2 21122 kip_us_wp_beyond_best_practices


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2 21122 kip_us_wp_beyond_best_practices

  1. 1. Beyond Best Practices How understanding the value in your business model helps de-risk technology-led change projects Topics Included in This Paper  Why Traditional Approaches Lead to Failure  Factors of Failure  A New Way to Look at Complexity  Four Steps to a Radically Different Approach  Positioning for SuccessPhone (US) +1 866 662 6820 (UK) +44 1943 604543
  2. 2. Reducing the risk of technology-led change projectsA white paper presented by KeyedIn Consulting Group on Best Practice. In everydaylife, we’re very good at putting off things we don’t much like to do. Like delousing thedog, clearing out the garage, or taking heavy curtains to the dry cleaners. And it’s avery similar scenario in the business world. Except, of course, getting rid of bugs, de-cluttering processes and ironing out problems are slightly more critical to yourbusiness success than making sure your canine is flea free or your garage canaccommodate a car.The same old same oldSo, unable to put it off any longer, let’s suppose you decide to take the plunge andembark on an ERP project. Thousands of businesses just like yours have trodden thisweary path before so you figure it shouldn’t be too difficult.However, the mistake you make is to follow a route that is traditional yet far from timehonored.First, you cast an inexpert eye over the myriad of tools available. Then you bring inyour best business analysts and map out your company’s business processes fromend to end. Ten weeks later you have a ‘war room’ set up, not to mention a bunkermentality. The walls of your nerve center are liberally festooned with detailed processflows showing how product, data and resources are deployed across the organization.From prospect identification right through to financial reporting and governance. Nostone has been left unturned and very little wall is left visible. Just a bit near the lightswitch for illumination.Making sense of it allBut the nightmare has only just begun. You now package everything up into amonolithic specification document along with 2,500 functional questions and a raft ofnew reporting requirements. Then you attempt to study it and draw meaningfulconclusions. Using this ‘traditional method’ you soon realize that pretty much everyERP on the market has a reasonable fit. For a brief moment you think that this is goodnews. Then you come to your senses. You realize that none are perfect, and all needto be modified to support your business processes.Tinkering with the proposalsReducing the choices down to a final three you play each supplier off against eachother, taking the opportunity to ‘fine tune’ their proposals. You start by reducing thenumber of days of the Project Plan by a third on the basis that the suppliers obviouslygot confused and thought that they were milking maids.1Phone (US) p +1 866 662 6820 (UK) p +44 1943 604543
  3. 3. Next you expand the scope to include all the free modules the vendor has thrown inon the basis that only a fool would look a gift horse in the mouth. Finally, you hammerthem down on price so hard that only the tops of their heads are now visible acrossthe negotiating table. For good measure, you schedule the decision process to thelast day of their financial quarter to make sure you wring out every last penny. Jobwell done. Or so you think.Six months later and you’re standing in the boardroom trying to explain why it’s allgone so horribly wrong. The product doesn’t appear to be working, theimplementation has gone to pot rather than to plan, the users have lost faith in thewhole project and the board members want answers.How did it all go so wrong? Here’s how.Setting yourself up to failBelieve it or not, when implementing ERP, an incredible 99.9% of companies take theapproach described above. Even with the very best of intentions it can only ever leadto failure. So the question is, why do so many companies put their faith in a systemthat is essentially designed to fail? The answer is simple. They fail to recognize thatit’s an approach which is flawed in the following three areas.Information OverloadMapping out your business processes in the manner described above makes itdifficult to see the wood for the trees. In effect, you’re embedding a whole heap ofmalpractice and poorly devised process into a model far too detailed to assess andchange effectively.Confusing the issueNext, you inevitably dilute the real differences between the systems – in areas thatwould actually add some value - by raising thousands of benign, functional questions.Plus, you’ll also be held back by the shortcomings of your current technology as wellas your reluctance to do things differently.Manipulating the systemFinally, to the most fundamental mistake. By bending the system to meet theperceived needs of the business you introduce massive complexity, huge risk andexponential increases in cost to the overall project.2Phone (US) p +1 866 662 6820 (UK) p +44 1943 604543
