In today's business, with increasing competition through globalisation and a more demanding and educated customer base, greater pressure is being placed on the supply chain to remove "non-value-adding" costs, while increasing its agility and flexibility to support changing customer requirements and demands.
In the past five to 10 years, the IT industry's solution to this problem has been to propose and roll-out a single business platform, commonly called an enterprise resource planning (ERP) solution, configured to support the company's end-to-end processes.
The value proposition, as sold to the customer, was the provision of complete visibility of management information across the entire business, and through this, it would enable more efficient inter-departmental communication (sales, manufacturing, supply chain and finance). Through this process, it would remove the "silo" mentality and encourage collaboration across the entire business. However, businesses have been partly successful in this regard, facing the following practical realities and challenges:
* Long, drawn-out implementation timeframes: Implementing a system which affects all parts of the business requires a significant amount of time spent mapping business processes, and understanding the interdependencies between the various departments within a business. Often business requirements, which are market-driven, change during these lengthy roll-outs, resulting in further delays in the project while trying to incorporate these new requirements within the solution design.
Large global IT and software application companies are focusing their R&D spend on making their solutions more open to communicating to other applications.
David Levin, CEO of Super Group's technology solutions division
* Underestimation of the level of change management required in the business: Most businesses underestimate the management leadership required to manage staff behaviour and productivity during a large-scale technology roll-out within a company. By definition, changing to a single business platform impacts most functions and therefore staff in the organisation. Practically, the firm is in for a "big bang" approach to system changeover.
* Lack of staff skills: Learning a new system, which in most cases is a significant change from the previous system, may require different skills that do not exist, or are taken for granted but have a significant impact on productivity levels. A good example of this is moving from a "green screen" application to a "windows-based" application. Functions that require high processing speed and volume of data, like sales order entry and warehouse goods receipt, are more suitable in a "green screen" capture environment than "windows". Typically the flexibility to offer both options to the business across different departments is not available in one system.
* Inflexible solution to changing business requirements: Because of the integrated nature of a single business platform/ERP roll-out, the flexibility and speed to integrate in new business ventures and apply changes to the existing business models, is limiting by having to assess the impact such changes would have on all processes captured in the end-to-end existing solution.
New approach
The IT industry's solution to the above business challenges is moving away from the concept of a single business platform, or ERP, to one of providing the technology and tools to deliver the same value proposition as originally intended, ie improved visibility and collaboration across the business, but with a different approach. This new approach is to provide technology solutions that enable communication to be improved between existing multiple systems. In simple terms: getting multiple systems to talk to each other more efficiently, rather than throwing out these systems and replacing then with one system (the ERP).
Large global IT and software application companies are focusing their R&D spend on making their solutions more open to communicating to other applications. They recognise that customers want to maximise the use of their existing IT investments, while creating an environment where systems can be modified to changing business requirements in the shortest possible timeframes, at the lowest level of disruption to the business (minimising the impact on change management and staff training requirements) and therefore at the lowest cost.
This is the first time the IT industry has taken a practical approach ("eating the elephant in small bits") to assisting customers in solving business problems using technology - the new concept of service-oriented architecture (SOA).
Furthermore, the IT industry has recognised that customers are challenging previously accepted commercial models of buying software, with more risk-sharing models like software as a service - effectively renting software as an alternate to a purchase - being viewed as the more practical and viable model. This is a topic for discussion all on its own.
It is still early days in how SOA is going to be deployed in the most efficient manner across businesses. But at least the market understands the "one size fits all" approach is not necessarily the most effective strategy to be deployed when considering how to best utilise business applications to differentiate one's business from the competition.
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