Top 5 Keys to Digital Transformation SUCCESS
Dan Aldridge, ERP Software Expert
The ERP Doctor | Director, Marketing at PCG | ERP Software, Digital Transformation and Manufacturing Expert | Infor CloudSuite | Infor LN Partner | Oracle NetSuite | SAP S/4HANA | Evolving ERP Podcast | Author | Golfer ?
This headline slide is from a great presentation I found that was written by a gentleman on LinkedIn code-named “Secret CFO”. His presentation is called “ERP War Stories” and here is the link: "ERP War Stories" by the Secret CFO.
When I posted the statement from his presentation that “McKinsey says 70% of ERP rollouts FAIL”, all hell broke loose. I got comments from friends in my network along the lines of that 70% number is “twaddle”, “hogwash” and so on. Too funny. Talk about war stories – I almost lost a limb!
Whatever the number is, though, I think we can all agree it’s too high. And that a big factor in failures, however often they occur, is that an organization isn't ready for the change.
So, instead of failure, I think I will focus my attention on - dare I say it? – SUCCESS! Because I feel the Secret CFO ’s pain and appreciate his humor, I decided to sprinkle some wisdom from “ERP War Stories” into my article. Maybe after reading it, he’ll think I have a “man crush”. Well - maybe I do! ??
Here are my “Top 5 Keys to Digital Transformation SUCCESS” that I’ve created to help you and the Secret CFO to, as my mom used to say, “turn that frown upside down”. I intend to go into each of these 5 key success factors in more detail in future articles, so STAY TUNED!
1. Get Executive and Organizational Alignment
Because I’m like a dog with a bone, I kept researching until I found a whole article and a series of videos from 麦肯锡 where they made that mythical 70% claim that the Secret CFO reiterates in his first slide.
No backup for that number, btw. Maybe my friends who ripped me were right!
I skipped the “reasons for failure” bits and went straight to the strategies for SUCCESS. The below is based on one of the McKinsey articles entitled “The elements of (digital transformation) success”.
Here is a passage from 麦肯锡 Senior Partner Wesley Walden :
When I talk to CEOs who are considering a transformation, I always stress five prerequisites that need to be in place.
The things I want to stress most from the McKinsey articles and videos are the need to have executive alignment and organizational alignment from C-level down to mid-level managers, that the transformation initiative must be a top priority, and that the BEST resources must be devoted to the project. In other words, no B-team players!
As the Secret CFO says, “Put your best people on the project full time. Backfill their day jobs.” Amen, my friend.
To succeed with executive and organizational alignment, I highly recommend engaging with digital transformation and ERP implementation expert Jonathan Gross, LL.B., MBA of Pemeco Consulting . He provides independent, tech-agnostic advice on executive alignment, digital transformation, and ERP project management. Here is Jon’s LinkedIn profile https://www.dhirubhai.net/in/jonathangross08/ and Pemeco’s website https://pemeco.com/ . He’s awesome and I’ll bet you a (Canadian) dollar that he’s less expensive than McKinsey. ??
2. Assess Readiness, Automate and Monitor
One of the biggest challenges causing failures is that organizations haven’t gotten alignment and they aren’t ready for the massive change that digital transformations bring. So, how does an organization measure and monitor digital transformation readiness?
Here’s a video by analyst Eric Kimberling called “Digital Transformation Readiness – How to Create Your ERP Implementation Plan".
The most important key to readiness that Kimberling identifies is to come up with the proper project governance plan. Ideally, that needs to be done before the company chooses the software and the system integrator (SI) to prevent the SI from arriving with an army of consultants and starting the meter running (and I know what that’s like).
Now that we have a sense of the dimensions of digital transformation readiness to measure, I’m excited to describe a readiness assessment and monitoring tool I found that can dramatically simplify and automate this key success factor. It’s called BusinessITScan.
This automated tool from IT's Teamwork | BusinessITScan? ?can assess your digital transformation readiness and whether your organization is strong enough to support the project. It combines several survey instruments and management methodologies into one easy-to-use management dashboard that measures digital transformation readiness at the beginning of a project and monitors it throughout - which traditional surveys aren't designed to do!
Here's a video where digital transformation expert?Anton Dijkhuis ?explains an intro to the BusinessITScan.?
See Anton's info at the end of the video or DM me on?LinkedIn ?for more information. Here is the BusinessITScan website?https://lnkd.in/gFNbBxHe which has another explainer video about the tool.
