As Pink Floyd once said: “Welcome my son, welcome to the machine.” For all we know, they could have been talking about the future of digital transformation when they released the song 40 years ago.
The dark side of digital transformation
As a recovering Big 5 SAP consultant, I have seen the dark side of digital transformation – and it isn’t pretty. Despite all the innovations, great new technologies and capabilities, there is too much bad behavior, lack of transparency, bias, and unrealistic expectations for CIOs and their project teams to succeed on a regular basis.
For example, I recently posted a whiteboard video outlining how the SAP ecosystem is leading its customers into corners and blind spots that they shouldn’t be in:
As outlined in the video, some of the symptoms of these problems include:
- Buying more technology than we need
- Leading with a vendor-and technology-first mentality
- Underestimating time, cost, and resources
- Prematurely forcing customers to the cloud
- Force-fitting boilerplate methodologies and tools where they don’t necessarily fit (for example, agile ERP implementation methodologies)
To summarize, here are some of the key blind spots in the industry, as well as what you can do to mitigate the risks during your digital transformation journey:
Economic and philosophical biases influence decisions that aren’t necessarily in customers’ best interests
We recently published an article outlining how economic biases are undermining digital transformations. The key challenge here is that software vendors are heavily incentivized to peddle their products as the single answer to their customers’ problems – regardless of whether or not it’s a good fit. This in and of itself isn’t unique to the ERP software industry, but the strength of the vendor machine (aka the ecosystems) often blind their customers to what their options really are.
For example, we are working with a large African consumer products company who has hired one of the big systems integrators to manage their SAP S/4HANA implementation. When the SI told them that their implementation can and should be done in less than three years. When the client pushed back, the SI accused them of being “resistant to change” and “not aggressive enough.”
While one could make a case for the SI’s point of view, it’s also important to recognize that the company is a large, multi-national company with thousands of employees across Africa. They operate in silos, have different ways of operating, and are trying to fundamentally transform their business in parallel with the SAP implementation. This magnitude of change isn’t going to happen in three years.
It is important to recognize the root cause: the SI makes more money the faster they can get their customers running on their new ERP implementation, regardless of the end result. This is just one of many cases studies of vendor and SI bias that we see on a daily basis.
Lack of experience with flagship cloud ERP systems leads to a largely unqualified resource pool
The current state of the industry marks the first time in my 20+ year career that all the major ERP vendors are introducing relatively new flagship products to the market at the same time. SAP has introduced its 2025 deadline for ECC and R/3 customers to convert to S/4HANA. Oracle has ditched EBS and Fusion for Oracle ERP Cloud. Microsoft Dynamics has rolled out D365 as a way to consolidate and replace Dynamics AX, NAV, and GP. Other ERP vendors are also headed down similar paths.
These industry dynamics lead to two things. First, there is a shortage of resources with deep familiarity with these products. While there are plenty of Oracle consultants with multiple full project lifecycles implementing EBS, the same can’t be said for Oracle ERP Cloud. The same goes for SAP S/4HANA consultants and Microsoft Dynamics 365 consultants.
Second, these resources don’t really know how long the implementations will take. They simply don’t have the deep experience base and broad historic data points to point to in helping their customers estimate ERP implementation time and cost. This leaves it up to you to determine what does or doesn’t make sense for your organization.
ERP systems integrators aren’t the singular answer that they proclaim to be
Digital transformations are about much more than technology. In fact, technology is one small piece of an overall transformation. But systems integrators typically don’t let you in on that fact up front.
For example, while most systems integrators are good at designing and building software, they are generally not good at the operational and organizational aspects of transformation. Things like defining a clearly aligned digital strategy, organizational design, and business processes improvements are not generally in their wheelhouse. They may claim to have these competencies, but they are generally light at best.
We constantly have to deal with the reality of SAP’s Activate methodology, Microsoft’s Sure Step methodology, and other ERP vendor methodologies with our clients on a daily basis. While vendors and SIs may list these things on their PowerPoint slides, organizational change management, business process improvement, data migration, user acceptance testing, and other activities outside the scope of the software are all inadequate. Yet these missing components are the keys to digital transformation success.
The solution: balance the equation with independent and technology-agnostic guidance
Vendors and systems integrators may mean well, but their biases often get the best of them. It is up to you, the customer, to own and manage your digital transformation.
This is where outside, technology-agnostic advice can help. For example, here are some key decisions where you will want to counter the industry biases with a dose of reality:
- Which ERP software is the best fit for your organization (SAP vs. Oracle vs. Microsoft other options)
- How much to pay for your enterprise software
- How much software you should buy – and when you should buy it
- What other technology outside your core ERP system might be a better fit for certain functional areas or locations
- How much time, money, and resources you should allocate for your transformation
- Quality assurance and management of your ERP systems integrator
- How you will incorporate organizational change management into your transformation
So welcome….to the machine.
Please contact me if you would like to brainstorm ideas of how to make key decisions related to your digital transformation. I am happy to be a sounding board as you continue your digital transformation journey!