Maintaining sustainable growth: getting systems selection right the first time
(As originally published in the Financial Post, October 2012)
By Vincent Bryant, Leader, Performance Improvement Advisory Services, Ernst & Young LLP
Vision, passion, determination and an off-the-chart problem-solving ability are common attributes of the successful entrepreneur. You need all of these plus your own "je ne sais quoi" to successfully navigate through the numerous pains and stages of growth that you will encounter as your business develops.
However, at some point, maintaining sustainable growth will create a demand for operational systems to allow the business to function on a day-by-day basis while allowing you and your teams to focus on what makes your business distinctive.
Systems — whether IT, production, customer relationship management or human-resources related — play a critical role in achieving operational effectiveness, building strong connections with customers and business partners, and providing the necessary levels of business intelligence and oversight to compete in our highly connected and regulated global business environment.
Although the majority of business people understand the importance of getting system-selection decisions right, and of implementing their chosen systems successfully, these projects often exceed budget, deliver below expectation and take longer to implement than originally planned.
Reducing the risks associated with system selection and implementation should be high on the entrepreneur’s agenda as anything that causes a deviation from the growth trajectory is at the very least an annoyance and may also impact product quality or customer service. Making an informed selection decision is therefore a crucial step towards reducing risk and achieving a successful outcome for the business.
The stage of growth and nature of the system naturally govern the level of effort required, but committing the business to a system-selection decision without a clear and comprehensive list of business requirements is akin to taking a step into the unknown. If something goes wrong after you’ve signed the contract, you’ll be compelled to pay attention to the detail of your strategic and operational requirements. The cost of making the wrong decision can be significant as the cost of rectification is often much higher than the cost of investing in a robust selection exercise at the outset.
A comprehensive list of business requirements provides the framework for making key selection decisions and provides an important baseline against which your system options can be compared. Business requirements should reflect what’s currently required to run the business, plus what’s necessary to support your strategy for organizational development and growth. Keeping in mind that few systems will fit your needs perfectly, it’s advisable to rank requirements on the basis of their importance — along the lines of "must have," "should have" and "nice to have."
To manage cost and avoid misunderstanding, these well documented requirements should be incorporated into a request for proposal requiring vendors to state whether their “out of the box” product meets your company’s business requirements or whether it will need customization and, if the latter, at what time and cost.
This approach provides the data for a thorough side-by-side analysis of the short-listed options and a realistic estimate of the cost of procuring and implementing the system. Without this rigour, it’s difficult to make an objective decision based on a good understanding of system features and cost — or answer the question, what exactly am I getting for my money?
A key part of the system-selection decision is your choice of vendor. Implementation projects can be disruptive, and you require assurance that your chosen vendor is able to work in partnership with your business for the duration of the project, is willing and able to solve problems as they occur, and has the financial standing to support you into the future. These vendor related requirements should also form part of the selection decision and be tested through customer and credit references and site visits.
Visiting companies that have worked or are working with your short-listed vendors and their products is a good way to determine whether they are best suited to working with your business. During these visits, you can learn first hand what the supplier is like to work with in term of relationships, teamwork, problem solving and their ability to deliver on time and within budget.
Many system implementation projects fail to deliver to expectation or need to pass through numerous stages of disruptive and costly correction before they are able to provide the operational capability required by the business. In the majority of cases, the issues can be traced to a superficial understanding of business requirements and the lack of attention to detail when selecting the new system and vendor.
Sooner or later the detailed business requirements will need to be understood; getting this right up front may seem like an unnecessary investment at the time, but it can significantly reduce the risk of making the wrong decision and dealing with the impact of this on your business.
To quote Thomas Edison, "Genius is 1% inspiration and 99% perspiration." Perhaps Edison was thinking of systems selection at the time?