Companies in Transition

                                                                                               March 2007

Dear Friend,

      The theme of this issue of Companies in Transition is increasing sales and profitability through operational excellence. A reasonably good strategy supported by excellent execution is more likely to succeed than a brilliant strategy poorly executed. The real work of building value is done on the front lines – in customers’ offices or on the shop floor – wherever your company creates products or delivers services to customers. And an effective, efficient software platform is essential to managing or carrying out that work. Equip them with good tools, point them in the right direction, and watch your employees deliver for customers!

      We hope you enjoy this issue of Companies in Transition.

Wayne Wilson

5 Steps to a Successful Software Implementation

   “Over 50% of enterprise software[1] implementations fail to accomplish their intended business objectives.”

 

Over the years, I have heard numerous versions of the above statement. Like all “urban legends,” it contains an element of truth though not necessarily “the complete truth.” According to The Standish Group’s Chaos Report, only 15% of over 13,000 information technology (IT) projects surveyed were classified as “out-and-out failures” while 34% were rated unqualified successes. The remaining “. . . 51 percent of all IT projects . . . [experienced challenges] with cost overruns, time overruns, and projects not delivered with the right functionality to support the business.”[2]

Academic studies have focused primarily on IT projects at large companies[3] rather than the small- to medium-sized enterprises (SMEs) where industry specific, off-the-shelf enterprise software packages can provide enormous business benefit. One study focused primarily on SMEs found that “SMEs can expect to have an easier time implementing [enterprise software] . . .”[4] than larger organizations. However, proper project planning is critical to ensuring a successful enterprise software implementation regardless of the size of the company.[5]

Here are 5 steps which can help ensure that your enterprise software project comes in on time and on budget while delivering the business benefits you expected.

Building better business processes

      Most companies want to grow, even grow rapidly. But employees can only accomplish so much as individuals. Business processes are like stilts to the clown – they extend the capabilities of your employees to handle multiple or larger tasks. The lack of formal business processes, or poorly designed or defined processes, is frequently a significant inhibitor to growth for mid-sized companies.

      The simple business processes with which most companies originally operated – the founder’s personal span of control – do not scale very well. Once a business becomes too large to be managed directly by the founder, further growth requires:

• Structured business processes – who does what, when, and under what circumstances,
• Formal delegations of authority for particular business activities, and
• Accountability through inspection and periodic reporting.

      Each area of the business (e.g. sales order processing, production planning, and human resources) needs it’s on “rules” and operating procedures about how business activities are to be conducted and by whom. The goal should be to continually enhance the formal processes necessary to support growth without becoming bureaucratic for its own sake.

A little incentive pay goes a long way

      Discussions of incentive compensation often focus on senior managers or the sales and marketing organization – those driving the business and making the sales. But carefully crafted incentive compensation plans can have an important beneficial effect in other areas of a business as well, including the warehouse or distribution center.

      A vice president of distribution services once asked me to approve an incentive program for his hourly employees. He was struggling with high employee turnover, absenteeism and stagnant labor productivity. While dubious of the value, I agreed to let him try. The program:

• Focused on a few key metrics such as lowering absenteeism and accidents while raising orders picked per labor hour,
• Relied on team goals to encourage peer pressure, and
• Charted and reported each team’s progress against their goals with weekly or bi-weekly cash payouts.

      Within a few months, the distribution center experienced significant improvements in virtually all targeted metrics at a very modest incremental financial cost. The program succeeded by providing an opportunity for additional pay, apart from overtime, and combined it with teamwork and recognition. Try it; you might like it.