|
In our experience, many technology decision makers aren't confident in their ability to evaluate tech requests. When they hear technical jargon their eyes glaze over and try to seek out a simple answer. If you are such a decision maker, the following tips should help you frame the debate and avoid getting bogged down in irrelevant technical minutiae.
You hear the grumbling dozens of times each day. "We can't do that until we get the new upgrade." "I've been asking for that capability for years." "How do you expect us to do the job without the proper tools?"
Of course, we know that our employees just want to do the best job they can. Since they are our most important asset, we want them to have every advantage at their disposal, including the slickest systems.
Unfortunately, we can't afford to buy new technology when the company isn't profitable. In these tough economic times, there's not a lot of idle cash or easy financing for this kind of spending. But based on the cries from our staff, the company may find it difficult to improve profitability without the new technology. How can we escape this Catch 22?
In our experience, the decision makers in most small and mid sized companies (and even quite a few large ones) aren't confident of their own ability to evaluate these requests. When they hear technical jargon their eyes glaze over and they seek out the corporate techie (or an outside consultant) to just give them the simple answer. If you are such a decision maker, the following tips should help you frame the debate and avoid getting bogged down in irrelevant technical minutiae.
Tip #1: Stop Blaming "The System"
At the Indian River Consulting Group, our clients frequently ask for help in evaluating or recommending technology, or in helping them develop a return on investment (ROI) justification. If you think about it for a moment, you'll realize that there is an implied diagnosis behind these requests: "a new, better or different technology will make us more profitable." Surprisingly, very few companies actually test this assumption explicitly. They call us because they've been hearing the incessant internal drumbeat ("the system stinks, the system stinks, the system stinks") so long that they've come to believe it's true.
Three out of four times, however, we find faulty business practices rather than inadequate systems. See if you can spot your own company in any of these examples:
-
Assumption: "Every outside salesman in this company must have a laptop. We are years behind our competitors on this basic capability."
Finding: There was no correlation between use of laptops and sales performance. In fact, anecdotal evidence suggested that salesmen with laptops spent a lot of time getting technical support, entering data into spreadsheets and surfing the web instead of spending time with customers. Until this company updated its basic sales and sales management processes, a much more pressing problem, laptop computers would be of marginal value.
-
Assumption: "We need a more user-friendly business system that everyone is capable of using. I'm tired of needing software programmers just to create a report."
Finding: The company's staff were capable of using their system's reporting capabilities; they just had no reason to do so. Executives micro-managed rather than setting broad objectives and then getting out of the way. Why learn how to create a report when the boss is just going to make you use his? No system is so easy to use that it requires no motivation to learn it.
-
Assumption: "We are running out of space. We need a warehouse management system that can help us cube out our inventory more efficiently."
Finding: Warehouse users were doing an excellent job of fitting the inventory into the smallest space possible. A WMS, using standard cubing dimensions, would have required an enormous measurement and data set-up effort, and would have provided inferior cube utilization (although it would have reduced putaway time). The fundamental problems were in the set points used to reorder inventory and the fact that the company had never performed a stocking justification for each product.
-
Assumption: "When our customers call we don't have any idea who they are, what they buy from us or how important they are to our bottom line. We should have a customer relationship management (CRM) system to help us track and segment our customers, allowing us to squeeze the most business out of every single account."
Finding: This organization suffered from poor discipline in its data maintenance practices, a problem that no amount of new technology can fix. CRM cannot change the "garbage in equals garbage out" equation; it can only repackage the garbage into pretty charts and graphs. Because there was no ownership of information, no one accepted the responsibility for keeping account information accurate, complete and current. In fact, their legacy business system had sufficient account tracking capabilities to meet a high portion of their needs once sales teams became properly motivated to stop the garbage.
-
Assumption: "We need to reconfigure our warehouse conveyor and control system to eliminate the bottleneck at packing."
Finding: Basic time studies revealed that half the packing stations were unmanned at any given time and that those that were in use were frequently idle while the packer scavenged for boxes and dunnage. More efficient staffing and workflow practices increased maximum throughput by four times with no conveyor changes.
