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Implementing a new Enterprise Resource Planning (ERP), Customer Information System (CIS) or Enterprise Asset Management (EAM) system can be a thrilling business experience. Consider the spectrum of strategic benefits: Greater functionality, new capabilities, critical tools – all promising to propel your company ahead of your competition.
Yet, inevitably, an issue arises which threatens to suck the wind right out of your sail: “What reports do you want?” A simple question on the surface – until you realize the question you’re actually confronting is: “Exactly what information do I need to run and improve the business?”
Two immediate options present themselves:
Given this choice, most project teams select the seemingly safe bet – Option #1. After all, tidying up current reports causes little or no disruption to the way people have been managing the business. Plus, if you can work in a couple extra slices of the data, everyone will be singing your praises. Right?
In most cases, the safe bet will fall short, not just of internal expectations, but more importantly of the system’s full potential. A few months after “go-live,” people will start asking why the new technology hasn’t produced the forecasted benefits. Even worse, it seems that nobody can figure out from the available data what’s gone wrong.
The likely answer: You’re getting prettier reports … but managing updated tasks and technology with the same old process and business measures.
It’s like loading the fancy new navigation system in your car with maps from the 1950s. Certainly more convenient and nicer to look at – but still lacking the critical connectedness that makes information more robust and more relevant for the user. Furthermore, it’s not just the processes that need to change, but the people as well. Without a doubt, there are people in your company who find the warm glow of a navigation system gives off the perfect amount of light to read their set of hand-scrawled directions.
The real answer, as you’ve realized by now, is Option #2.
Implementing new systems gives an organization a unique opportunity to start from scratch, learn how information connects to actions, and how these actions drive the key measures of business success
The results are even more powerful when those business metrics are compared against industry standard performance measurements. Consider the power behind statements like, “Our cost per Purchase Order is X, the Industry Standard is X – Y and World Class performance is X – Z; so, what is it in our processes that are driving our current Cost per Purchase Order?”
Knowing which process elements are impacting your current level of performance (and cost) will help ensure that those characteristics are specifically addressed as part of your system design. Once you have a complete understanding of how actions connect to process performance and cost, you can configure processes and systems to take full advantage of your new technological capabilities. Once you understand what drives your process performance and realize that your new system gives you the capability to record that data, the question, “What reports do you want?” becomes easy to answer.
More importantly, you know what process and business measures are important in moving your business past the competition. Then you will understand the real cause of drifting performance: Is it fuel costs, sub-optimized routing, or return trips due to bad inventory management that is driving up your cost per service call?
While having a way to measure the impact of daily activities relative to key process and business measures is an important way to know that you have gotten value out of your systems implementation, there is an equally important long-term advantage. Knowing how your performance measurements connect from the boardroom to the service center will keep you from ever having to say: These are great numbers, but I am not sure they mean anything.”
Too often the analytics we use to understand the business are deceptive. We might know we’re moving quickly – without knowing if we’re moving in the right direction. Increased sales costs might not lead to increased revenue; as more orders for raw materials might not lead to more finished goods.
Invest a few weeks to understand the connectedness of your process and business performance measurements prior to upgrading your systems. Ensure that your new perspectives get baked into the system configuration. Then step back and unleash a significant diagnostic tool. Plus, as an added bonus, the few weeks your organization spends mapping out metrics with task-level employees will help enlighten both employees and management regarding the real constraints of doing business.
Once all of the relationships are understood, the measures are memorialized and the metrics are codified in the system, your answers will be a few short queries away.
Conventional wisdom suggests that connections are an important part of business success. A second look might suggest that connectedness is also important in maintaining successful process and business performance.
Written by Paul Giessler, Senior Director, SSA & Company