Step 4: Distinguishing between Objectives and Processes and Recognizing the Importance of Your Customers
In earlier articles of our series on How to Choose a Business Management System, we discussed internal preparation, success measurement, and asking the right questions. Today, we will be taking a closer look at objectives, processes and the importance of your customer as they relate to a new software package.
Throughout a selection and implementation process, the line between business objectives and processes can blur. You must keep the distinction clear or your new system will begin to resemble your old one. This clarity is essential to making decisions that build a foundation for the success of your new business management system.
Objectives are the expected outcomes that you want from a business management system. These outcomes are reflective of business goals, not project goals. Business goals are the most important anchor in your search because your business management system is a tool, not an end. Your new business management system should enable you to better leverage your people’s time, energy and talent to further the pursuit of your business objectives.
Processes are the methods you have developed to use your business tools to accomplish your business objectives. This is a critical distinction. Confusing processes and objectives will frustrate your search and will likely result in a poor selection decision. Focusing on processes at this stage will result in complicated business methods when you begin implementation. Don’t make procedural decisions based on your current knowledge level. Your new software will have several different ways to get most jobs done and have its own set of limitations. If you have chosen to hire a Value Added Reseller (or VAR) to help you with the implementation, they will be able to utilize their business experience to help you determine the best approach.
How do you ensure that you and your team are making decisions based on objectives rather than processes? Concentrate on delivering value to your customers. Your business value flows from your customers. If your objectives match those of your chosen market, people will value and purchase your product. Recognizing the needs of your customers will help you identify your business objectives and what drives your business value.
We all know that Customers purchase our products. After the Customer exchanges their money for our product, is that the end of the transaction? Of course not. Your customer buys from you because you provide a value that someone else does not. But value-add is a topic for another blog, so, let’s continue. You must broaden your definition of customer; change it to include not only those who buy from you, but also those who consume any work or product in your organization. This includes any person, department, work center, etc. which uses some product or information produced by someone in your organization. Perhaps a better term to help understand customer is consumer. Your objective is to provide everything your consumer values and nothing else. If you are my target consumer and you don’t value what I produce, I have just wasted effort and resources.
Think of a customer as a vendor, an employee, a department, or a customer who will use the output from a person or department in your company. In a manufacturing environment for example, the customer for a raw material handler is the department, work center or employee who needs the raw material for their daily work. Consider the cash receipts department; an area we might think has no customers. Who are the customers? Well, there are many – some internal and some external. Your buying customers want to make sure that their payments are applied to the right invoices in a timely manner. Your bank requires an accurate accounting of the amount and age of your receivables. Your Controller needs to know what the cash position is at any given time. The credit and collections department needs accurate information to call the customers who are overdue. The sales team needs to know that their customers are current when calling for the sale of a new product. Get the idea? A customer is anyone who uses the information or product an employee provides.
So, how do we determine a customer’s value of our offer? Think about your house. What determines its value? The traditional definition of value is the price a willing buyer will pay a willing seller, neither one being under compulsion. Is that value? Do you value your house more than just the economic value it has? Most likely. You probably attach sentimental value to the house. You hope someday to have it paid off and enjoy the payment free life. Perhaps you enjoy the view that inspires you or calms you whenever you take the time to enjoy it. Perhaps it is the smooth feel of the woodwork as you grasp the handrail, the symmetry of some architectural feature or the quality of the tile floor that gives you that sense of wonder or contentment. I recently refinished a handrail. Every time I use it when going up or down stairs I get a sense of satisfaction.
The railroads give us an example of mistaking process for value. The railroads certainly had everything in their favor. They received preferential treatment and governmental benefits. They became the market leader. The railroads had little competition, and they achieved great success. However, in the midst of their success, buses, trucks and airplanes came in and took away their competitive advantage. How did this happen? One answer to that question is the railroad executives focused on the process of railroads rather than the value of transportation.
Customers did not need trains. Customers needed transportation of goods or persons. Customers were looking for a cost-effective, efficient method to go from one location to another, or to move product or materials from place to place. Customers wanted this method to be convenient, effective, reliable and economical. Interestingly, railroads have recently begun advertising how effectively they can move 490 tons of freight with one gallon of fuel – and they have expressed it in a way that emphasizes how fuel efficient or “green” they are.
Whether we use air, truck or train, we are looking for results within a time frame; at a price that allows us to maintain profitability or the service level critical to our business. Train, truck or plane is the method or process; freight or people delivered, is the value or objective.
There are plenty of examples of misplaced objectives and value in the software industry. Many of you will not remember the name WordStar; some of you will remember WordPerfect, and I’m sure all of you know Word. The first two were industry leaders at one time but lost their edge, and a new product took over their lead. We could go on with Corvus, Arcnet, Novell, Lotus 123, MultiPlan, Victor, Commodore, KayPro and many others. Value is not what you say it is, but what others say it is. You cannot define your own value; you can only define the value of another.
Your new business management system will have its own set of benefits and challenges. Do not confuse methods and processes with objectives, goals and requirements. Determine what you want to accomplish and then measure everything against that.
Concentrate on, document, and clearly communicate your objectives in an open environment. Keep your team focused on enhancing value by reducing waste.
Make sure you understand who your customers are at each stage in your business process. You pay your people to add value to your product. Providing value to each of your internal and external customers makes sure that your new business system gains all the value it can.
Continue to Step 5 – Identifying the Reality of Your True Business Process