Enterprises are increasingly operating in a dynamically changing and fluid environment. They are constantly changing gears just to keep pace. CXOs are constantly looking for ways to overcome or create disruptions in a world becoming increasingly complex. Infosys Consulting Blog gathers a community of subject matter experts who are driving pragmatic conversations around that which is changing and that which needs to be rethought, redefined and redesigned for enterprises to achieve market-leading performance roadmaps.

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May 21, 2012

What is management consulting?

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I recently spent three weeks barn storming throughout India, teaching VRM(TM) awareness classes to our newest recruits. (VRM(TM), stands for Value Realization Method, and it is a proprietary set of tools and techniques, based on Free Cash Flow, that we use in conjunction with our Impact(TM) Framework to realize massive business value in large scale transformation programs.)  The number one question that I received during this training project, other than how VRM(TM) differs from other technical frameworks we use, was; "What is management consulting?" 

At first, I gave short answers re-framing the word as if I were a walking dictionary; (i.e.,"giving advice to the leaders of the client"), but I quickly changed my tactic and asked; "Why do you ask?; What is it that you do not understand?"  After all, unlike other companies in our space, a large amount of our revenue comes from consulting, as we operate well up the value chain and invest in our clients' success.  What I heard back was eye opening.

It appears that the key reason that our young college graduates want to get into consulting is that they think they will be involved in the highest level of corporate strategy.  In effect, they want to "start at the top".

To me, as a management consultant professional, strategy is just one of the areas where consultants can make impact, and a very highly specialized one at that.  Even when I was a VP of Strategy, I would often hire consultants for all types of projects where my staff did not have a current or advanced skill set.  I always thought it was better to contract the best specialty consultant than hire a full time staff person for a part time need.

I'd like to hear where you come down on this.  What would you tell students hoping to get into the field?  What is the value of process consulting?  User experience design? What is the value of knowing what other companies are doing?  What is the value of a proprietary set of proven methods for managing change?  What does it mean to be a management consultant in 2012?"

Please weigh in!  I promise I will pass your ideas along!

May 18, 2012

Getting Started with an HCM Implementation: Defining Stakeholder Goals and Vision

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At the start of every project, we schedule time with the executives to understand their pain points, opportunity areas, and goals for the HCM organization.  After talking with the leadership, we then have discussions with the teams representing the in-scope process areas.  
 
The sessions are typically one-on-one so that folks can feel comfortable expressing their opinions.  Through this exercise, we're able to analyze the goals and vision across the company to ensure alignment before the implementation begins.  This is a key first step that we feel should be taken before communicating the implementation strategy and goals to the greater organization.

During recent meetings at a Fortune 50 retail company, the executive leadership expressed to us their concern that the middle management would not be aligned with their goals and strategic vision for the project.  Initially, they were hesitant to let us speak with managers and directors from the HR organization as they were not sure what feedback would be shared.  Imagine their surprise to discover that, in fact, there was significant alignment in terms of what they wished to gain from the engagement: improved process automation, process delegation via broader self service offerings, decreasing non value-added customizations, improving enhancement request cycle times, and reducing operating expenses associated with over-customization.  This was a very important first step that allowed executive leadership to rally the organization around this common set of goals and to build enthusiasm for the implementation.      

At another client about to undergo a global SAP implementation, our interviews included a more diverse set of business and IT stakeholders representing multiple geographic locations.  We found the results of these interviews to be more varied based on the individual's role, process area, and location. Goals for the ERP implementation included global process standardization, reducing the total cost of ownership of the ERP system, increasing leadership and employee retention, defining a scalable architecture, introducing customization governance, and increasing accuracy of data.  

Taken together, these themes represent key steps in achieving the goals of a successful  HCM Transformation:

1. Global HR system consolidation and standardization, coupled with process standardization is needed to establish consistency across the HR organization and reduce process duplication.  This will enable the HR organization to achieve greater process efficiency and decrease manual work, reducing total cost of ownership of the system.  This elemental step will lay the foundation for a greater strategic shift of the HR organization.  Essentially, strong process harmonization across global locations is needed to provide the foundation for greater organizational change.

2. Accurate HR data is required to support not only the HR organization but also enable the success of processes, programs, and initiatives across the company.  Through rigorous system consolidation and process automation, HR data accuracy can be achieved.  

