Does your software provide the information that you need to run your business?

I read a study a few months ago that identified two key issues about managers in a business:

• 15% or more of a manager's time is spent looking for information.
• 42% make decisions based on bad information, once per week.

Since the role of a manager is to make decisions, and decisions are made based on the information that is available, this means that managers are extremely unproductive (wasting 40% of their time) and ineffective if they make decisions on bad information.

What's the reason for this?

Most of our information today comes from computer systems. They are capable of producing data at a much higher rate than any manager can absorb. What is the problem?

Most software that is installed in a business is installed to handle normal transaction workload, because this is the obvious area. The more transactions that can be handled by the fewest staff creates a more productive environment.

However, hidden in all of these transactions is the data about your business. Unless you can extract this data, it isn't being used to manage your business.

In many assignments that I have taken on, I look for data about the business. By analysing that data, I can find out a lot about the business. It may take a lot of analysis and structuring before I can understand the value. In most cases, what I come up with is not known by the business owners and managers. They have assumptions about what is happenning that conflicts with the data. They don't know, because they don't get this information normally.

Computer systems are a great source of data, but it is useless unless the data can be turned into something useful that can be used to make decisions.

The 5 Ws of Software Project Success

Computers are a necessary component of every business today, yet the success rate for software projects in business is not very high. Most companies get some value from implementing software, yet they get far less than they should, and far less than if they looked at software as an investment rather than as a cost of doing business.

If you look at it as a cost, you look at whether you can afford it. If you look at it as an investment, you look at whether you will get a 20, 50 or 100% return. Very few businesses ever achieve returns that measure 20% let alone more than that.

We have all heard the questions that every reporter must answer in any article. They are: Why, what, where, who and when. It turns out that these questions are the same ones that generate results for software projects. The reason that software projects fail to achieve big returns is that there is not a clear answer to these questions.

Let's look at each of these in turn.

Why buy or install the software?
While this seems like a simple question, there are many potential answers to the question. This is often described as the goal or objective of the “project”. The software can be used to satisfy many different goals, and often the people involved interpret different goals from the original.
Take Customer Relationship Management (CRM) software, for example. The assumed goal for some may be to increase sales, but CRM software can do many things:

• It has a contact manager.
• It has the capability to track every interaction with your customers.
• It has the ability to track the status of activity with a customer.

Saying that you want to implement CRM software encounters this type of conflict.

A recent client's objective was to understand the status of activity with customers. The reason was that he was having high turnover with salesmen, and when they left, he had no idea whether there was any sales in the works. By tracking the status, he could quickly assign someone to work on these customers to finish the sale. Most people that I talk to would not have assumed that this was his objective.

You must clearly define why you want to install the software to everybody involved.

What must happen to get the software to deliver the results needed?

Most software projects focus on software implementation, but this need has nothing to do with the software or training on the software. This has to do with how people do their jobs. If we use the example above, every salesperson needs to track all of their activity with clients if you are to be successful. This can be a lot of work.

What is the incentive for the salesperson? If there is no incentive, why would they do it? If they do it, how do you know whether the information that they capture is of value for your objective? Many projects attempt to capture all of the data, assuming that it will be of value later. This results in too much data that is of little value.

Define how you will track whether it is doing what you want it to do. Do it on a small scale to ensure that you can use the data that is being captured. Work with the data that provides the most value first.

Who, Where and When will the information be captured?
These are the questions that deliver the results. If people are in the office and working on their computers, it is easy to capture the information that you are looking for. Rather than write it down, people can type it. However, if they are in the field and don't have access to a computer, and don't have any other need to capture the information, it will be much more difficult. This is where most software projects go wrong. They try to capture too much information, but force people to do it on their own time and don't offer any benefit to the person doing it.

This is a case of less can be more. If you ask for too much, you will get garbage or not get it at all. If you ask for less, the most critical information, you are more likely to get it. If you also show the value that you get early, it is likely to be better information.

This completes the circle:

• Everybody knows why you are doing it.
• Everybody knows what must happen in order to meet the goal.
• The people who must do it, know where they have to do it and when.

Are You Suffering from Software Withdrawal Syndrome?

