Step 5: Identify the Reality of your True Business Process
In part five of our series on How to Choose a Business Management System, we’d like to spend some time covering the identification of your true business processes.
A new software implementation is the perfect time to find out how people really do things in your company. We can almost guarantee that you will be surprised. The way you think something is being done will almost certainly be different from the way it is actually performed. Many times this is due to a lack of training, but frequently it happens because of a lack of understanding of the reason for or value of the process. Sometimes the difference is due to the real-world difference between what is physically possible and what the instructions say. Lean proponents use the words Genchi-genbutsu – Go and See for yourself. Do not delegate this task.
Many times, we find that management has one perception, but reality is markedly different. Verbal tradition rules in many companies. We find that two realities prevail, the one that management conceived or believes, and the way people really do things. This applies to procedures, sales processes, warehouse picking, manufacturing bills of material and routings – to every area in the company. For example, a number of years ago, while interviewing the management team of a durable office products retailer with a direct sales force, we began discussing commissions. The President of the company was a salesman. He began to describe the commission plan in great detail. He had developed his plan to motivate his sales people to sell at the highest margin possible because they earned a percentage of the gross margin. Gross margin was the cost of the product plus the freight to bring the product in the door. When he finished his description, knowing the constraints of their existing system, I turned to the office manager and asked if they really applied freight to the cost of each item. The sheepish answer, as you have already guessed, was “No.” In reality, they had no way to apply the freight cost to each item with their existing business management software.
The next step, after picking the President up off the floor (perhaps it was the ceiling), was to facilitate a discussion of how to resolve the difference between reality and perception. Was there another method to calculate cost? Was there a real value that offset the cost of capturing and applying freight cost? Should they change the commission calculation? Obviously, there is no “one size fits all” answer to these questions; however, the real key here is that without communication, the large difference between perception and reality cost the company a good deal of money in excess commissions.
Just as your business may not work the way you think it does, much of what your staff views as a requirement is actually not. Your current business management system has placed constraints on you and your staff. Much of what you do today is because of your previous software selection. As you work through the process, allow yourself the freedom to evaluate the difference between your perception and your reality.
Many years ago, we had a client who was converting from an IBM mainframe to a PC based accounting system. This was the time when every company had a wide dot matrix printer that printed column after column of tiny characters across green bar paper. They had one report that was very complex and filled many of those big sheets of paper. The accounting manager was certain that they had to have that report to run their business. After analysis, we determined that we could provide the needed information in a more succinct fashion because we found that they used only a few of the many columns (Objective). Carrying this report forward would have been expensive and required keeping the old, noisy line printer and the reams of wide green-bar paper. We promised them that if they still needed that report after 90 days, we would write the old report. They never did ask us for that report. Questioning the value of the report saved the client many development dollars and on-going operating expenses.
The challenge is that if you haven’t evaluated your business system requirements, you will focus on what you are used to doing and how you are used to doing it. This is the time to get perspective from an outside company that specializes in this process in order to ensure you get the most from selecting a new business management system. These companies can have many different names, the most common being Value Added Reseller or VAR for short. Selecting the right implementation partner to work with you is critical. You will be relying on this company and their personnel to help you make all the implementation decisions to meet your objectives and goals. Their input is more than software knowledge. If they cannot relate to your business and do not have the understanding of your business sector, find someone who does. The outside perspective can, and should, bring new life and insight into old ways of doing things.
Remember, back in the beginning, you set your objectives and goals. This is the time to review them and keep them fresh in your memory. Continue to separate process from objective. A business process is seldom synonymous with business objective. You may have some people who resist any change. Sometimes this is because they do not understand the objective; they only understand the job they have been doing. Since they don’t understand the objective, they have no measure to know what the outcome should be. Defining objectives can help these workers realize the areas that need change. The person doing the work may have the best method to reduce waste; however, without understanding the objective, the work becomes the objective.
These examples illustrate that not only can our process differ from the expected, but that we can want things that really aren’t effective. Both are wasteful and add no value to our systems. So, as the hippie generation said, “Question Authority.” Make sure that the “Authority” is based on objectives, not perceptions.
Next step… The Selection Process
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