If you are currently evaluating any of the top ERP systems or other business technology platform, your leadership has hopefully discussed what your organization wants and needs from a transformation. In many cases companies simply want to “get up to speed” and reduce inefficiencies so they are not lagging behind. More and more, however, companies are targeting the idea of creating competitive differentiation through a digital transformation.
The answer to whether or not you should try to create differentiation through business technology is not an easy one. Years ago, simply implementing a new ERP technology would bring a company light years ahead by introducing efficiencies and automation that few companies could afford. Nowadays, however, creating differentiation through technology can be a bit more complex.
As you evaluate goals and options for your digital transformation or business technology initiative, here are a few considerations for discussion:
If you are a small, niche business that provides a unique product, your product may be all the competitive edge you need. This is especially true if barriers for entry in your space are high enough or if your market is small enough. You should still look at the core capabilities of business software to help maximize profitability and stay up to date with customer expectations, but this is not the same as creating a true competitive edge through technology.
We talk with many companies who “want it all” when it comes to technology but haven’t defined what “all” means. Because technology can literally do just about anything, be sure to set clear business technology requirements in advance. As mom used to say, “you can’t have it all.” Be sure you do this as part of your ERP software selection process or implementation.
If your competition is providing a level of service that you are not able to offer due to lack of technology, then they have the competitive advantage over you. Implementing technology so you can offer the same level of service will not necessarily bring you differentiation but will reduce your competitor’s edge. Rather than bringing your company up to the same level, think instead about going a level beyond what the competition is doing.
An example of this is was seen in the mortgage industry when mortgage companies started to offer online applications. Initially you could input all of your information online to save a ton of time, and then a broker would call you to fill in missing fields, complete the application and then meet with you for signature. Rather than simply get the same online forms, forward thinking firms began using automation to have forms not only completed, but signed, submitted and approved without ever having to talk to a human.
You can absolutely create differentiation through a supply chain transformation, robotics or automating quality assurance, but the most common forms of differentiation tend to come from the points of interaction with your clients. Especially across younger consumers, things like ease of interaction and automation are key, so start there if you are struggling to determine how you can differentiate.
Of course, if given the easy option we would all chose to create a competitive edge. The problem is that technology transformation is not cheap or easy, so be sure you are defining cost versus benefit. Creating an business case is fairly straight forward when evaluating labor benefits and general efficiencies with a technology implementation.
This can be a difficult task, however, when evaluating intangible or potential benefits such as market capture, geographic expansion or increasing user or customer satisfaction. When there are variable inputs and unknows or when you are looking into leading-edge technology such as internet of things, RPA or blockchain, this would be an ideal time to reach out to a consultant for help. The cost of embarking into new territory can be exciting, but costly if mistakes are made.
Be sure the competitive advantage discussion starts at the very beginning of defining your transformation strategy as it will guide your way and decisions all the way through. Feel free to contact us for an informal discussion about your transformation. We are happy to be a sounding board as you continue your business technology initiatives!