3. HR-specific Key Performance Indicators (KPI's) need to be identified, tracked, and reported to establish benchmarks and ensure continuous improvement.  HR KPI's should include both strategic/transformational metrics as well process-specific steady state metrics. Metrics should be made easily available to key HR decision makers.  In order for KPI's to be meaningful, accurate master data must first be established.  

4. Once strong foundational processes have been developed or outsourced, strategic processes, including Recruiting, Talent Management, and Succession Planning should receive the focus of HR leadership.  

5. As HR Transformations often involve significant change impacting a globally diverse set of stakeholders, a robust Change Management program is needed throughout the course of the implementation to ensure user understanding and adoption.  

6. Finally, the organization will be able to shift from a transactional focus to that of a flexible, strategic HR organization to change more easily and support global growth.
           
Based on these findings, the HCM organization was able to define the overarching goals of the transformation, gain funding for the next phase of the engagement, and spark enthusiasm across a global set of stakeholders prior to beginning design.

Although it sounds simple, we feel it is critical to spend ample time with key stakeholders before you begin the implementation, provide an objective forum for them to share their perspective and then take a look at all of the goals, values, and objectives that the organization shares.  You might just get a better, clearer picture of what the organization needs to focus on during the implementation, and in doing this exercise, your employees will feel more involved in the planning phase and potentially more supportive of the big changes ahead.

May 16, 2012

Re-visiting core competency to stay relevant in business

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I recently read an interview with John Sculley, who was successfully enticed from PepsiCo to join Apple almost three decades ago by Steve Jobs - "Do you want to sell sugar water for the rest of your life or do you want to come with me and change the world?".  Ultimately, they parted ways and rest is history. An interesting statement made by John Sculley in this interview is "... App Store and the Apple Store are as much a part of the "experience marketing" as the products themselves".

We all know Apple is known for its superior joined-up customer experience, but the quote did trigger a chain of thought - when did Apple re-define its core-competency from just marketing and selling products to marketing and selling "experience" with an accompanying product / service? Was this a conscious transition or just happened over a period of time? What drove the transition - their customers or competitors or their visionary leader? Are there any parallels to be drawn here and applied to other companies?

Thinking beyond the Apple example, some of the other recent cases I have come across wherein companies are re-drawing their business boundaries and core-competences include:

  • Online giants Amazon and Google exploring opening up brick-and-mortar stores in US and Europe
  • Google re-transforming itself from being a leading search engine to wanting to become dominant player in mobile and ecommerce space
  • TV manufacturers such as Samsung transforming themselves from making an "idiot" box to "smart" boxes

Given the technological revolution markets and consumers are undergoing, I am increasingly convinced that companies need to re-assess their core competencies regularly to stay relevant. Potential drivers for this re-assessment could either be internal (e.g., a break-through invention or an innovative idea a company had stumbled upon) and/or external (e.g., convergence of technology, communication and entertainment leading to digital revolution). So, key questions every company leadership team need to ask themselves during their strategic break-outs include:

  1. What business are we in? Are there any significant changes to our market/ competitors/ consumers? If so, what is driving the changes?
  2. Is our core-competency still relevant to our business and the eco-system? If yes, how is it relevant? If not, why it is not?
  3. What are internal and external factors enabling and impacting this relevance? 
  4. Are there any new developments that could possibly impact this relevance in near future?

These questions could throw open plethora of unexplored opportunities (and of course challenges) and with right guidance, approach and mind-set, they can re-invent themselves to stay relevant to their market and consumers.

I'd like to hear your views. What do you think about this need to revisit core competencies. Do you agree or disagree? Let me know your thoughts.

May 15, 2012

What does vanilla taste like?

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From order management and invoicing through to recruitment, enterprise resource planning (ERP) systems should open opportunities to create positive customer experiences.  But when businesses install "plain vanilla" versions of these business-critical systems, they risk negative customer experiences and dissatisfaction, leading to manual workarounds. A successful ERP implementation is one that follows a user-centred design process.   

A plain vanilla out-of-the-box system implementation has certain obvious attractions, starting with the fact that it requires no customization or additional installation. Surely it is cost effective to install a system that is tried, tested, and meets 95% of the business requirements?  With less time spent on requirements gathering, design, specification and user testing, the plain vanilla option ought to be successful for the project and the business.   

