A conversation this week with the Director of Operations in a fast-growing company reminded me that we don't think ahead about our data. We need to put more thought into how we will use data generated by our various business applications, not just how our teams will use the applications. There is a great deal of focus on how the organization will use software to run the business day-to-day. There is little discussion about how the organization will use the data in these systems. There's no vision for how the data from your software applications can deliver incredible value over time.
How are you making use of the data within the applications you use to run your business?
Where is the one place you can go inside of your company to get data about your customers, your products, your revenues, your costs, your employee activities and time, even your capital equipment? If you’re like most people, each of the sub-categories above require that you go to a different system to get the data-driven answers to your questions. And if you want to perform an analysis across two or three of those data sets together to answer a question or inform your business strategy, good luck. That requires a masters degree in Excel, or better yet, an analyst who will do it for you. Most of us don’t have our own personal data analyst, do we? It’s time to tackle this issue in a new and more effective way. It’s time to think strategically about your software applications and your data.
Does one software package solve all your needs?
Businesses spend a lot of time evaluating off-the-shelf software to run their business. Often this begins with selection of an ERP solution like Microsoft Dynamics or Netsuite for finances. And then it expands to include modules for human resources, or manufacturing, or supply chain. These are great systems and can deliver many benefits for mid-to-large sized organizations. They are also getting better at delivering value for smaller companies. But recognize the implicit trade-off that is made as you evaluate the addition of another ERP module versus optimizing what you have, selecting another software package designed specifically for the task, or creating a system that addresses a need in your business precisely and handles it without compromise. Is the ROI higher to your organization if you adapt your process to fit the off-the-shelf software? Or would it be higher if you built a custom software application to deliver exactly what you need? Or what if you selected a 3rd party application that is not part of the ERP but delivers exactly the functionality that you need. For more on custom vs off the shelf, check out this blog post.
Have you clearly defined the problem you are trying to solve?
ERP systems have their place, so don’t hear me saying they are not good. But I am saying that you need to understand what it is you are trying to accomplish with software. Before you start talking to ERP vendors, spend some time to establish your goals. Define the scope. Consider who will be using the software. This approach will help you select the best available solution for the business process you’re looking to improve. Software that is designed to work well for the finance organization may not adapt well to the manufacturing team and they way that they work. Let me illustrate. If you needed a screwdriver for one task, and a knife for another, would you go buy a Swiss Army knife so you had one tool for both jobs? You wouldn’t do that, would you? No, you’d buy a screwdriver designed to do the job you need done. And you’d buy a knife designed to cut what you need to cut. One ERP vendor says that “dealing with disparate systems” is one of three signs that you need an ERP. Is that a compelling reason to change software? No. Having said that, I think they have two other reasons that are quite good. These are, “the basics aren’t letting you grow” and “you can’t meet customer expectations”. If either of those two things are happening, then you absolutely should be looking into upgrading your business software.
Don’t I need one application, or ERP platform, to run everything so that I can have access my data in one place?
You do not need to buy all the ERP modules just to get all your data in one place. The software that runs your business isn’t designed to make it easy for you to analyze. It’s best to move that data into a system that’s built for analysis. Moving data from software applications into a data warehouse, data lake, or operational data store gets easier every day. Common approaches for this include using an API (Application Programming Interface) or an ETL (Extract Transform Load) processes. The goal is to implement a solution that will extract and integrate data from your existing business systems. Then, the data warehouse makes data easily accessible for analysis and reporting by your internal business users. Using a visual analytics tool such as Tableau along with a data warehouse will make it easy to generate insights. This also gets the data into the hands of the experts who can generate insights, such as the finance team, operations management, account management, and others.
Bringing it all together!
As you evaluate how the organization will use software to run the business day-to-day, make sure you consider how the organization will use the data in these systems. As your business grows and you see the need to upgrade your operational and financial software systems, don’t forget to include a plan to unlock the incredible value available to you in your own data.
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