Massive vs. Incremental Change
One of the first decisions that need to be made as an organization and as a transformation team is how big of a change do we really need? Are we looking to completely rethink the way we do business or do we just want to focus on more of an incremental change? To be honest, there is no right or wrong answer to this, but there are some pros and cons of each that should be considered to help determine what is best for your organization.
If your organization is risk-averse and you already have a finely tuned business model, an incremental approach may make more sense as it comes with less risk and lower costs. On the other hand, if your organization has experienced disruption by outside forces, or if you have an older, outdated operating system, you may need to start rethinking your general business model. Your company may be pushed to make a huge quantum leap improvement to your business in order to stay competitive. There is upside and downside to both approaches. Specifically, a big leap will have more risks involved on both sides – there is risk in doing so, as with any investment, and there is risk and opportunity cost staying stagnant.
We must look at the cost-benefit of both scenarios.
Standardization vs Flexibility
The beauty of technology today is that it gives you a lot of options. One of the decisions you need to make as an organization is if you want to use technology to standardize and drive common business processes across our organization, or if you’d rather utilize technology to make for more nimble, agile, and flexible operations? These are questions we always need to be asking ourselves while making important decisions for the company.
- For large organizations, more mature, and focused on more efficiency gains may find that standardization is what they really want to drive their cost structure down.
- For small businesses or companies going through a lot of growth may find that flexibility is the most important thing. It is whatever best fits your business and overall transformation strategy.
Single System vs Best of Breed
Another big decision we have to think about is if you want one system that can handle everything within the organization, or if you want to find specific, focused solutions for different parts of our organization. You could go with one single ERP system that encompasses functionalities from finance to supply chain, or you may go to the other extreme which is a best of breed model. A best of breed model is where we have a core financial system, or may have a sperate CRM, HCM, or other technology for customer service, manufacturing, and warehouse management to help with our overall digital transformation strategy.
Pros and Cons
Single ERP Solution
- Upside: It is only one system that is used company-wide. You have one single platform, one single source of truth for the entire organization that will allow for transparency and improved efficiency across departments.
- Downside: It may limit your flexibility, and it is harder to change or customize the solution to specific needs within the business.
Best of Breed
- Upside: You can find the best solution for each specific segment of your organization that would optimize functionality in a more glove-fitting approach than you would with a single ERP system.
- Downside: Complications related to data and where that data resides could arise when implementing multiple systems across the same business. The software integration will become more complex when tying multiple systems together.
It is always important to weigh the pros and cons and the cost-benefit of both models, but either way, you want to make sure it’s aligned with your overall goals and objectives.
Changing the Software vs. Changing the Business
Another major and controversial decision, much like who will be our next President, that needs to be made going into a digital transformation is determining whether the software should fit our business or if our business shifts the software. This is not just a one single decision; You might have different answers for different parts of your business.
Pros and Cons
Software to Fit Your Business
- Upside: This approach gives you exactly what you want and need in accommodating current functionality. It is going to allow you to preserve your competitive advantage and enables more of a mild change for the organization and employees.
- Downside: By changing solely software solutions, you’ve exposed and introduced a possible risk to your transformation both in the implementation itself, and longer-term post-implementation.
Business to Fit the Software
- Upside: You will minimize risk of fully uphauling an old system to be replaced with a new one, and instead will find a more seamless integration across the board.
- Downside: The risk will have been shifted from the technical side of customization to the organizational change side. So, now we are putting the pressure on our people to change vs. the risk of changing solely the software.
At the end of the day, you always want to have a clear vision for what it is you want with your software and how you want it in your business.
Integrating Data vs. Starting Clean
An important digital transformation strategy decision to consider is if you need to migrate data or start on a clean slate. Maybe there is a middle ground that would best accommodate historical trends integrated into the system. Either way, this will play a large role in your integration process.
- Upside: This option keeps a door open to consider historic data. You will have the story of your organization going back many years, which can help you see how you have progressed since you started.
- Downside: You will have introduced a significant risk to the integration by bringing data over that may be corrupt or may need to be cleaned up prior to the migration.
- Upside: This would dramatically simplify the implementation, and it minimizes the risk of dirty data, inaccurate or incompatible data, and other problems that could be created by migrating older data.
- Downside: Obviously, what is not migrated will not be considered in data moving forward. When looking for historical data, you would have to go back to old records, which isn’t entirely
Agile vs Waterfall
Now, there are two schools of thought and approaches to ERP and technology implementations – the Agile Development Model and the Waterfall Model.
Agile Development Model
An approach to software development that focuses on creating immediate value and getting something in front of the user so they can start to comment on whatever is being developed.
- Upside: It is ultimately a faster and more organic development and integration cycle. The results will be visible earlier in the process.
- Downside: This approach is not necessarily a big-picture, enterprise approach, but more of a specific, narrow model that focuses on specific needs: finance, supply chain, etc.
The traditional method of software integration where we have clearly defined milestones and stage gates where for example we define, agree and sign off on all of our business requirements before we move into design and implementation.
- Upside: You will more often than not have a clear vision with distinct executive alignment for how the technology is going to be deployed.
- Downside: Organizations struggle oftentimes with change fatigue and tap out before actually getting to realize the full value of the implementation.
There are many factors to consider, and it can be very difficult to decide which direction to start on as you begin your digital transformation journey. It is important to do a cross-check of all these digital strategies beforehand to make sure your digital strategy is best suited for your business needs before making the investment in both time and resources.
Please feel free to contact us if you would like to brainstorm ideas related to your digital transformation. Whether you are embarking on an ERP, HCM, CRM, supply chain, or any other type of digital transformation, we are happy to be an informal sounding board.