In a world where competition is fierce, margins are thin and costs are high, companies need to leverage every advantage they can to retain or gain market share. With the pace of new product introductions at an all-time high, it's difficult to compete on product innovation. World class quality is a given. Competing on price sets off a death spiral. So, how can companies set themselves apart from the multitude of competitors?
Many companies have elected to compete based on the services they offer to their customers. Whether it's special packaging, short lead times, rapid deliveries, direct information access, custom product configurations, a combination of these or some other services, most companies today are competing on the agility of their strategic business processes. Yet when they purchase new software systems, companies rarely focus on these key processes, but instead spend the bulk of their evaluation process comparing standard functionality or trying to replicate all their existing business processes in the new software candidates. This is an expensive and non-productive process for the company evaluating new software.
Today, most mainstream business applications have achieved functional parity, with very little difference in the business processes they support. Every ERP application is going to do accounts receivable postings or inventory issues, for example, and with very little difference in the way they do them. Why spend time looking at these processes when in the long run they may make no difference to the company's ability to execute more effectively than its competitors? Instead, the evaluator should focus on how the solution supports its strategy today and into the future.
Instead, top management should identify the company's market strategy and the 3 to 5 business processes that allow them to execute against that strategy. Software vendors should be asked to demonstrate those business processes only. They should be asked to focus not only how on the process is done today, but also how the overall process could be improved and made more efficient using their application. Vendors should also be required to prove how easy it is to reconfigure or change the process flow in the future as the business's needs change and evolve over time. This process will show that the vendor understands the company's business in a way that even spending several days in "discovery" and detailed demonstrations never can. And it ensures that the company can continue to execute well on its chosen strategy and won't be forced into a cookie cutter "industry best-practice" model that hobbles its ability to out execute its competition.
Oddly enough, one key issue that most companies rarely specifically evaluate is the application's architecture. It's important that the application be build on industry standard technology that is easy and inexpensive to support, of course, but even more key is the application's ability to flex as business processes evolve. The system should have an abundance of configuration "switches" built in that enable the company to easily switch functionality on and off, but the system should also be architected in a way that makes modification or customization easy, cost effective and supportable. The idea is that business processes should be honed up front to maximize efficiency for today's business conditions, but as the company's competitors catch up, the company will need to continuously improve its processes to stay ahead of the game. This can't be done if they need to wait for "the next release" or if custom modifications lock them in to a specific release.
By focusing only on 3 to 5 key business processes, the user interface and the underlying architecture, companies will find that the software evaluation process becomes much more manageable and cost effective. It can be accomplished more quickly and with less manpower. Best of all, the company will be acquiring a tool that will support its competitive efforts, as well as its day-to-day operations, for many years to come.
Sharon Ward is Director of Software Strategy at Green Beacon Solutions.
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