I highly recommend Eric Kimberling and his firm Third Stage Consulting Group for all things digital transformation success. Here is the Third Stage website https://www.thirdstage-consulting.com/ . Eric and his team have a couple of podcasts and a very active YouTube channel here. https://www.youtube.com/@erickimberling
3. Stick to an Organizational Change Management Plan
One of the most important success factors in digital transformation is developing an Organizational Change Management (OCM) plan. This plan is mentioned in the previous section under organizational readiness, and having a working plan that you stick with is key.
The Secret CFO cites managing organizational (he calls it cultural) and process change as being probably the most important success factor for digital transformation SUCCESS. He says (I’ve got to cover my mouth to stifle a laugh):
“Culture and Process Change. This is the hardest bit. Elon Musk landed two rockets at the same time. But has he ever tried to get Asscrack Bobby to book inventory in using a handheld scanner, when he’s used the same paper form for the last 35 years?”
Holy crap…that’s funny! Do you know an Asscrack Bobby? I know I do, and I’m sure even Elon Musk would have a hard time getting him to use a scanner. ??
Ok, Dan….focus. To get us serious again about OCM, here is another video from Eric Kimberling entitled “What is Organizational Change Management?".
Organizational change management is an often overlooked and misunderstood workstream during digital transformations, ERP, and HCM implementations. Some think of it as an activity to make people feel good during transformations. Some view it as simply employee training and communications.
But organizational change management is much more than that. It is a critical success factor that should deliver tangible results. There is no one-size-fits-all solution or methodology, but there are some key frameworks and tools that can be used to make your transformation change initiatives more successful, including:
领英推荐
Although I don’t claim to be a change management expert, I understand the concepts and how crucially important it is for digital transformation SUCCESS to develop and - more importantly - STICK to an OCM plan.
Eric’s firm Third Stage Consulting Group does change management consulting and there are instructions on the video to contact them.
Also, I would highly recommend several other people who are change management consulting specialists including (in no particular order):
4. Select ERP Software Carefully, Getting Independent Advice
The Secret CFO says the following about ERP:
“First up. What’s an ERP? ERP = Enterprise Resource Planning. Three of the most boring words ever put alongside each other. But what an ERP can do is not boring.
ERP is a system that does everything. Handle and plan your inventory, invoicing, payments, accounting, people, workflows, and capital. EVERYTHING. It takes the complicated things in the business and swallows them up into one beautiful big black box. It’s the workhorse of the business.”
In other words, you need to take your time and get help to select the RIGHT ONE!
The decision on a new ERP system could be the most important one you make for the next 10 years, which is probably about how long it will last if it’s implemented correctly. When selecting, consider Mergers and Acquisitions, speed of implementation, and Total Cost of Ownership (TCO).
Don’t be swayed by bells and whistles, and shiny new things. The fundamental question is: "Does it do the job as the “backbone” or “back office” of your business, and is it scalable as your business grows?".
In my experience, private equity firms that may identify acquisition targets as well as boards want you to pick a mainstream, highly rated, cloud ERP solution. If you acquire another company or open a new plant in an existing division, this is the lowest risk, highest ROI strategy; standardize on the best cloud solution.
Also, in my experience, the chances for digital transformation SUCCESS increase dramatically if you choose the best fit Vertical Industry Cloud ERP for your company. For example, if you are a manufacturer then this “Top 10 Manufacturing ERP Systems for 2023” list from analyst Sam Gupta at ElevatIQ is for you.
Surprisingly, this list ranks the biggest names like SAP and 甲骨文 lower than ERP vendors such as 恩富软件 , which he ranks #1 (spoiler alert). It shows that there are many viable options other than the “usual suspects”. In fact, if you’re feeling a little lazy, this could be your “shortlist” for ERP selection! Here you go.
Note that like Eric Kimberling , Sam Gupta is an independent, technology-agnostic digital transformation and ERP software selection expert. So, he is not paid by the ERP vendors themselves or the System Integrators (SIs) that might be biased toward a certain product.
My advice - Remember to take SI recommendations with a grain of salt. Also, even if you use SI's for selection, it's great to get a company like ElevatIQ to review or participate directly and get a "reality check".
If you need help with digital transformation and ERP software selection, I highly recommend ElevatIQ . Here is their website https://www.elevatiq.com/ Check Sam out on LinkedIn , and tell him that the “ERP Doctor” sent you! ??
For all things ERP, I also really like and respect Sam Graham who is the author of several books on ERP and many great articles! Reach out to him on LinkedIn.
