Tag Archive: evaluating

Are Your Ready for a Systems Transformation?

August 12th, 2018

The topic of Systems Transformation seems to be arising more frequently lately.  How do you know if it is time to consider a systems transformation?

Let’s start by defining a systems transformation.  In essence, a systems transformation is an upgrade to the way you perform business – inclusive of your people (allocation of resources, skillsets, etc.), processes, systems and information flows/ collaboration partners.  

Although there is never a bad time in terms of elevating your business performance, the investment and disruption might not be ‘worth it’.   In other words, does the return on investment make it the ‘right’ time?  

Here are questions to ponder in answering that question:

  1.  What are your growth plans? – If you are performing well and growth is slow, you are unlikely to require a systems transformation.  However, if you expect solid levels of growth, you’ll need one. There are two reasons: 1) Even if you are providing an exceptional customer experience currently, to maintain that with growth is a different ballgame.  2) As you grow, if you don’t want to add people to support each new level of growth, you’ll need to devise systems to grow in a scalable, profitable way.
  2. Will your margin levels sustain your business needs?  – Of course, no one would complain about increasing margin.  However, the key question is what has to be done to achieve the result?  Take a look at whether your profitability and margin levels are sufficient to satisfy stock price expectations, investor needs, reinvestment plans, business valuation goals etc.  We have run across “cash cow” businesses that yield enough profit for the owner’s lifestyle and objectives. There might not be a reason to invest in an upgrade. After all, there is risk and disruption with every activity of this magnitude.
  3.  What are your customers’ expectations? – No matter your growth and profitability, if your customers’ expectations are changing or increasing (as they often are in today’s Amazonian environment), the key question is whether you’ll be able to meet them with your current setup.  We see that it can go either way – depends on the industry, your customers, the marketplace etc.
  4. What are your employees expectations and capabilities?  – Will your employees stick with you if everything remains status quo.  This can completely depend on your employees. We have run across people who prefer “what works” and are quite happy not to upset the apple cart.  On the other hand, we have also seen many job seekers look for new opportunities because the executives weren’t interested in growth – the company’s or the employee’s.  It is important to think through what will happen. If you choose the status quo and your employees don’t align, it might force you into a different strategy, and you’ll be worse off for not thinking proactively.

On another note, if you don’t have employees capable of leading a systems transformation, you will need to shore up your team.  Certainly you can supplement with short-term resources to fill in gaps and consultants to advise on skills not required over the long-term but you might also need to fill in gaps within your team.  Don’t overlook this critical component but also don’t let it deter you from making the leap.

  1.  Do you have the funds?  This is the one that deters most executives.  It is quite tempting to hold off until later when it seems like it is a ‘better time’.  However, are you defining better time as one when you feel better or one as defined by the questions above?  As my consulting mentor says, there is always money. It is a matter of priority. Recently, we ran into a client that has never borrowed money.  It can be a smart and prudent strategy if it supports your business objectives. However, the CEO was questioning whether he should continue this strategy.  If it is the ‘right time’ for an upgrade and it will provide a return on investment over the long-term, he should absolutely borrow to fund the near-term investment to gain the value down-the-line.  

Of course, that doesn’t mean you should dig a hole the size of the Grand Canyon to fund your systems transformation.  We have seen many executives accidentally throw money out the window when it wasn’t the best timing or get carried away and spend ‘too much’.  In these cases, you might never recover from your upgrade! Gain advice from experts with an eye to return on investment. Keep in mind that taking prudent risk will be required!



Have You Heard Horror Stories about ERP?

April 25th, 2018

enterprise resource planningSince we are known in ERP circles, it is a topic that comes up in conversation frequently.  Recently, at an Executive Forums meeting, one member talked about a situation he knew about where the company lost half its sales after a failed ERP implementation, and they ended up reverting back to their old system.  Can you imagine? The unfortunate thing is this is not uncommon although it is a more dramatic example.

ERP isn’t bad.  It is essential in achieving scalable, profitable growth although sometimes it can seem bad and have just horrible results.  

Similarly, no particular ERP system is bad; although some are definitely better for your particular situation and growth plans than others. We cringe when we hear about the plans of potential clients who were sold ‘ice to eskimos’ by ERP suppliers.  The challenge is that an ERP system can sound like a significant financial investment and so clients are tempted to not add cost by hiring an expert to assist with the process. However, since it is as significant as it is, when it goes bad, it extrapolates into many times the initial investment with unhappy customers, added cost and more.  Thus, it is no wonder clients stick with a ‘dead ERP’ longer than they should in many cases, which limits their ability to grow – and certainly achieve scalable, profitable growth.

All hope is not lost!  Here are a few things to consider when evaluating ERP and whether you should think about upgrading:  

  1.  Can you support your growth plans two years out? –  ERP isn’t something you slam in place unless you want to experience the horrific stories.  Start two years out. If you will be limiting your ability to grow profitably, it is time. It could be that you are on a system like QuickBooks, or you expect M&A activity or a potential sale, or you have a highly customized system or one that isn’t supportable two years down-the-line.
  2.  Forget about bells & whistles (cool items ERP suppliers show you) and evaluate a short list of critical success factors for your business –  This is #1 to success in evaluating ERP systems.  These critical success factors are items relevant to your profit drivers, maximizing the customer experience, unique to your industry/company, etc.  Once you identify them, tie them to functionality.
  3.  Consider your partners carefully – Although selecting the best system for your situation is cornerstone to getting the appropriate foundation on your house, if you have the wrong partner, you might as well hang up your hat.  The perfect software with the lowest cost proposal from a weaker partner will quickly surpass your highest cost proposal with a so-so partner and double it from there – at a minimum. Selecting ERP partners is quite similar to selecting any good partner – be aware you’ll be happily collaborating or stuck with them for quite a long time.

All businesses will go through ERP upgrades at least once or twice every 10-20 years (if done well, more if not).  Why not pay attention to how to make one of the most significant investments pay off?