How can you expect returns if you are unwilling to invest ?

Business is hurting from the lack of the right tools and enablers, we need a good dose of IT to create efficiency. We acknowledge the need to transform and that is why we are talking; the team also agrees with the direction and the way forward. The benchmark results are well received and we would like to be in the top quartile of the industry. We should create the framework for evaluation of options to our specific requirements before we finalize on the best option and let’s work to an aggressive time line.

The CEO intuitively knew, to take performance to the next level, technology has to play an important role. Coming in of global competitors had started slowing growth and put pressure on profitability. Operating margins and other business metrics were lagging behind; survival was not at stake but to stay relevant to major customers, the business begged for technology. The absence of mature IT leadership posed additional challenges in execution of the strategy defined through a technology consulting engagement.

Early investments in technology solutions had not delivered to promise; early decisions were taken by the business based on promises made by vendors on business benefit. Business participation in the project waned quickly as technology formalized processes and exposed lacunae in operations. People on the ground resisted the change creating roadblocks – real and imaginary – towards deployment. The cycle repeated itself a couple of times leaving everyone frustrated and wondering if technology will ever deliver.

That was before global players invaded the market changing the way business was done, improving customer satisfaction and driving profitable growth became an urgency. Even with higher overheads and manpower cost, they delivered; in came Consultants offered a mirror to the business and helped them with a well-crafted plan and strategy; technology strategy followed. A new CEO added to the excitement with experience at competitors. Culmination of events necessitated that the company reach a decision rather quickly.

In a perceivably low margin business where the average margin was half of the best, it was evident that operational efficiency can gain significantly with the right IT interventions. Industry specific solutions and generic options competed on functionality and price with a wide variation in between. An all hands meeting agreed to the strategy and initial steps enthusiastically committing resources and time. With negligible investments thus far, in parallel the Management decided to approach the Board for budgetary approvals.

The Board members had diversified business interests with business operations of varied size; they were also parsimonious in their approach to investments especially technology which was seen as necessary but not essential. Thus while their companies had grown in size and reputation, they had not been able to realize the true potential while newer competitors had moved ahead. The minnow in the family thus started from a disadvantage when the CEO put his case across for investments in technology.

Discussions went back and forth on various technology options, merits of one over the other, cost of acquisition and support, TCO (Total Cost of Ownership) and business benefit; the figures appeared obscenely high even though they were competitive and in line with benchmark investments. For the Board reality was that other larger entities in their bouquet too had rarely invested similar amounts barring the initial stages for industry standard ERP solutions. They finally approved a significantly reduced number which turned the project into a non-starter.

The business case was clear in identifying the benefits – financial, customer satisfaction, growth, profitability – the ROI was less than a year; but past experience made the Board wary of committing to the investment. Ensuing “What if” had no answers beyond a point; there are no certainties, only probabilities of success. The sanctioned budget did not cover basic costs even if executed in phases to demonstrate potential success. Risk mitigation strategies can be created for most action plans, the keyword being “action”.

Except in cases of some of the new technologies and innovative digital models, most of the solutions – vertical or horizontal – have successfully established credibility to deliver business value with discipline of execution and leadership oversight and endorsement. Phases can reduce risk if logically broken down with continuity in the journey. Processes if left out of design consideration will fail to provide the end result. Analysis paralysis can miss opportunities that become clear only in the future, status quo breeds mediocrity.

Years have passed since the above happened; they are still at the same milestone the debate continues, they are yet to decide and the industry continues to grow rapidly !

The tale of two competing technology platforms inside an enterprise

The company (let’s call it A) was seeded in the era of client-server technologies and the inception of what became known as the standard for developing open systems. So naturally their technology foray included the technology stack that promised interoperability and ease of programming. Systems were developed in-house with a bunch of programmers working alongside the business, thus creating many fit for purpose solutions that helped scale up the business. Their growth story aided by their early focus on technology made them a player of reckoning.

One of their able competitors (why not B) started off with a few years decided to watch the results of A’s foray before taking a decision to invest. Years passed by and the turn of the millennium saw anxiety filled movement for compliance and then a drop in business triggered by dot-bust coupled with further slowdown due to terrorist activity. By the time B did get started taking nascent steps into the world of technology, a newer framework was gaining popularity as an alternative making a compelling case for adoption.

By now A was already reaping the benefits of an early start giving them resilience and efficiency that a good technology solution can provide. They broke into the top 10 by the time B was just about stabilizing technology solutions to move to fast track growth path. Both grew at a fast clip from there on though the gap kept growing with A enjoying the benefit of base effect. Each had created specific market differentiators as they competed head on and survived the arrival and exit of some major global competitors.

A decade later the market had changed; heavy investments in technology by some big companies and newer technology enabled startups and disruptors started eating away market share from both. While they continued to stay profitable they were relegated to a marginal player status. Call it providence or just competitive landscape, A & B were finding it difficult to change, straightjacketed by their people and process. Technology alone was unable to pull them out of the quagmire they found themselves in.

