The first part of this series looked at What is the Proper Relationship for the CIO, CEO, and CFO? The CIO role is already challenging and gaining in difficulty in today’s business environment. And by all measures it looks as though things will continue to become more difficult and complex as time goes on. Today’s CIO must not only keep up with technology, and business process improvement with automation, but must also become a “mini-MBA” in applying technology solutions to forward looking business strategies including customer acquisition, customer retention, revenue growth and profitability. Although it is a monumental task it is possible.
Where technology can achieve solid ROI and breakthrough results in the enterprise are in the two key value areas that have not been well addressed: customer focus (beyond CRM) together with product or service innovation.
Want ROI? The Next Wave in ERP Will Occur by Changing the Focus from Process to Customer
The heart of the business is the customer, without them there is no business. Today’s technology initiatives, whether they are with ERP products like SAP, various CRM offerings, or a whole host of other technologies and packages focus more on processes and on technology than they do on the heart of the business. I’m a fan of visual models. They help me to think through, adjust, and understand complex ideas in a simplified and high level manner. For example, the simple model below represents today’s package application technology landscape in terms of the 3 key areas of business.
- The large red bubble is the technology process focus on the value proposition of “operational excellence,”
- the orange block are the technology tools and systems that are typically applied,
- the smaller green bubble is the value area of “customer focus,”
- and the tiny center of intersection between business processes and customers in the blue block is the value area of “customer focused innovation”.
That is the sad state of today’s typical technology environment.
Customer Focused Innovation at the Process and Customer Intersection is the Ultimate Objective of a Change in Technology Focus
Successful package applications and technology application over the next couple of decades will dramatically alter this dynamic. They will focus more aggressively on the customer and the innovation intersection between the customer and business processes. Business processes will necessarily get closer to the customer and technology will be focused on the integration of the customer into business processes. By doing so customers will have a greater influence over the types, quality, and availability of products and services. The following model shows what I believe the next twenty years will develop as the winning technology landscape of the future:
- Although covered with technology, business processes become a secondary focus to the customer for technology.
- To enable this the technology landscape shifts to encompass more of the customer interaction with the business, potentially leading to ideas such as “mass customization.”
- The area of customer-centered innovation becomes much larger as businesses learn to integrate their customers deeper into their business processes.
- The customer naturally becomes much more important to the application of technology like never before.
The current state of the economy and global economic pressures have created a disruption in the classic technology model of process improvement and process automation. Together with global competition and a potentially permanent change in customer purchasing characteristics winners and losers will emerge in the new technology arena. As customers take center stage and innovation becomes more important just for business survival collaboration will become more and more important as well. The transformation of business and technology will require new collaborative technology tools to build bridges between business, customers, and the product or service development areas.
Because of the pace of change, focusing on “best practices” and internal process improvement, or even extending processes is no longer enough. Business can rarely (if ever today) integrate, automate, and streamline to achieve marketplace success –, to one degree or another nearly every competitor is doing this or is quickly headed in that direction.
Business complexity and the breakneck pace of change turns yesterday’s breakthrough technology into today’s commodity; vendors are modestly integrated into the extended supply chain, all the way from raw materials to end customer delivery; customers are more sophisticated and have more options than ever through the Internet; competitors have worked to incorporate similar technology throughout their entire process chains by integrating, automating, and accelerating their processes. As a result, business demand on technology simultaneously creates new opportunities and new struggles.
Want BIG ROI for Your Technology Investment?
In the first part of this series we looked at the changing business landscape and what it means to the CIO, IT Director, IT Manager, or other key technology decision makers. From a high level the current global business competition, as well as economic issues are directly affecting the C-level executive requirements and the CIO – CFO – CEO dynamic. This article reviewed how and where the CIO role is coming under tremendous pressure and how to change the current dynamic by more appropriately partnering with the CFO and the CEO. This partnership is a critical business bridge between lagging business indicators of business financial and process health on the CFO – COO side of the business house and the leading indicators of sales and product or service pipelines on the CEO side of the business house.
The second part was an overview of the current system landscape and its focus on business processes and the emerging trend of trying to focus on the customer. This piece also looked at the future business landscape and how the technology focus and direction will be permanently changed no matter what happens with the economy and global competition. Because the technology marketplace (business consumer) is becoming more sophisticated and more attuned to business / technology alignment, the IT dynamic is going through a structural change. The whole technology sector is slowly moving away from the “operational excellence” value proposition to the “customer focus” and “innovation” areas of the business. Very few of the consulting companies and few of the application vendors see this sea change and are doing little to address it. This is the area of technology market winners and losers of the next 20 years.
Part 3: Changing the Direction of SAP, ERP, and IT Applications to Focus on the Customer and Innovation
The third part in the series looked at current technology landscapes and how they are aligned and then looked at future technology landscapes. A brief review of the supply side and the demand side of business shows that unless you have lots of customers (demand) to fill a bigger and bigger pipeline (supply) then your business model collapses. While it is hidden during good economic climates, any disruption in those economic conditions which fails to fill the capacity pipeline points out the glaring insufficiency of the “operational focus” to technology. During any economic disruption, or any reduction in demand from customers for your products or services the current technology model falls apart.
The final part of the series looks at the emerging technology landscape and what the future holds. It lays out an emerging technology landscape model which has some re-alignment and some components already in use by some of the world’s most successful companies. A new alignment of technology with the customer facing processes, and the use of social or collaboration tools across the enterprise with a clear business objective is explored. The driver for the future change will be because the business does not see the revenue generation prospects of technology–, they fail to see the possibilities of promoting customer retention, customer acquisition, innovation, and marketplace analytics. The new technology model looks to change that dynamic.
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- The importanc of CFO and IT Alignment