Volume or Value?
I was recently shocked to hear from one of my clients that they were advised by Gartner to not stick to one vendor but rather go for ‘best of breed’ and then build integration between the various pieces of software. I hope I misunderstood because my client’s business is not very complicated so I wonder why Gartner would say such a thing while it is perfectly reasonable to expect any large scale ERP solution to cover the entire spectrum of this client’s global needs, from finance to CRM and from supply chain management to enterprise planning and budgeting.
But this is not a unique case, as I speak with customers large and small, I still find many who prefer to build fragmented systems and then pay to integrate them and struggle with enterprise wide planning, budgeting and consolidation.
Imagine the situation of a multinational which operates in 40 countries around the world deploying, maintaining and integrating ERP, CRM, business intelligence, content management on a country by country basis. What a mess, you can do the math, how many people would be needed to run this mishmash, many sites, and many pieces of software, add to that data and process integration. Obviously everyone in IT would be very busy just keeping this environment alive. Who will be working on the strategy to help arming business users with the right information in the right time to provide insight into the business and to support decision making? No one.
And then we wonder why there is such a pressure on IT to demonstrate value, demonstrate ROI or justify future investments. We act surprised when CEO surveys show that they are not getting value from IT.
It almost feels like IT measures itself by the number of tons of iron, the number of projects under management, and the number of people in the team rather than the organization’s ability to create an environment that supports decision making in the information age. The point that is missed by many IT executives is that the role of IT has supposedly evolved from automating transactions to providing information so that business users can make informed decisions. Well you can never deliver information if you are trying to maintain many systems. I can sympathize with those who inherited a messy environment but can’t understand those who invest in silos of information and invest again to integrate them. Maybe even ‘invest’ is not the right word here.
The troubling thing is that this virus also infects small and medium enterprises where I still see a tendency to bolt on bits and pieces in an unplanned fashion as needs arise then struggle with data duplication, lack of resources and the inability to deliver information.
Of course there are bright spots all around us, CIOs who went against the tide in order to build a cohesive software environment that manages transactions and delivers information across the enterprise. Those are not scared of being bold, of temporarily upsetting divisional and regional managers or of buying from a single vendor!
Let me leave you with one statement “centralize complexity – distribute information” think about it.
In my organization, we use ERP, CRM and Bi from different vendors but are able to deliver many reports to our business users.
Can you give me an example of the difficulties companies face whjen they adopt a multi vendor strategy.
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Hi, consider this not so unique situation.
FMCG company, marketing head believes that if you cut the price of product X by 7% you will be able to capture market share from your struggling competitors during this economic down turn. He estimated a 10% increase in product shipments.
Head of sales agrees and says he can achieve this without an increase in head count.
CEO wants to make a decision, he asks "how will this price cut and increase in shipments affect our revenues and margins"
Now keep in mind that the increase in production will require raw materials, will affect the wear and tear on your factory equipment, may require more electricity, sales commissions will be higher, this will also require more admin to process and ship orders.
Can you answer this question using your IT environment you have described? Most likely no but the real question is can the business user do it without talking to IT? Surely no ... why? because the data is fragmented and the process is broken ...
This the kind of decisions people need to make, some are more complex than others .. In many cases IT thinks I can deliver reports .. users want to get answers now.
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So getting back to the question, is there an IT solution from a single vendor that could provide a relevant report to this scenario incorporating all those non-measurable, intangible, human parameters into the reporting process ?
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Hi,
I would say a cohesive and comprehensive implementation of any leading ERP suite (SAP or Oracle) will easily have all the data elements needed to address the scenario I referred to in my example. On the other hand a so called 'best of breed' implementation is highly unlikely to have the right level of process integration to do so
I also want to say that the human parameters are all measurable, production cost takes into account workers time, sales cost takes into account sales compensation, etc.. again assuming a comprehensive and cohesive implementation of a leading ERP
The next point is on the Business Intelligence side, a smart BI implementation would allow an enlightened business analyst to quickly work through various what if scenarios similar to the one I referred to in my previous posting. But don't expect this to be in the form of pre defined reports, what if scenarios can never be fully predicted during the implementation but the BI system should allow users to simulate scenarios and work through them
I can comfortably say that you can achieve all this working with no more than 2 or 3 software vendors within your organization .. and that you can never achieve this if you follow 'best of breed' ..
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