Learn from the past
Cloud technology is here to stay, but cloud initiatives can come and go.
“Just because it’s cloud software as a service doesn’t necessarily make it fast, cheap and easy,” said Grant Thornton Business Applications Principal Devon Snyder. “Anybody who’s implemented an ERP once or twice in their career can tell you that most executives will say they never fully realized the benefits that they set out to achieve.”
“Just because it’s cloud software as a service doesn’t necessarily make it fast, cheap and easy.”
– Grant Thornton Business
Applications Principal Devon Snyder
“Most enterprises assume cloud migration equals lifting their on-premise infrastructure and shifting it to an AWS or Azure server. Nothing could be further from the truth. For a true digital transformation – and what is the move to cloud for, if not that – an enterprise must first transform its processes to render them suitable for the cloud.”
The project perspective
– CIO magazine
Many organizations today begin their cloud initiatives from a limited project perspective, without understanding the need for broader transformation.
“If you look at the nineties through the two-thousand-tens, a lot of companies put in technology for the sake of putting in technology – not for transforming their business,” said Grant Thornton Business Applications Practice Leader Chris Lilley.
“So, what makes business transformation more important now? In reality, these projects used to be at least half or more an IT project. Now, with software as a service (SaaS), more behind-the-scenes work is done by a software vendor. The IT footprint is about 20 percent of what it used to be on a project like this.” The initiative’s differentiating benefits need to come from the business.
The cloud platform has advantages – but now, those advantages are table stakes for SaaS solutions. To achieve the differentiating efficiency, automation, advanced analytics and other more competitive benefits organizations seek today, there must be a broader transformation.
The sustained value perspective
Broad transformation starts with alignment. For an organization to transform, it needs everyone to be aligned to the same vision and plan.
That commitment comes from the top. “If you’re dealing with human capital, you need to have the CHRO sitting at the table driving this. If you’re dealing more with finance or supply chain, you need to have the COO, CFO or division operating level executives there, and they have to commit and engage,” Lilley said. “I think the biggest thing that gets overlooked is the organizational realignment. If you’re not committed to do this right, don’t do it.”
Leaders must commit and engage with a transformational plan like this five-step approach:
Step 1: Blueprint phase to determine the level of modernization needed
Step 2: Pre-implementation workstreams
Step 3: Phase Zero / Implementation Readiness to start the "long pole" workstreams
Step 4: Transformational system implementation
Step 5: Stabilize and optimize
Step 1: Blueprint
Step 2: Workstreams
The first step is to create a blueprint of the work you need to do in four quadrants:
- People: organizational and stakeholder readiness
- Process: key areas that need improvement or reengineering
- Organization: target operating model
- Technology: software evaluation and selection
“If you’re building a house, you would never get a backhoe and start digging a hole without understanding the footprint and other aspects of the house you’re about to build. In this phase, you need to clearly articulate what you’re trying to achieve, and then link how the software and non-software components will achieve those objectives,” Snyder said. Lilley said that organizations need to be honest in assessing whether they are ready to commit to the program. Are you willing to commit the necessary resources and ensure they have the capacity to support the program? Are you ready to deal with the significant challenges that most organizations have, related to data readiness and progress alignment? Do you understand and agree to address the policy, procedure and organizational changes that are required to successfully implement a cloud solution? “If you’re not ready to do that,” Lilley said, “you are not ready to move to the cloud.” The cloud needs to be viewed as a long-term commitment. In return for that commitment, you can take advantage of the continuous investment the software vendor is going to make in the cloud solution. With the right support structure, your organization will benefit from regular enhancements and advancement provided by the software vendor that, in the past, would require an upgrade project to realize.
Next, organizations should create the pre-implementation workstreams needed for the four quadrants of people, process, organization and technology.
Step 3: Phase Zero
“Once we lay the foundation, then we can start to lay in all of the automation that is going to take you to that next level,” Lilley said. Snyder added, “If you push the transformational envelope, your workplace should look completely different. I’m not suggesting you let people go, but I am suggesting that you have the will to reprioritize work in order to take advantage of the efficiencies gained through digital transformation. We are in the white collar revolution of automation. SaaS provides the opportunity to significantly advance your organization in terms of automation. If you don’t do it, trust that your competition is – it’s a business imperative for survivability, now more than ever.”
