technology.  Results – user adoption was low and now business users are looking at implementing their own BI solution(s).  Needless to say that the ERP vendor, the Implementation Partner, and their own internal IT organization are no longer considered trusted advisors.

What Drives Business Results?

Technology is a great enabler that can play a role in supporting the generation of business value.  However, technology is not always the best approach to address problems that may be inherent in the business model.  Example: automating non-value-add business activities will not generate business value for the customer.  Also consider that most business value is generated outside the ERP software.    “Making decisions and implementing them is where business value is created in an organization.” (Dawson, Ross. Developing Knowledge-Based Client Relationships. Butterworth Heinemann, 2000).   ERP does not have the capacity to make decisions having considered a diverse range of issues, and will not have the capacity to do so in the near future (maybe in our lifetime we should have artificial intelligence capabilities embedded within ERP).  Knowledge is only an attribute of people.  Technology stores information.    So how should we leverage ERP to support greater business results and business maturity?   Consider the follow illustration:

Key Drivers for Business Results
Key Drivers for Business Results

It is important to note that business processes and people have a far greater impact on business results than technology.  Technology can be a cost-effective solution in automating consistent rules and activities.  However, technology like ERP can only utilize information that has been codified.  There will always be tribal business-related knowledge and experience that exists outside technology.  Some of this tribal knowledge is leading or emerging business activities/rules.  In this situation where business rules and activities are radically evolving then technology is not a cost-effective solution for automation. 

Summary

It is important to understand and appreciate what technology can and cannot do for a customer.  Often the true problem lies not with the ERP software itself (granted there always software bugs and fixes to apply) but rather the demand for quick fixes and rapid cures to business challenges.  If the ERP software did not improve the performance of the underlying business model then executive management would conclude that the ERP implementation was a failure. 

Technology like ERP can be an enabler and a limitation for customers.  To ensure enablement over limitation you must first understand the right relationship between business and technology.  Once you understand the key strengths and weaknesses of both areas then you will have a greater insight to the right application of technology to support the customer in driving valued business results.

Comments

13 responses to “Business Leads and Technology Supports”

  1. […] functionality that business should be utilizing.  However, do not get caught up in the trap that technology alone matures a business model.   The business process assessment should identify all business activities. We also need to […]

  2. […] of a business solution.  What is required is a practical analysis of the strengths, weaknesses, and business drivers to develop a balanced approach for success.  This analysis is not a one-time event but a continuous […]

  3. […] In the pursuit of driving better decisions we can easily start down the path of creating a data-gathering monster that cannot realistically be maintained.  The result is bad or missing data and the goal of driving […]

  4. […] Bron : ERP the Right Way! Bekijken… […]

  5. […] Please allow me to elaborate. A business function is a necessary structure resulting in a concatenation of activities/tasks that aligns with the skills/experiences of the organization to best support business processes.  The ERP software industry started as discrete, functional applications that continue to evolve into enterprise-wide, business process solutions.  In general, software applications focus more on business functions requiring the implementation of multiple applications to support an entire business process.  As a veteran project manager, you understand that an application focus may result in gold-plating or poor support of functional hand-offs (integration).  You also appreciate that technology is only one component of a business solution. […]

  6. […] ERP software industry is realizing that people have the greatest impact on business results.  It is refreshing to see the increase in socialization and collaboration capabilities.  […]

  7. […] am a firm believer that business should lead and technology supports.  Therefore, as the business model evolves it is important to identify the corresponding ERP […]

  8. […] Business Leads and Technology Supports | ERP the Right Way! – 22/11/2010 · There is a misconception in the ERP market that says technology is the key enabler to business maturity. In a previous blog (ERP is Only Part of a Business …… […]

  9. […] Technology alone does not mature a business model. […]

  10. […] A set of ERP features require a certain level of organizational and business process maturity for a successful experience.  For additional information, see my article on Business Leads and Technology Supports. […]

  11. […] ERP product features that aligns to the customer’s current business activities/maturity.  Technology alone does not mature a business process.  Keep it simple!  Keep it […]

  12. […] practical aspects of this model are (1) the roadmap must start where the customer is at in their business process maturity, (2) utilize an increment (agile) approach to build organization momentum, and (3) realize that […]

  13. […] my perspective, I see technology as finally catching up with business and not technology changing business.  Technology greatly enables the human brain to think and express thoughts outside physical […]

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