In last week’s blog I gave an overview of three simple ideas to make Enterprise Resource Planning (ERP) transformation a success. This week, we’re taking one of those ideas and delving into the detail of why ERP transformations that focus on customer-value end up delivering more value for all stakeholders.
The benefits delivered to an organisation’s beneficiaries drive income (directly or indirectly). In a commercial context, each beneficiary is a consumer who is often also the customer (i.e. the person that pays for the product or service); but even for public and third sector bodies, long-term budget allocations and donations increase when delivered benefits increase. As a result, whether your organisation has a profit motive or not, focussing on these ‘Customers’ helps the organisation grow.
Despite the importance of Customers, the initial motivations for ERP transformation are often dominated by the potential efficiency gains of automation and the potential for more efficient allocation of resources. Such motivations drive the operating model towards a focus on expenditure alone. In the worst cases, these efficiency ‘savings’ are illusory benefits that compromise Customer-value and future income. In contrast, focussing your ERP transformation on your Customers will realise efficiency gains that do not come at the expense of your top line. Focussing on the Customer is the only purposeful way to avoid such hidden damage to your organisation.
By its nature, ERP spans organisational boundaries. It will affect a wide variety of stakeholder groups, each of which has their own priorities consistent with the role they play. For example, it is the role of the Finance department to protect the assets and financial wellbeing of the organisation; and so their risk appetite is unlikely to be as high as Procurement when it comes to sourcing suppliers and the devolution of negotiating authority. Resolving such disagreements is easier when both parties can agree on their collective purpose; and customer-centricity provides that common ground.
In the absence of Customers, organisations lose their fundamental purpose. And, as Daniel Pink tells us, purpose is one of three intrinsic motivators for the individuals within those organisations (along with mastery and autonomy). Therefore, Customer-centricity is more than a means to resolve conflicts of opinion, it is a tool to engender support for ERP transformation. Maintaining a constant, direct link from Customer value to the ERP transformation taps into individuals’ motivations at all levels of the organisation, reducing delivery risk while aligning the ERP to the business model. Extrinsic motivators (e.g. top-down goals and incentives) can’t achieve the same level of alignment due to the complexity of the transformation…. And besides, who would have time and knowledge to specify the bonus for each UI element or work instruction?
ERP transformation requires a significant investment of money and time. Even a simple ERP replacement will require 6 months to a year to complete. As time progresses, the world changes, and so Customer-value can evolve. A well-run ERP transformation will evolve with these changing needs, but that requires a ‘true north’ whose detail and relevance cannot be captured by the original vision for transformation. The transformation itself will provide valuable insight into what’s possible and what’s valuable; and a static vision written at the transformation start is unlikely to capture this subtlety.
By contrast, Customer-centricity provides a reference point for those difficult decisions on scope, quality and timeliness that inevitably arise throughout any change. In the absence of this ‘true north’, changes in programme scope can result in the tactical removal of fundamental building blocks, and the transformation becomes a ‘technology project’ alone. When prioritising the available programme resources, Customer-centricity avoids the risk of preserving ‘sacred cows’ and ‘pet projects’ whose value is questionable or non-existent.
Ultimately, the benefits of Customer-centricity are specific to each transformation; and so its execution will be the limiting factor on benefits realisation. With the importance of execution in mind, our next blog will discuss in detail what Customer-centricity looks like during initial discovery.
Other blogs in this series
How not to overspend and under-deliver your ERP
Don’t overlook the importance of ERP discovery
This post was originally written by: Philip Richardson