Market forces led to consolidation of the industry and the founders of A & B who were healthy competitors decided to merge their business operations to create larger play. Due diligence and valuations aside, both believed that their technologies provided them the platform on which they had competed and created a name for themselves. In a merger of equals who decides on the prevalence of process and technology while the people were relatively easy to put into different buckets to rationalize.

Thus began the discussion and debate between the survival of technology landscape, the business applications, and the IT infrastructure, none willing to give a quarter. Both IT teams presented the merits of their choices to the combined management who defended their IT architectures and wanted their solutions to become the solution of choice. Both portrayed passionate attachment to their investments to the extent that rational thought was kept aside; so they decided to call in a consultant for mediation.

The consultant, a veteran with experience of many mergers and acquisitions and more than a score years behind him agreed to assist in resolution of the seemingly childish conflict. He started by asking some tough questions on the intent and rationale behind the merger, the new GTM (Go-To-Market) positioning, the target customers, competitive landscape, and finally team competencies to support the chosen solution. He opined that these shall determine the victor and survivor between the battles of technology solutions.

They agreed to drop their earlier arguments and align with the direction set by the consultant as the way forward. After all there was no direct impact to their business or customers due to technology frameworks and to that extent they were chasing a red herring driven by ego, otherwise a non-issue. Saner minds now applied rigor to determine the best option including a hybrid approach if necessary to solving the problem of technology choice. The solution that emerged gave them the benefit they wanted from technology.

Which solution stack finally won ? Does it matter ? What matters is that the decision was taken the way it should have in the initial stages by evaluating business benefit and connect to customers; you cannot go wrong with such criteria as compared to evaluating merits of one technology stack versus another. Forget IT folks, today business leaders also get enamored by smooth talking technology sales people who create inane metrics for assessment and are able to influence the search engine enabled technology decision makers.

The Chicken and the Egg

They traveled the seven seas in a small group looking wide and far for the ultimate solution to beat all solutions and their competitors. Visiting software solution providers and their customers, the team ensured that they explored all the nuances of the solution as used by their hosts. It was a search spread over many months and millions of frequent flyer miles. They came back with voluminous notes which were put together to create the decision matrix. A winner emerged from the chaos; it was the current market leader.

The team was excited with the prospects of implementing the world’s best solution; they presented their conclusions to the management using business case formulated on vendor provided parameters and some internal thinking. Despite the high investment required, management accepted the widely used solution considering that alternatives were not even known by name. The system integrator and implementation partner who had worked through the journey celebrated the decision along with the team.

The team chosen from business, IT and the vendor made preparations and started the project as a cohesive group with broadly defined timelines. It was perceived to be easy with clear use cases and the fact that current manual process was riddled with inefficiency. Lagging competitors by many years, the team and everyone around acknowledged the need and urgency. Well begun is half done, so goes an old English saying; that applied quite appropriately to this marquee project which had all the ingredients that consultants and wise men talk about.

Months passed by in the requirement gathering phases and everything was hunky dory; the rigor of the business team was highly appreciated. Some more months passed by, the team was still in discussion on feature fit to the future state process. Exceptions were highlighted and the system expected to cater to these. The implementation partner was getting restless. Another couple of months later there were no conclusions on the final process; the IT team raised a red flag to the CIO, users reciprocated with an escalation to the functional head.

A senior functional resource was brought in to resolve the bottlenecks; he quickly realized that the users were attempting to force fit their existing processes into the new system. The group had challenges in understanding the basics features of the system despite multiple rounds of demonstrations and step by step explanations. Their lacked the ability to define new optimized processes and with no interest in changing the process they kept shifting the goalpost. Soon it was evident chances of success were like water on Mars.

The SME decided to unearth documents that were the foundation of the product selection. The going in comparison set was not a portrayal of the future state but a broad level definition of the function which obviously met every systems checklist. The selection was based on market positioning and market share in their industry. Almost everyone was using it and thus the decision was kind of obvious. It did not need the process that was adopted to determine the tools. The lack of focus on process from the beginning led to the current situation.

What comes first, process or technology ? Should an organization determine the future state before attempting to select a tool or follow the process that this company did of finding the best tool and then try to figure out how to make it work ? If technology is indeed subservient to business and process, then the journey traversed by the team had a fallacy; even when choices are limited as was the case again, should the process take precedence over technology ? The savior understood the problem and solved it quickly to get the project back on track.

The Knight in shining armor took some difficult decisions and changed some resources while staying involved with the rest focusing on what mattered. He separated the critical and the important while parking the good and nice to have. Exceptions will be addressed when they occur, let’s move on with the 99%. Suddenly everything started moving and though delayed they were back on track. Given the situation I believe that it does not matter which comes first in the poultry farm; it is about where you want to go.

The organization acknowledged the fact, “People are not your best assets, the right people are !” and that’s a story for another time.