Not only does plain vanilla promise business stakeholders an improved system with tried and tested processes, it offers on-time and on-budget delivery; a compelling argument for executives looking to announce the successful transformation of their business. It all sounds too good to be true, and it is. 

Here's a real story of how it can all go wrong.  A successful global company (let's call them Firm X) was implementing an Oracle ERP system to replace its old and disparate platforms to improve efficiency and simplify processes for both its employees and customers. Add the fact that the program represented Firm X's largest IT spend in more than three years. 

The global head of Human Resources, along with his senior business and IT executives, decided to go with a plain vanilla installation. There were convincing arguments for this decision. A renowned management consultancy mapped out the business processes, assigned monetary value to each process, and concluded that the best value would come from a plain vanilla installation. An equally renowned system integrator felt confident that without customisation the programme stood an improved chance of delivering on time and on budget.

So, plain vanilla it was.  And, as promised, the system was indeed delivered on time and on budget.

But then the problems started. Customer complaints flooded in. Job hunters couldn't complete the online application form. Employees couldn't find customer data that was previously available.  Users abandoned the system and resorted to other channels, or back to old systems and workarounds.

The project sponsor called for emergency usability testing* to uncover what was going so wrong.  The testing found that the design of the interface was so unintuitive, complex and ugly that for some tasks users abandoned 100% of the time.

The testing results were far reaching.  The relationship between Firm X and the system integrator broke down over arguments about whether a problem was "defect or a change request".  Lawsuits were threatened. The global head of HR was eventually fired, and  the program was abandoned.

What the survivors of the Firm X catastrophe learned was that in addition to offering "on-time and on-budget, vanilla systems are also characterized by: 

  • Lack of utility. All functionality is delivered.  Even functions with low end-user and business value.  This has the effect of creating clutter on the screen, confusion between functions and errors through unnecessary complexity.
  • Poor user interface design.  Plain vanilla is ugly and difficult to use. Unintuitive field behaviour, validation messages and screen flow can break the customer experience and expose inconsistencies between positive experiences in other areas of a website.
  • Reliance on training.  At a certain point in the development process someone invariably notices how difficult the system is to use, but usually it's too late to change without massive impact on time and budget. The solution is typically to offer training, online demos, a help section or instructional copy.  But training as a remedial strategy to bad design never works. You simply can't "train out" bad design.

Together, these factors hurt the bottom line.  Indeed, recent research shows that says poorly designed software is costing U.S. business $60 billion annually

 

How do you avoid pitfalls of plain vanilla? Improve it.

ERP vendors may argue that companies' needs are so varied that a "one size fits all" approach can't work.  But there are broad areas of commonality that all companies share, such as online recruitment or catalogue design.  Breaking usability best practice is nothing to do with tailoring to meet the needs of clients. Rather, it's a cynical business model that relies on poor design to encourage consultancy revenue.  

Until ERP systems start getting the basics of design right, customers and end users must be included in the development process from the start in order to guide customisation and expose design issues early. 

Take a user-centred approach
In the case of Firm X, at no point (before it was too late) did anyone listen to or observe users using the old or proposed systems.  By rejecting all customisation, the programme lost the chance to simplify the plain-vanilla version based on what's important to users.

Too often, stakeholders and consultancies neglect to involve users from the outset when deciding the scope of what to customise.  Even if the programme is set on a plain vanilla path it is critical to observe and interview users interacting with the current systems and to find out early how they react to the plain vanilla version.

By applying this method a business will get real insights into what's important, uncover critical problems up front, and help guide strategic and tactical decisions about scope. Customisation does not necessarily jeopardise schedules and budget goals if you customise with end-users.  

A vanilla system, by definition, means end user needs are not considered early on.  Test the vanilla system with end-user first, and use the insight to drive customisation priorities.  

The bottom line: Focussing on what's important to customers always simplifies the solution and always lowers project costs.

(* The author conducted the usability labs)

No Data? No Problem

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Got a business case staring you in the face? Intimidated by demands for "hard benefits only"? Can't find reliable data for quantifying those benefits? Here's a counterintuitive tip - turn opinions into data.

