Getting The Results You Expect

From the Dec. 2007 Issue

Various research studies report between one-third and two-thirds of new system implementations fail to deliver expected business benefits. In this article, new “systems” refer to integrated business systems such as Enterprise Resource Planning (ERP) or Customer Relationship Management (CRM). ERP systems usually include integrated functionality for accounting, manufacturing, distribution and customer service. CRM systems collect and organize customer data from various sources including call centers, e-mail, point-of-sale, sales personnel, etc. CRM enables a comprehensive view of customer data and behavior so companies can better manage their customer relationships.

Here are the five most important action steps an organization can take to ensure its new system delivers the results the business expects and needs.

Step 1 — Confirm your business is ready for the change.

Selecting and implementing a new business system is a major undertaking that involves serious commitments of time and money. Integrated systems are fundamentally about how you operate your business, and, to be effective, they require your business to operate as disciplined processes. If your business is not ready to operate with structure and discipline, postpone the new system.

Ask yourself if your business needs the new system to cut costs, reduce inventories, improve customer service, improve decision support information, etc. Those companies that have a clear link between these needs and functionality provided by the new system have the highest chance for success.

Any company embarking on a new system initiative should make sure it shas built a “foundation for change.”

Step 2 — Establish a foundation for change and continuous business performance improvement.

While it may be clear that your business needs real change to improve business performance (to achieve or maintain competitiveness), making that change can be very hard and elusive. This is especially common for well-established industrial companies with deeply ingrained routines and habits. Because an integrated system affects every major operation, the company needs to have the “Organizational will to change” to support and sustain the difficult and sometimes contentious activities of selecting and implementing a system.

Performance measurements are a great way to highlight the cause-and-effect relationship between how a company operates and the bottom line. Companies without performance measurements often do not have the facts to isolate the real problems that are cutting into margins, causing poor customer service, driving the wrong inventory, etc. For this reason, operational management personnel often resist performance measurements.

Performance metrics are most effective when tied to performance evaluation and compensation, not just for senior management, but also for all personnel that play a significant role in the business process. Performance measurements linked to compensation can be difficult to implement, but once implemented properly, they focus the company’s collective attention on doing things that matter most to the bottom line.

Step 3 — Define system requirements that meet your business performance needs (i.e., focus on your business processes, not the technology).

Your business is about your processes, not IT systems. The only value IT systems provide is in helping you to operate your processes effectively and efficiently. Before engaging software vendors, think through what your business needs from a system, and prioritize those things that are most important and will help set your business apart. Broad involvement at this stage will take a little longer, but will help later on as decision makers know their needs were gathered and considered.