Vendor lock-in

Kids ask the most interesting questions; they make you scratch your head and think. I had this experience recently when interacting with a gathering of B-school kids. The occasion was an event organized by the students with the industry exploring insights and networking. One such session was around the challenges and opportunities for the CIO. The CIOs presented were heartened that the role is one of the aspirational careers.

The question that stumped some of us went something like this. CIOs take decisions on IT strategy and architecture thereby setting the foundation of the technology that will enable the enterprise for a long time. So when selecting an ERP or similar system what are the criteria to select one over the other considering that once a specific technology is chosen, it will stay for a really long time. It’s like a lock-in because no one changes ERP systems normally. How do you then manage cost escalations and support ?

Now as I know the question is largely accurate portrayal of reality. Every enterprise when selecting an ERP has painstakingly reviewed most options before assigning the family jewels to the solution. Such magnitude of projects is always launched with fanfare with senior management speeches and project naming ceremonies. Committees are formed with best intent and sooner or later the project goes live. I am not getting into success or challenge that typical projects face; that’s another story.

Over the years with increasing licenses and customizations, the sustenance cost starts to hurt; CIOs find ways to reduce support costs or squeeze licenses deployed to keep operating expenses low. The thought of replacement is rarely tabled and considered impractical. How can such a change be ever executed ? Who will drive this ? Change will be disruptive to the business. The cost of replacement will be extremely high and not worth the effort.

I am sure that these reasons have some echoes for every CIO. Change is indeed a herculean task when it impacts almost everyone in the company; especially so when the change will have the biggest impact on the IT organization. Apart from the change that every employee will have to go through, the IT teams will have to get out of their comfort zones and drive the change from the front while keeping the lights on and business chugging along as usual.

So is ERP replacement the peak that no CIO wants to even attempt ? Or is it only for the few brave expedition leaders akin to climbing the Mount Everest ? Yes the biggest peak has been climbed a few times and so has ERP migrations done with sparse frequency. Why this reluctance in proposing the change or embracing the challenge to climb mountains ?

I believe that the vendor lock-in created around the difficulty of ERP change is to some extent promulgated by the CIO. It is time to abandon this myth and start exploring new horizons in the new world being created around us. We can be part of the creators rather than accept status quo irrespective of whether we were part of the original decision or not. Every decision taken is based on facts that that time and is largely a correct decision. Should we allow this to constrain the future ? After all if you keep climbing smaller mountains, no one rejoices with you as much as if you did climb the Mount Everest !

Industry awards for ICT Vendors

I had the privileged invite to judge ICT vendors; from a respected enterprise that gives away awards every year. This was their first attempt to form a jury to decide the awards. Earlier years the awards were decided based on size, growth, market share, and in some cases new innovations added during the previous year.

The number of award categories had grown over the years from a handful to more than double score. Thus multiple juries consisting of senior CIOs were appointed and the task was split.

Absence of customer-inputs

We got started with the understanding of categories we were to judge and the time allocated for discussions of each award. Everyone agreed and we jumped onto the first category. The nominated and shortlisted names were not a surprise.

But as we started to scratch the surface, the question came up “where is the customer dimension? How can we assess the relative merits of performance without the voice of customer?” It was evident and confirmed that over the years there was no thought given to this aspect in deciding the winner. The sound logic stated that size and/or growth demonstrate customer confidence.

The jury did not bite that. Sometimes size is a function of regulatory play, incumbency factor or better marketing machinery. Progressing through the categories, the debates took many hues; at times the shortlisted vendors were not perceived to be market leaders or worthy of an award.

In some the selection criteria of the nominations made it appear that the award was pre-decided; the deliberations had the jury wondering if these were sponsored awards being played out to gain respectability.

Truth Vs. marketing babble

Not too long ago a CIO had used social media to highlight the farce behind one of the industry awards for CIOs. In the world of scams, anything is possible. Over lunch the discussion did veer to this doubt. We were animatedly appeased by the organizers that such was not the case. They acknowledged the shortfall in data and that some criteria needed amends.

CIOs listening to vendor pitches and presentations tend to believe awards cited by the vendor. They purportedly validate the technology, solution, or service as it is assumed that experts indeed evaluated objectively across formal KPIs that matter. A few dazzling awards may appear alien but are rarely challenged. If an exotic niche publication conferred the award, so be it. Micro-segmentation works to serve a purpose. Ho hum!

Importance of being prudent

Sticking to what matters to the business is always a good starting point while selecting any vendor. The other important factors include, and not limited to, cultural alignment, success in solving similar problems, industry/ domain focus, long-term development strategy, apart from size, growth, and the awards they have accumulated.

If you are an early adopter of technology, seek safeguard that shares the risk/ reward. For others, nothing works better than peer reference, i.e. talking to existing customers.

Back to the awards, we the jury were aghast at the invisible customer angle. The high point of the day spent was a category that was denied an award in the context presented and one that got away was a lone nomination to a category that at best had a start-up as a challenger.

So next time a vendor puts up a slide or gives you a brochure with glitzy photos of awards, acknowledge them, but do remember to exercise your right to references with or without the help from the vendor.