Don't panic. I'm not suggesting turning lead to gold via some magical, Midas touch.  I'm advising an approach I saw used to great effect at a global ERP implementation of an industry leading manufacturer (let's call them ABC Corp.).

Their need: update a business case for reducing global inventory, in order to get buy-in from 20 sceptical country managers. 
Their challenge: current global inventory costs were unknown as the firm operates in country-based "silos".
The solution: find the one person who knew more about inventory realities than anyone in the firm and get that person to make educated guesses about global management benefits. 
That person was Jose Clemente (disguised name), previously European inventory manager and newly promoted global inventory director. Operating from a European perspective, Jose had been working with inventory at ABC for over 15 years. He had travelled to every country site to gather learnings to apply to European needs. In the process he established strong relationships with ABC's globally dispersed inventory managers.

The reality was that Jose's judgment about current inventory costs and improvement opportunities were more trusted by ABC's management than the financial statement inventory numbers pumped out monthly. Why? Because Jose knew the flaws in financial data gathering and analysis, due to having lived it himself.  He was aware that such numbers were based on differing definitions of what "inventory" consisted of across the world.  He knew about inventory counting shortfalls, ghost stockpiles and numbers of multiple inventories that were averaged, in spite of being collected at differing points in time.

Thus, when Jose presented his thoughtful "opinion" of the monetary improvement in inventory levels possible with the new ERP system -- and backed it up with rationale that make sense to key ABC stakeholders -- his view trumped missing or untrustworthy data . With Jose's input, the business case was deemed reliable. Global managers bought in to the program, and it became successful.

Here's a three step guide to using opinion instead of missing or doubtful data:

  • Step-1:  Rid your unconscious (and those around you) of the mistaken assumption that "data is good, guesses are bad".  It depends upon the reliability and knowledge of the source.
  • Step-2: Seek out the opinion(s) of people who know the processes and the firm, and who are respected by key stakeholders.  (If you find more than two SMEs, consider using the Delphi Method, a technique which can be surprisingly accurate by extracting the wisdom of collective intelligence from a group of individuals.
  • Step-3: Document SME opinions with extreme clarity of scope, definitions and rationale. (One of the most important insights I got from a senior manager early in my career was - get these right, and the answer is sure to be trustworthy.)

There is no reason why "we have no data" need deflate a promising discussion about the value of a solution investment. Simply turn respected SME opinions into "as good as gold" business case benefits.

(Note: Have some good "when opinion trumps data" stories from your experience. Let me know.)

May 7, 2012

Why do smart firms make sub-optimal investment decisions?

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I was recently talking to a client whose firm had grown both inorganically (acquisitions) and organically at a rapid pace in the last 3 decades. They grew from being a regional player in US North East to a super-regional player across North-East, Mid-West and Mid-Atlantic. However their future growth aspirations have been limited by a lack of investment in operational capabilities. The client's current state challenge and future state aspiration has led them to consider a set of strategic options to improve their operations capability. The client asked Infosys to help with a strategic options analysis and business case development to secure internal budgetary/investment approval for the optimal choice. They are embarking on their FY13 budgetary process and need to assess the options and earmark a capital budget.

Having helped clients with similar situations before, I have seen that there is a strong tendency for making such decisions based on the wrong set of criteria or insufficient set of factors. The loudest stakeholders get their favorite options by focusing only on the criteria that are favorable for that option. Not having an objective set of criteria and not following a structured decision framework that weighs the different options objectively against the most important factors to meet its business objectives, leaves firms making sub-optimal decisions. Not explicitly agreeing on a decision framework and a process has been a major reason for lack of buy-in and dis-agreement on the decision, leading to revisiting of the decision.

When I have helped and facilitated clients make decisions such as this, I have seen that agreeing on a structured process to make the decision (using a decision framework) with the stakeholders leads to stronger buy-in with the decision outcome itself. The key for such a Decision Framework is that the strategic options analysis should be multidimensional, have a step-wise approach, balance different criteria, help focus on the most important factors and ultimately compare the alternatives on the Business Value it would create for the firm. By Business Value I mean both the tangible and intangible value that the shareholders, colleagues and community stand to gain "net" from the option balancing it against factors such as cost, risk etc. I look forward to your comments and inputs on this topic.