What is your ERP strategy ?

Technology evolution has created many opportunities and challenges for IT departments. The pace of change in recent times has been going up exponentially with obsolescence setting in faster than the adoption curve maturity. Each new flavor  trend and hype creates a flurry of activity which forces the CIO to react. Despite claims of various consultants, there is shallowness of expertise to get some real stuff done. Today it may be difficult to find COBOL programmers; it is equally difficult to find UX or Big Data experts.

Every company and function wants to retain talent and leverage the years of experience and expertise rather than losing them. This is more so if the person is really good at what s/he does; which is why we have retention plans, fast-tracked development, high potential identification and many other financial and non-financial incentives. We also face the challenge of managing a few members who have failed to change with the times and are unable or unwilling to adapt to the new world.

The technology treadmill keeps some of us running to explore and evaluate how and what could be potential uses that will create a differentiation. We embrace the technologies when something works and soon you find the trend becoming main-stream with everyone following. Consultants, vendors and tech media keep the hype high with new buzzwords and technology lead disruptions. The already scarce resources end up stretching to explore the opportunities over and above their operational activities if any.

Operations are necessary and critical to ensure that business as usual continues while the new stuff keeps the excitement going. Most enterprises have teams that either built the systems a few decades back or were part of the teams that conceptualized the implementation. If you are lucky they have been able to re-skill and stay current while managing the legacy. It is also possible that some have not been adept. Many organizations outsource the legacy sustenance and thereby the BAU operations.

The challenge that many face is to find productive use for the team members that failed to stay current with technology or business. These old-timers built the legacy that did well for the business contextual to the need at that time. With evolution their inability to adapt makes them dead weight in the current hyper-competitive business environment. The quandary for the CIO is to find useful work for them or find a humane way for their easing into other functions or out of the company.

One of my CEOs in the past had remarked of this phenomenon “We offer employment to qualified people on merit, we do not guarantee employment”. With profitability pressures and economic uncertainties this is true even for the better ones with work not just shifting to lower cost but also adding on to existing staff. Do more with less is here to stay and the bar keeps rising every year. Discussing this with a CIO, when she asked me “What is your ERP strategy ?” I was stumped.

ERP is presumably the new term for Early Retirement Plan, effectively created and deployed with HR. Her company had moved off the legacy technologies that had survived more than two decades and through the planning process she had attempted to re-skill the old workforce offering those positions that would have created a graceful exit over a period of time. Most took the opportunity clutching straws and made the grade. A few who did not had to be offered the new ERP !

In some companies old tech still stays, so do people; the pressures of current technology enabled disruptions will require them to sooner or later transition to newer and contemporary solutions. Recent times have seen many transitions from custom legacies to COTS systems to compete in the new normal. The eventual will arrive; CIOs need to hasten their people strategies to ensure that they are not left with a situation where they are pushed to a wall to take a decision.

All ERPs require planning, so why wait ?

Would you pay more for quality software ?

In a class of MBA students the discussion around quality frameworks veered towards ERP class systems and the large amounts of effort it takes to keep them running. The number of patches released frequently as well as the overall administration keeps everyone busy and on their toes. Bug fixes, functionality enhancements, and then some more bug fixes are the norm. Comparatively the in-house or bespoke systems are relatively stable and the effort investment is around incremental functionality.

Is it because the development of custom solutions is carried out by IT companies with multiple quality certifications like CMMi and others; or just that the big software vendors providing so called “off-the-shelf” solutions are struggling with factories of programmers that churn code trying to keep the innovation wheel running just to stay in the game. The resultant code is often bug ridden with usability that requires a PhD and a large team to keep it from falling apart.

Despite paying anything between 15-30% of the initial acquisition cost and spending a bomb on implementation with process consultants attempting to fit business to solution to business, it is indeed a wonder that quality remains firmly in the backseat. The story is no different across the industry which has started believing that it is their birth right to charge customers exorbitantly as Annual Maintenance Charges so that they can forever keep on downloading patches; they also get to call a helpdesk which will in most cases not solve the problem which to begin with should not have been there. The twist in the story is that now AMC is also indexed to inflation which provides a creeping increase every year with no improvement in the service level.

Why is it that none of the big software vendors ever talk about quality certifications or Six Sigma levels of defects ? Do they not believe in churning out quality solutions that will be the biggest differentiator for the customer rather than esoteric functionality that is rarely used; consider the fact that almost every enterprise uses between 5-50% of the functionality, I am sure that customers would gladly shift to solutions which are stable, work as designed and provide updates to functionality collaboratively.

There have been efforts from various CIO and industry groups to rein in the runaway costs of maintaining business as usual of which a large chunk goes towards the AMC and teams managing the big solutions. User Groups have failed to make a dent in the ever increasing charges; it does not matter how big or small you are, neither does it matter if the solution does not work as promised, you got to pay else support will be withdrawn and reinstatement of support is very expensive.

I wonder how many customers will pay AMC if the solution worked perfectly out of the box and did not have any bugs or required patches. Maybe this is a ploy to create solutions that fail on quality tests so that vendors can charge you to just make the system work; after all it is a very large chunk of revenue for these companies. An interesting thought thus emerges, would the CIO pay more if s/he was assured that the software does not require any patches, bug fixes or support ? I definitely would !

Change Management

I recently took up a new assignment with a global major and market leader in the segment in which they operate. A fairly efficiently run operation with a legacy ERP that has served well for a decade. The ERP today does not resemble the original having gone through a number of customizations to adapt to the ever changing business and competitive environment. Quite a few have been imposed by regulatory changes which are a necessity to do business in the country. Many satellite systems have been developed using multiple technologies over the decade to overcome some of the inflexibilities of the system. 50% of the IT staff is devoted to supporting this application and continuous development in some cases assisted by external service providers.

The global parent moved to a newer ERP system a couple of years back and over a period of time have transitioned the many country operations into a consolidated instance. This enterprise has resisted moving onto the global system over the last year or so citing many a reasons, some rational and a few which stretch the imagination. Everyone however realizes that its a matter of time before the transition will have to be done, but are trying to prolong this as much as they can. The country management team is frustrated attempting to balance expectations between the global parent and the local business heads. One of my defined objectives is to align to the global system and retire the current ERP.

A quick survey of the senior management team members reveals that they do not see any benefit in moving to the new system since the current one has served well for many years and is adapted to their modus operandi. The new ERP will enforce global policies and probably also take away the flexibility that is currently exercised by the local management in how they run the business.

It appears to be a scenario wherein the basic principles of change management will have to be reinforced to ensure some momentum and progress. The questions that we are beginning to ask are:

1) What will change when we move to the new system ?
2) What will become possible that we cannot do today ?
3) What will NOT be possible once we transition to the new system ?

To bring about change, you have to believe in the change with passion to create the same within. Mandates can create inefficient transitions but will not change mindsets and people. Successful change is always brought about by people who believe in the new world. The WIIFM question needs to be answered everytime. If your future appears brighter than today, it's due to the promise of tomorrow. If it was darker, you would resist the movement or attempt to go out and create the vehicle that will drive the darkness away.

WIIFM : What's In It For Me !!