5. Take a Holistic Approach
People sometimes tend to confuse digital transformations with ERP implementations, as the Secret CFO did with saying “McKinsey Says 70% of ERP Rollouts FAIL” when McKinsey was actually talking about transformations (see key #1). While ERP rollouts are often a large component of digital transformations, transformations are typically much bigger.
They encompass people, processes, and many, many technologies. In fact, digital transformations should affect not only every technology in use within an organization, but they should be changing every touchpoint with customers and suppliers – both external and internal.
So, the key to success here is to take a holistic approach to people, processes, and technologies. The people are covered under the Executive and Organizational Alignment and the OCM keys. The Business Process Management is covered under the Readiness Assessment and Monitoring key where there is a detailed discovery of “as is” and “to be” processes that are documented during what we like to call the “Engage” phase of a project.
Then we get into technology that includes customer and supplier touchpoints including, among others…
I explore many of these different types of enterprise technologies in my “Can Enterprise Software Be Sexy?” article here.
Will I return to this topic? As Austin Powers would say, Yeah BABY!
For information about how to take a holistic approach to your digital transformation planning, ERP software selection, 恩富软件 CloudSuite (aka Infor LN) implementations, and enterprise software in general, I highly recommend Merino Consulting Services BV . Visit me on LinkedIn Dan Aldridge, ERP Software Expert https://www.dhirubhai.net/in/danaldridge/ , on our website https://merinoconsultingservices.com/ , or email me at [email protected] .
Conclusion
Well, I’ve talked your ear off. I’d like to give you a chance to comment. What other thoughts would you add to my analysis and Top 5 list? What do you think of the Secret CFO’s “ERP War Crimes”? I hope this has been useful to you and enjoyable as well!
My company Merino Consulting Services BV is a digital transformation and ERP software consulting firm specializing in implementations of and upgrades to the vertical industry ERP systems from 恩富软件 called the Infor CloudSuites. Here is an article explaining the CloudSuites that contains demo videos and a variety of links.
If you are considering SAP S/4HANA you might want to see this head-to-head comparison “SAP S/4HANA vs Infor CloudSuite – Which is Better?” If you're being forced to convert from SAP ECC to S/4HANA, then this article could turn your head. ??
Please don’t forget to say hi in the comments below, send me a DM or email me at [email protected] . Thanks for reading my article and please comment + repost if you like it!!
Digital Marketing Specialist at Odoo Skillz
10 个月Based on our experience, ERP projects fail when they are top-down, too wide or too ambitious. ?? When focusing on quick wins with baby steps, all mountains are easy to climb ???
Influencer of Continuous Process Improvement | Driving Operational Excellence, Strategic Growth, and Team Empowerment
12 个月Simply-Spot-On. Thank you Dan !!
SAP Programme Director Solution Architect @ Dragon ERP | M&A Due Diligence, Business Project Management
1 年This is Awesome Dan, I’m going to give it another read in the AM as I want to give it the attention it deserves
Owner at OneBigWave | Head of EMEA at Amobee | Senior Advisor, Growth Partner TMX at Deloitte Digital | Focused on Digital Transformation, AI, and Branding
1 年Excellent article, Dan. Thanks for taking the time to break down what it takes to implement a successful digital transformation. I think one of the most critical points you made here is #5. Taking a holistic approach is absolutely essential, as transformations cover people, processes, and technologies. I think many people try to narrow their approach down too small, and this is a major cause of failure.
Director of Digital Solutions LatAm - Samson Group / Creating value through digital transformation and cognitive solutions. Counselor, Columnist, Writer, Speaker, Professor and Thought Leader about Digital Transformation
1 年Very interesting article indeed, always sharing valuable posts.. Congrats ! However, ERP doesn't means Digital Transformation ?? We are talking about two different things, with two different objectives, demands and organizational outcomes. Organizations can buy and apply ERPs with zero digital transformation. It will be just a digitalization how the data flows. ( digitalization ≠ digital transformation ) To be a real digital transformation, should have an OT-IT Convergence ( in case of industrial-base organizations), using data strategically from industry (DCS or SCADA system ), Corporate (ERP) and business (CRM). It requires an organizational culture adjustment and operational process optimization also ( in the 3 organizational dimensions -Industry, corporate and business), creating new business models and revenue streams ( this is transformation) , which goes far beyond the ERP itself. That's why 70% of Digital Transformation fail.. Most of the leaders think it is necessary just to apply new software or technology without any effort from culture and process pilars. Nice debate Dan Aldridge, ERP Software Expert ! Thanks a lot for rising this topic . Always a great discussion about relevant issues... Best regards