  4. 4. The Complexities of the problemIn our previous white paper, Navigating the ERP Minefield, we looked at good practicefor selecting an Enterprise Software Solution and structuring a project to drivesuccess. Here, we look at the critical success factors that need to be consideredaround both your internal business process and your business model, in order tosuccessfully implement critical business systems.These approaches are relevant to a number of critical areas of business change. Inparticular, integrating acquisitions, outsourcing business functions and managing anexponential growth curve.Chaos theory is the science of how tiny, insignificant events can come together tocreate an unpredictable yet often significant impact. In 1914, a single gunshot inSarajevo eventually led to a world war. Two years earlier, on the Titanic, the catalystfor disaster was sub-standard rivets. More recently, in the Paris Concorde disaster itwas a piece of metal on the runway.The impact of chaos theory is very much in evidence when working withorganizational change. Not only does every single change you make have an impact,but the more you make the more these changes interact and influence each other.The result? Even more chaos.The integrity of an organization can be seriously undermined by making too many,perfectly valid and relatively low impact changes along the way.It’s clear that each and every change you make to your organization, your software,your processes and your business model adds risk to the project. The question is howdo you drive effective change whilst at the same time managing that risk?A radically different approachWithin your organization there’ll be many unique approaches to managing everydaybusiness. Most will have been developed over time as a way of managing specificissues influenced by a number of different things. For instance, the preferences ofcurrent and previous management, constraints in your current or previous technology,partner relationships, and customer demand.Getting to grips with those that actually add value to your organization - and moreimportantly to your customers - is key to understanding how to move forward. Andthat’s where a clear understanding of the business model comes into play.The first thing you have to do is ask yourself why clients deal with you. What is it youdo that makes them come back for more? How exactly do you acquire new clients andwhat are your differentiators in the marketplace? The answers to these, and otherquestions just like them, provide the context in which you operate your business.On the other side of the model you have the activities, resources and partnerships.Here, particular emphasis should be placed on the initiatives currently in play and theareas where you believe your process is ‘special’.Now compare the two. Notice how little synergy there is between what your customersvalue and where you focus your energy internally? This leads us to the first rule ofbuilding an optimized business:3Phone (US) p +1 866 662 6820 (UK) p +44 1943 604543
  5. 5. ‘If a business process is not directly underpinning customer value or deliveringregulatory compliance, it’s a valid candidate for change.’Step One: NormalizeBest PracticeThis is easy to identify since there are many texts and industry-specific documentsthat help define what best practice looks like to an organization such as yours. Thecloser you stick to defined best practice, the more likely that a technology solution,outsource vendor or shared services team will be able to quickly and easily integrateinto your organization.Non-Value Add Processes and FunctionsThis approach requires you to first look at how the system would prefer to operate.This then forms the basis of your process into which you can add configuration andpersonalization. Remember, you don’t want to change or break the process flow, youjust want to support how you do business. So capture the relevant entities, static dataand reporting variables but change your business process to what your industryidentifies as best practice.Step Two: Quantify the differencesGovernance and Compliance ProcessThis area is key during the selection process. Make sure the solution you select hassupport for the relevant regulatory controls you need to have in place then build yourprocesses around them. The vendor and the implementation team should be able todemonstrate other successful implementations into similar businesses, as well asprovide industry-specific best practice guides and advice.Value Add Processes and FunctionsThe end results and objectives of these key processes should have been mapped outin the selection document. Focusing on the deliverables from these processes, thevendor needs to demonstrate how they would support these from within their system.High Customer Value ProcessesThese are the only processes you need to map out in detail at the outset. Onceagain, the client and process deliverables are the key issues. However, they are soimportant to the success of the process, we need to fully understand how youcurrently approach them. Once they are understood in detail, both the output, plus anynuances in the delivery of the output, can be effectively documented.4Phone (US) p +1 866 662 6820 (UK) p +44 1943 604543