You know what that is. Your company has just installed new software to run the business. The discussion put you to sleep. When you wake up:

• You have to relearn how to do your job
• Everybody is talking a new language
• your job is harder to do
• Your job takes longer to do
• You get irritated more easily
• Your customers no longer have any patience

For some reason, people who work with computers are immune from this disease.

The impact of this disease on the business can be substantial.

• productivity goes down
• Costs go up
• Sometimes quality of service can be a problem
• You can lose sales.

During a time like this, who can afford it?

The reason for the disease and the assciated impact is that three things have been ignored during the project:

• People - how are they going to be impacted and how can this impact be prevented?
• Process - your business process will be change by the software. How can this impact be prevented?
• Business Results - how do you keep your finger on the goal, the reason why you bought the software during the ensuing chaos?

Can you afford to lose the benefit that you were looking for? What are you doing to ensure that your business is not negatively impacted?

This disease can be prevented. Even after you have it, there are steps that you can take to reduce the impact and recover faster.

Is your business suffering from CRUD

About ten years ago, Fram oil filters ran an ad saying "Pay me now or pay me later". The basis for this ad is that if you don't change your oil filter regularly, you will build up CRUD in your engine and need major engine repairs.

This saying has a lot of meaning in many areas. If you plan, you will avoid future problems, but this is something we often ignore. There are too many fires to fight to worry about planning.

During a growth period, this is especially true. It is hard to focus on preventing an unknown future problem, when you have today's fires to fight.

Things are different in a recession. During a recession, you can't afford to waste time, resources or money. Your business operations are a good source of free time and wasted money.

As your business changes, the activities that you need to perform also change. You add new ones to satisfy the needs, but you seldom review all of the old ones that you were doing. Over time many of these activities become useless because of something else that is being done, but they continue anyway. This is the CRUD in your business engine.

Now is the time to eliminate the CRUD. When business slakens, your people are often less busy. They have time to look at business operations. When business picks up, you will be ready to increase volumes and your costs will be lower.

In most cases, companies don't think of buying software during recessions. They think of it during peak times, because they can't handle the volume. If you have already eliminated the CRUD, your software installation will be more successful. If you automate with the CRUD, it may cause you productivity problems, it will increase cost and may fail to reach your goal.

Why CEOs and CFOs hate IT and ERP

The number of articles that talk about problems with IT seem to proliferate. Many surround the same issues: cost, complexity and customization.

In this article, the writer references a CFO research Services survey of 157 senior finance executives, which specifically looked at initial and ongoing ERP system ownership costs. While many companies may balk at the inital costs, they normally overlook implementation costs (which can be much more) and react again at ongoing maintenance. They particular react to customization.

Even if you don't fit the size and complexity of these companies and their needs ($100 million plus), the same issues apply to you. The numbers just have more zeroes.

Let's look at each of these in detail:

• Cost issues arise because most software sales are focused on the purchase price. The purchase price is only one small part of the cost (see my article on the subject), I think the real issue is expectations. If the purchase price is $10,000, you expect to pay $10,000. If the total cost is $50,000, you have a problem. Yet, if going in, you expected a return of $100,000 a year, then $50,000 may not be an issue. In most cases, nobody looks at the potential of a $100,000 return, because they are trying to justify $10,000. Surprise!
• Complexity creates problems with productivity and this costs you money. If you provide an easy to use aand easy to learn solution, people will become productive more quickly, saving you time and money. In most cases, there is no focus on people. All of the focus is on technology implementation. People are left to fend for themselves. Even the training leaves a lot to be desired. This creates frustration, productivity loss and increased cost and even reduced value. Computers can do complex things easily, whereas people make mistakes when performing complex activities. We should be using computers to simplify activities.
• Customization is a common occurrence in most medium sized companies. Software is purchased and then modified or extended so that the company can maintain existing operating methods. This is a cost that is of questionable value. Every business operates a little differently. Software products are developed around an assumed business process. The customization is required when you don't want to use the process that comes with the software. There are many reasons to use the process that comes with the software. First, you don't need to modify the software or create special routines (less cost). Second, in many cases, the process is best of breed (you will be better off using it). Third, when improvements are made to the software, you will be able to take advantage of them (You won't need to look at new software again). There is one reason why you may want to customize: Your process is more effective and costs less that the one that comes with the software. Don't lose this benefit. This may also be a reason to choose different software.

