Over the last two weeks, I have been intrigued by two data points:
1. A recent article by a well-respected colleague about the outdated nature of ERP software, and
2. Work we just started with a new client – a very large US-based manufacturing and distribution company – whose digital initiatives extend well beyond ERP to include business intelligence, eCommerce, and a host of other technologies that many companies forget about during their digital transformations.
Both data points have helped me realize what has been plaguing the ERP software industry for so long: when implementing new enterprise technology, vendors, companies, and consultants tend to forget about the last mile of digital transformation. This is a key reason why so many ERP implementations fail.
What is the Last Mile of Digital Transformation?
Two life experiences help me realize how the “last mile” applies to digital transformation.
First, I used to be a competitive long-distance runner long ago before I had bum knees. Our coach used to emphasize the importance of the last mile in our 5K (3.1 mile) races. We were coached to start strong during the first mile, settle into a steady pace during the second mile, and finish even stronger to pass as many people as possible during the last mile to the finish.
Second, I spent some time in the utilities and telecommunications industry early in my career. When building residential power or telecommunications infrastructures, companies would often refer to the lines between the main infrastructure the “last mile.” That was the part of their business model that actually allowed them to generate revenue from their massive and costly infrastructures.
Just as both examples here can’t do much without a successful last mile, so too is the case with digital transformation. Sure, we can put in a nice, post-modern ERP system to clean up back office inefficiencies. We can even improve some business processes along the way and move our applications to the cloud.
But if that’s all we do, then we’ve missed out on the last mile of digital transformation: those true, transformative technologies that allow us to make quantum-leap business improvements to our business model. This goes well beyond efficiency gains. This is where the real business value and opportunities for improvement lie. This is how companies reach the third stage of digital transformation.
Key components of the Last Mile of Digital Transformation
There are a number of ways to leverage enhancements to your business model, business process improvements, and technologies to help reach this last mile – or the Third Stage – of Digital Transformation.
- Predictive analytics to better forecast demand, reduce stockouts, and reduce inventory
- Business intelligence to provide better visibility into your business
- Machine learning and artificial intelligence to automate routine business processes and increase efficiency
- Robust eCommerce tools to provide better customer service and order management to your customers
- Omni-channel buying experiences for your customers, while providing a “single source of truth” for customer behaviors across all buying channels
- Data migration tools to provide better data into your digital transformation
You may have heard some of these case studies or examples during sales pitches from software vendors and ERP system integrators. The problem is that these case studies may sound good, but most companies don’t turn these grand visions into reality.
Why the Last Mile of Digital Transformation is so Elusive
The root causes of why most companies fail to reach the last mile or Third Stage of digital transformation isn’t that difficult to see:
- Companies and software vendors tend to underestimate the time and money required to make their ERP implementations successful, which leads to critical workstreams and budgetary line items being cut later in the transformation.
- Companies get tired and lose momentum simply from redeploying basic ERP functionality, leaving little fuel in the tank for these more advanced business and technology improvements.
- Software vendors spend massive amounts of R&D on continuously upgrading technology, so they tend to focus on back-office functionality. This is true for even the providers of top ERP systems.
- Organizational change management is difficult enough – even before getting to these more significant changes.
This is why the odds are often stacked against digital transformations in general. It is also a key reason why so many companies have trouble determining how to avoid ERP failure.
How to Reach the Last Mile of Digital Transformation
The good news is that the recipe for success isn’t that complex. Executives and project teams simply need to focus on five things to ensure they properly address this last mile:
- Take time to define future-state business processes up front – before your implementation begins.
- Expand your view of digital transformation beyond traditional back-office ERP functions.
- Don’t limit your technology and implementation options to just one software vendor or system integrator. They may pressure you to do so, but this often isn’t the best answer for most organizations.
- Define and execute a robust organizational plan management strategy.
- Ensure you have realistic implementation expectations from the start.
These recommended tactics may not seem difficult, but industry incumbents aren’t necessarily motivated to provide objective and technology-agnostic advice to help you reach this last mile. This is where the best independent ERP consultants can help.
Feel free to contact me to discuss. Our team and I would be happy to bounce around ideas to help you create a plan to reach this last mile and Third Stage of digital transformation success!