Approaching a digital transformation can seem daunting. There are many considerations and software providers, so how do you determine which solutions are best? After assembling a small, cross-functional team, outline a strategic approach for summarizing your intentions and highlighting priorities for the initiative.
In the following sections, we’ll discuss how to effectively approach the task and apply your decisions to the vendor selection process.
How to Articulate and Rank Your Priorities
A formal process will help you structure your thoughts; I recommend using the Kepner Tregoe analysis. Begin by compiling a list of needs for your digital transformation (including descriptions, differentiating factors, and the target customer audience). Matrix these against a set of filters you deem important (“Must Have” and “Want to Have”). You will inevitably develop a range of needs, but here is what one might look like:
Need: Control Tower
Description: IT application that provides internal and external end-to-end visibility throughout the supply chain, enabling remedial action as needed.
Differentiation: Many software purveyors claim to have a control tower, but few can truly deliver end-to-end capabilities and offer options for actionability from within. The solution must be able to identify unforeseen constraints as they occur and provide an early warning to effectively communicate and resolve problems.
Target customer audience: All customers with complex and wide-spanning supply chains.
Once you’ve fleshed out each need in these terms, create the two sets of criteria you’ll measure them against. Note that each company will have a unique list wherein many of the “must haves” reflect the corporate strategic and annual operating plans. Here were some of mine:
Must Have:
• Appears innovative to customers
• Demonstrates measurable impacts to business performance in the next fiscal year
• Attains a set financial target, like a certain return on invested capital
• Drives X% earnings improvement (When I worked for a public company, I wanted to express the impact to management. I was able to get their attention by dividing the hard-dollar savings by the number of common stock shares to show the additional earnings per share.)
Want to Have:
• Offers a sustainable competitive edge
• Broadly appeals to multiple customers and boosts retention
• Is consistent with the company’s core competencies and capabilities
• Has an acceptable financial risk
• Positions us as a thought leader
• Is easy to implement
Once the lists are complete, apply all the needs against the Must-Have list, rejecting any that fail to meet the criteria. Each team member will then rank the remaining needs against the “Want to Have” filters. Those that most align get a “1,” the second-most aligned get a “2,” and so on. Once the scores are tallied, digital transformation priorities are set from lowest to highest ranking numbers.
Applying Priorities to the Vendor Selection Process
The outlined priorities will inform how you spec vendors, as upgrades often have requirements. For instance, we defined the Control Tower listed above as providing internal and external visibility throughout the supply chain. If it made the cut, we would need a way to gather data from our existing legacy systems, suppliers, logistics companies, and so on. As such, any vendor we consider should be able to capture and extract system-to-system data.
We also listed the desire to see a measurable impact on the next fiscal year. Timing, then, is another major vendor requirement. Can the prospective purveyor get us up and running – from pilot set-up to go-live implementation – within our designated time frame?
Depending on your firm’s size, you may also have to accommodate corporate mandates. To protect company data, finance executives may require controls and auditability features for system changes and modifications. Those heavily invested in legacy ERP systems tend to stipulate a “system of record” to track valuations of components and finished goods, inventory levels, transactions, ledger journaling, and financial results. If pulling in data from outside systems, you’ll need to safeguard company data with a single version of the “truth.”
Considerations Beyond Your Immediate Priorities
Software-as-a-Service. It should go without saying today, but don’t settle for anything less than a cloud-based Software-as-a-Service (SaaS). In-house server maintenance offers no added value. It costs less to outsource the work to specialists and doing so allows you to focus on your core competencies. Cloud service providers offer built-in scalability and load balancing, as well as cybersecurity, intrusion detection, and disaster recovery options.
Single Instance Installation. When I was the CEO of a fast-growing fulfillment and supply chain services company, I preferred consistency over everything we did, whether in the US, EMEA, or APAC. We easily accommodated customers’ changing conditions as they expanded, contracted, and opened or closed locations. This benefit was especially evident when we later acquired a competitor whose IT platforms were on multiple instances in different geographies. They were unable to seamlessly operate even though their IT staff was significantly larger than ours.
“Glocalization.” Even if you don’t conduct business internationally, there’s a good chance you might in the future. Think globally but act locally. Certain products and services require translation and localization to serve foreign markets, so ensure systems can communicate effectively in English as well as double-byte languages, like Chinese and Japanese.
Eco-system Future Proofing. The supply chain is ever-evolving. Protect your future by investing in a configurable and adaptable system capable of incorporating new processes and technologies. Vendors should be able to present a roadmap for integrating everything from IoT and augmented reality devices, like sensors, to voice assistance technology and third-party feeds (i.e. weather conditions, labor actions and strikes, legislative and regulatory changes, and embargoes). They should also enable connectivity to complementary hubs.
Been there, done that. Consider whether software providers have already installed a system like the one you want within the same industry. If you’re the first, that’s okay too, just know the risks and ask for discounts or incentives, as you’ll be helping them trailblaze.
Now that you have a sense for your priorities and most fundamental requirements, the next step is to identify the pool of prospective providers and initiate contact.