To see the referenced article.

Procrastination

What is procrastination and what impact does it have? My focus here is on business productivity and the impact of procrastination. In most cases today, it relates to buying software, since software is the primary tool that we use to improve business performance.

We procrastinate because we are uncomfortable. We are unsure about whether we will achieve the goal that we have.

If we are trying to improve sales, for example, we hear from others (especially salespeople) that CRM (Customer Relationship Management) is a good tool to help us increase sales. But we don't know how it will help us increase sales. So we mull it over. Should we do it? We ask others who have been successful. They say it did the job for them. They are typically sold on a particular software product as being the reason they were successful. So we look into the software product. The more we look into it, the more we get comfortable with it. The more we get comfortable with it, the readier we are to buy.

The problem is: We still don't know how it will help us increase sales! We are just more comfortable with it.

I pick on CRM because it has a high failure rate and is one of the more difficult processes to manage effectively.

It is good to feel uncomfortable before buying a new software product. Our problem is, we don't know how to effectively become more comfortable. If we focus on the software product, we have a reason to still be uncomfortable with it, but we become more comfortable, because it becomes familiar.

The area that we should focus on is the business process that is being automated. If CRM will help us increase sales, then HOW will it do it. If we start to create a vision of the new process, we can identify exactly how it will help, we will not only become more comfortable with what we need to do, we can even become excited. The detail allows this vision to become real. When we now go out and look at the software products, we can see exactly whether and how a software product can help us.

At this stage, we will no longer be suffering from procrastination, we will want to take action.

Being able to see what this will look like can be difficult if you have never done it before. You can get help from a coach or consultant, but it is important that you do it yourself. Nobody knowss your business like you do and nobody else can say whether the change is the right one for you.

To eliminate the procrastination, take action. Don't run out and buy, start creation a new vision for your business!

Success or failure in software applications

Our businesses run on application software. Yet the failure of new software applications continues to plague us.

A survey of 158 organizations by Aberdeen group in February and March of this year, has shown another set of issues. The writer describing this in a BLOG, outlines the symptoms, but his perspective also describes the problem. The results of the survey show:

• Nearly 65 percent of respondents reported declines in employee productivity, up from 58 percent in the 2008 survey.
• Just over 60 percent stated that problems with application performance have caused decreases in customer satisfaction, a jump up from 47 percent in 2008.
• nearly 40 percent said that application problems damaged the company's brand, compared with 32 percent in 2008.

Is this kind of performance acceptable?

Part of the problem starts with the writer's opening sentence "Sometimes I forget that selecting, implementing and paying for core enterprise applications are just the first steps in the long and arduous journey of managing the lifecycle of enterprise applications. "

Implementing new application software is not about software, it is about business outcomes. Talking about software projects in terms of selecting and evaluating software as the first steps is the problem. Too many projects get started with the software and end with the software being installed. The software is only a small part of the need.

After implementation, business units are left trying to make sense of the software, become productive with the software, respond to customer needs and continue to sell their products. Unless this is an integral part of "the project", why would you expect anything but dissatisfaction with the results.

Successful software projects need to follow the following cycle:

1. Identify the business goal in concrete measurable terms. This may mean dollars and cents (the most common measure), but also means other business outcomes. For example, improvement in quality of service, faster response time, improvements in productivity may be more easily measurable and will eventually lead to improved profitability.
2. Identify how the software will help you reach these goals. If you just assume that improved results will come, you will be disappointed. New jobs, new software, revised business processes will initially cause reduced productivity. Unless there is some early return on investment from these new tools, you will cause frustration, reduced performance, etc.
3. Evaluate software based on its ability to best deliver the improvements identified above. Then implement and measure the results based on the imporvements. Leave the financial measures until later.
4. Do not end the project when the software is installed, or even when the technical cleanup is completed. End the project when the business goals have been achieved.

The original blog entry describing the survey can be found here.