  6. 6. Step Three: The Current Business Issues andBottlenecksWithin every organization there exists a myriad of issues that have a fundamentalimpact on the ability of the business to operate effectively. Things like breaks in theinformation flow, latency, re-entering of information, and lack of visibility. The problemis, as businesses grow, these issues magnify and can quickly destroy the expectedeconomies of scale. Automation doesn’t help – you simply get more things wrongmore quickly, so you end up taking on more staff and increasing costs in line withincreases in revenue. If you fail to drive out the value of an acquisition you run therisk of spending a great deal of money building a group of companies worth somewhatless than you paid for them!Step Four: Completing The ModelIt’s now time to map out the end to end flow through the business at a reasonablehigh level, flagging each process with either Best Practice, Regulatory Specific, ValueProcess or Customer Value.Provide a more detailed level of process mapping for the Best Practice andRegulatory Specific process and then very detailed mapping, complete with data flowlevel detail, for Value and Customer driven process. Include the current key businessissues and constraints in your definitions, taking care at this stage to use those thatare part of the objectives, not the defined solutions. This should provide you with aclear picture of where the business needs to be, going forward.Better than that, you now have an Optimized Business Model. One that uses bestpractice where possible, supports your regulatory commitments and delivers on yourcustomer value proposition. You also have a business model that can be quicklyharmonized and aligned with the technology solutions you intend to underpin it.Performed correctly, this task will be completed in around half the time of an end-to-end process mapping exercise. Plus, it will already have locked in the value of boththe new technology and a pragmatic, client-focused approach to defining how theorganization should do things.5Phone (US) p +1 866 662 6820 (UK) p +44 1943 604543
  7. 7. Commoditizing Business FunctionsNormalization is the first step towards delivering commoditized business functions. Asan organization you want key back office functions to be simple, defined and easilyunderstood. This increases flexibility and also reduces dependency on key staff aswell as ramp-up time for new ones. It also opens the door to delivering shared serviceor off-shored service centres as the company grows and acquires new entities.This business model led Normalization and implementation of Optimized BestPractice, is a vital step in effectively integrating new acquisitions. It is also an area thatventure capitalists and private equity investors value highly. They look fororganizations that can deliver exponential growth and manage business integrationeffectively.In this M&A world you are either a Bidder or a Target. Which of these you are seen aswill be defined by the maturity of your business model and the level ofcommoditization demonstrated across your organization. What’s more, as amanagement team, your long-term future, future returns and levels of pain will bedriven as much by this assessment as by the products, services and growth curveto date.Driving The Maturity ModelIn the process described above we’ve outlined how to create a target operatingmodel. This is the roadmap that provides context for your organizational changeprograms. These could be Technology Projects, Consolidation, Integration, BusinessProcess Outsourcing or the creation of Shared Service Centres.This context is vital for the success of any organizational change project and shouldbe the first step in any program aiming to fundamentally change the way you dobusiness. It comes before selection, before the formalization of the key changeprojects to be embarked upon, and before setting the phasing and budget for yourupcoming programs.The Best Chance of SuccessDelivering an optimized business model prior to undertaking major change projects isthe very best way to de-risk the program and give your organization the greatestchance of success.Utilizing the tips, tricks and tools described here, together with those in our Navigatingthe ERP Minefield and Project Rescue white papers, will help ensure your selectionand project initiation processes not only run smoothly, but also provide your changeprogram with the very best chance of ultimately delivering on the business case.Watch out for our next white papers on the subject of Deliverables Planning whichdetails how delivery-based planning can both drive success and reduce cost inbusiness critical projects.6Phone (US) p +1 866 662 6820 (UK) p +44 1943 604543
  8. 8. About KeyedIn SolutionsKeyedIn® Solutions is transforming the enterprise software market through a suite oftrue SaaS-based integrated business applications and a consulting organization richin IT expertise. KeyedInProjects™ software includes PPM and PSA applications thathelp organizations manage projects, resources, billing and customer relationships.Trusted, multi-tenant SaaS deployment makes implementation quick, yet highlyconfigurable and the intuitive interface makes learning simple, delivering ameasurable ROI faster.The KeyedIn Consulting Group provides strategic and tactical consulting servicesaround existing or planned systems, helping organizations and PMOs improve projectinitiation and execution while delivering bottom-line results.KeyedIn provides executives with tools to drive and monitor business results and theirteams with capabilities to effectively manage their projects and programs. TryKeyedInProjects for free at www.keyedin.com.KeyedIn Solutions - US KeyedIn Solutions - UK5001 American Blvd W Offshoot HouseSuite 1010 68 The GroveMinneapolis, MN 55437 Ilkley West Yorkshire LS29 9PAPhone: +1 866 662 6820 Phone: +44 1943 604543Email: info@keyedin.com Email: ondemand@keyedin.comLearn more at www.keyedin.com KIP_US_WP_BBP_0816_17Phone (US) p +1 866 662 6820 (UK) p +44 1943 604543