As you can see from these examples, it pays to question assumptions and revisit management basics. Challenge anyone who asks for big-ticket technology to prove that he has studied and exhausted all alternative solutions. (It's often beneficial to get a fresh, outsider's opinion. Feel free to email me at
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
for some tips on spotting the process issues that are masquerading as technical limitations in your company.)
Tip #2: Try Bolting On
Let's suppose that, after thoroughly evaluating your situation, you still conclude that your company is limited by its technology. Does this mean that you are forced to spend big bucks to stay ahead of the competition? Maybe not.
The biggest outlays for technology typically involve changes to your technical foundations: communication networks, computer hardware and core business systems (enterprise resource planning [ERP], order processing, financials, etc.). But you can often get significant value without touching any of these. The key is data extraction: the ability to pull information about your customers, orders and inventory from your business system into cheap, flexible PCs.
Today, almost all systems provide some capability for such data extraction. The methods could range from very elegant (a direct database interface) to downright ramshackle (tricking your system to send reports to data files instead of a printer), but there is usually a way to get it done. Many inexpensive software tools exist to simplify this process.
Here are some examples of simple, low cost, bolt-on solutions that have provided real bottom line improvements for our clients:
- Using Microsoft Access to mine sales data. Access is a powerful tool that is relatively easy to learn. You can use it to slice and dice sales history, looking for trends and patterns that can be exploited quickly to increase sales. Find out where your accounts churn the most, which customers buy less than their full product basket from you, who is most sensitive to price changes, etc.
- Automatically notify salesmen of critical events. You can use off-the- shelf software to automatically send an email, a pager message or even make a synthesized voice phone call to a salesman when one of his accounts goes on credit hold or a critical shipment is backordered.
- Implement sophisticated inventory forecasting with Microsoft Excel. It may sound far-fetched, but the mathematical capabilities in Excel are equal to all but the most expensive dedicated forecasting software. With an external Excel forecasting engine you can overcome your business system's inflexible or inadequate capabilities quite effectively.
- Create custom news feeds to arm your salesmen with critical competitive information. There are dozens of free and almost free web services that can provide individualized information with very little effort. For example, with the newly released Google News, you can automatically search for articles about specific customers or competitors from over 4000 new sources every day.
These and similar bolt-on options can often provide most of the value of more advanced solutions at a fraction of the cost.
Tip #3: Spend It Like You Mean It
If you're still reading this, you've decided that your company has no choice but to spray a money hose at the problem. You've determined that your constraint is really about technology rather than business processes, and you can't see an effective way to solve it with a lower cost bolt-on solution. What's left to do besides making that phone call to the bank?
If you've followed all the right steps, you have a detailed return on investment (ROI) justification for the outlay. You should know exactly where the new technology will cut costs and/or increase sales. Here's a check to make sure that this is REALLY the case.
If these assumptions are all true, we suggest that you create a special account to pay for the new system. Fund this account out of the budgets of those departments and branches who will use and benefit from it. Don't allocate any portion of the cost to "corporate" or "IT" or "overhead" accounts.
If laptops will truly make your salesmen more efficient, they should not object to using a portion of their increased commissions to pay for them. After all, half of something is better than all of nothing. If the fancy new warehouse system will improve productivity, it should be paid for with a headcount or inventory reduction (over time, of course). If a new company intranet will streamline accounting functions then it's reasonable to expect reduced clerical costs. In short, ask the users of the new technology to step up to the plate and commit to achieving the benefits.
The point is not to discourage innovative thinking or to punish whiners. Rather, it is to make sure that you know exactly how the investment will improve your bottom line and that everyone is committed to achieving results with the new tools.
Steve Deist (
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
) is responsible for the Operations Practice at Indian River Consulting Group. IRCG is an experienced based firm specializing in Distribution. Started in 1987 by J. Michael Marks, IRCG has specialists who consult with distributors and suppliers to make the changes necessary to maintain competitive advantage. You can contact them by calling 321-956-8617, or visit www.ircg.com for more information.
Copyright © Indian River Consulting Group LLC. All Rights Reserved.
Please contact Sandie Stewart at
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
for republishing permission.
|
