HOW TO EVOLVE TO TWO-SPEED IT
It used to be that IT had one set of customers, and they were internal, and one system to maintain: The ERP.
Fast forward 10 years and people are using mobile applications in every aspect of their daily lives, using social media to communicate more with pictures than words, and expecting the same kinds of experiences at work. IT is increasingly being asked to help enable new business models to serve these changing needs – often via the cloud. In the face of that challenge, we’ve come to realize that the ERP is in many cases not up to the task of supporting the speed, mobility, user experience and self-service capability external customers now expect.
So, we’re moving to what Gartner calls it two-speed IT. As we go through this evolution, IT professionals need to keep an open mind. We need to stop reflexively looking to the ERP for everything, and stop identifying ourselves as “an SAP shop,” or an “Oracle shop,” and refocus on finding the right balance between traditional systems of record and these new systems of differentiation and engagement.
Becoming a convert I’ll be the first to admit that when I was CIO at The Global Fund a few years back and we needed an ordering system, I immediately thought, why not do it through our Oracle system?
The volume and structure of information that we needed clearly belonged in an ERP system. But as far as the ordering function went, we needed to do something that offered the user a more consumer-like experience. And, it couldn’t be something that we had to train people for. With high turnover a fact of life for our external stakeholders, we needed to deploy applications that were intuitive.
I kept an open mind, and we did a rigorous analysis of three different scenarios before choosing Coupa. I realized we could build the best ordering system in the world, but if nobody can use it, or wants to use it, the business process wouldn’t work. We still integrated it with the ERP, to manage all of the financial flows and to control the spend. This CIO was converted.
This is a perfect example of two speed IT. Speed one is for systems of record, where you’re running your core business processes--accounting, product planning, etc. Speed two is for systems that run processes where you’re looking to reach out to customers and interact with them. ERP is the engine, but you put something more modern that supports self-service and mobility on top of it to build today’s business models.
New business models For example, if you were running a service center 10 or 15 years ago, it would probably have been a remote call center. A customer in California would call and talk to someone in Kansas who would arrange for a service technician to come out and fix their washing machine. That’s now a very outdated model.
What the customer does now is open an app, take a photo of the barcode on the back of the machine, type in the problem and send it off. From there a ticket is created and sent to a service center, and a service technician is dispatched electronically, directly to the location.
Another example: At the moment, I’m working with a lot of banks that would never have considered having an e-banking solution. Now they’re coming to us and saying, “Our customers are demanding e-banking.”
If we had to build things like these 10 years ago we would have said, “We need a six-month project to change the ERP to do this,” and what we built still would have been unsatisfactory. The ERP is not a system that thousands of people want to interact with.
The two speeds
When ERP went in, there was no notion of someone taking a photo on a mobile phone and uploading it, or of a process that didn’t require human interaction. This is the pressure that our internal customers are under. They’re looking for solutions to address the changing needs of their customers. They’re having to change the way that they do business, so we do as well. You can see why we need a second speed.
As a CIO, you’ve got to continue to maintain your ERP, which requires about an 18-month cycle time to change. That’s okay. If you’re running payroll or your financial closing or your planning, you don’t want to be changing that all the time.
You also want to be able to adapt quickly to new business conditions and extend the ecosystem without touching the core. For systems of engagement, you want is speed and simplicity. People don’t need access to all the financial accounting structures. You need to give them a way of providing you the data you need to drive your financial accounting structures, while allowing them to do their job quite quickly and simply.
Keeping an open mind The big idea is to have the right tool for the right job. There’s still life in the old ERP yet, but you have to realize that the demands of the external market require more agility. IT leaders have to figure out the best way of structuring the organization to solve problems in the short-term, but also for the long-term. That will probably end up being a mixture of ERP and systems of interaction or differentiation.
Above all, it is imperative to keep an open mind. Most CIOs have had some degree of this type of change forced on them over the past decade. If you say no too often, if your knee jerk response is always to look to the ERP, people will go straight to the market and buy their own solutions. What you’re doing then is diluting your organization in terms of information, security, and governance.
It’s much better to be leading the charge. So, as you consider these requests to support your new, external customers, ask yourself: Can you do it better internally? And, can doing it better internally give you a critical business advantage? If not, outsource it, integrate it, and focus your efforts on adding value to the core.