Snyder recalled one company that created hands-free automation in its accounts payable invoice processing, “but they did not do anything to get other value from the accounts payable department personnel.” Lilley said, “You have to look at what the organization needs, and make sure that you realign roles and responsibilities to that new structure. It takes full transparency to tell people ‘We’re changing this. Here’s how you’re going to be valued going forward.’”
Phase Zero sets the foundation for the entire implementation by confirming the strategy, scope, timeline and resources (roles and responsibilities), as well as defining guidelines and standards for project documentation, communications and issues/risk tracking. Phase Zero also establishes the project organization structure and meeting/review cadence.
Step 4: Implementation
In the SaaS world, Phase Zero requires strong business support to complete. Business is heavily engaged with design, testing, training, user adoption and policy. “As you get deeper into the project, that’s where IT has a larger role. As we bring in new functionality, they have to make sure that it hangs together within the ecosystem,” Lilley said. “It’s just a different role than IT has traditionally had on ERP projects. There is no longer a heavy build requirement, so IT tends to be focused on integration, data conversion/cleanup and understanding how the cloud solution co-exists with your other software solutions.”
The next step is to complete the larger system implementation. To succeed, the solution must be more than implemented – it must be adopted.
Step 5: Optimization
“There’s an evolution in how your customers want to engage and, if you’re not embracing that, you’re going to lose those customers. That’s just the bottom line.”
“The number one success factor we use is the adoption of the software,” Snyder said. Most implementation teams ensure that the software works, the methodologies are sound and the team can convert the data – but they might not effectively drive adoption. “If you don’t do that, bad behaviors will immediately creep back into your organization, and you will lose the benefits of automation. For example, you will see Excel come back into your environment if you don’t get people to embrace the change, understand the technology and understand the new power of the technology. Really, the demands of your employees – and your customers – are a key element in driving cloud adoption,” Snyder said.
– Grant Thornton Business
Applications Practice Leader, Chris Lilley
The journey is not over at go-live – your organization must stabilize and optimize. “Best -in-class companies don’t stop their journey at go-live,” Snyder said. “If you do, you will fall short of expectations. You should fund your optimization phase right out of the gate, and appreciate you’re going to have one.”
Choosing your cloud partners
Organizations must also plan to evolve. “There’s an evolution in how your customers want to engage and, if you’re not embracing that, you’re going to lose those customers. That’s just the bottom line,” Lilley said. “You have to be as efficient as possible at processing the core transactions across your business, so that your business can invest in those differentiated value-add services and products that the customer’s seeking.”
As you focus on developing differentiated products and services, you need to ensure that your cloud partners are moving in the same direction.
“In the cloud world, you’re in a larger ecosystem,” Lilley said. “You have to make sure that your vendor is aligned with where you want to be as an organization. It’s important to understand what they’re going to build and release, what partners they’re going to have and how you’re going to access that ecosystem. Make sure you understand the vendor’s roadmap and meet with them regularly to figure out how you’re going to integrate that roadmap into your business going forward,” Lilley said. “You have to embrace a three, five, seven-year outlook with the vendor and make sure that you’re aligned to where they’re taking the product.”
Your partner should also help you plan for the future. “If you have a partner that is not asking you long-term strategic questions, I would wonder why,” Snyder said.
“Cloud is moving quickly. There’s no way that your team – who is charged with doing what you do to differentiate yourself in the market, and supporting your applications as they exist today – is going to have the right insight and knowledge to take you to where you need to be in this ever-changing technology world,” Lilley said. By connecting with the right partners, you can benefit from the lessons that others have learned in change management, business processes and system engineering.
“Learn from your peers. Learn from those who have underachieved, and those who have overachieved,” Lilley said. “Don’t go it alone.”
Practice Leader, Business Applications
+1 215 656 8350