Published by: Forbes
In this guest-authored article for Forbes, RecVue CEO Nishant Nair, a member of the Forbes Technology Council, discusses the all-too-common problem – and results – of businesses being forced to adapt to their internal applications, and how to prevent this from happening.
In 2014, American brewing conglomerate MillerCoors was running seven different instances of a financial application following years of industry consolidation, as noted by CIO. The plan was to unify the software to serve the entire company. Three years later, with a $100 million lawsuit, multiple critical defects and thousands of additional reported problems during a lengthy, dysfunctional go-live, it was abundantly clear that the project was an abject failure.
This didn’t have to happen, but it does more often than you might think.
Too often, financial software is deployed that isn’t designed with the flexibility or scalability for the needs and requirements of order-to-cash processing. This is especially true in today’s digital transformation world with ever-changing revenue models. Businesses are told to make changes to their business model or adapt processes to how a piece of software works when, in reality, software should be agile enough to work according to business processes. Business process creators are the experts in their industry’s needs, not the software developers. Without software flexible enough to adapt to those expertly crafted processes, it’s no surprise such implementation projects fail.
What does this failure look like? Corporations led down this road end up with more manual processing, lack of reporting and visibility and customized internal systems. This means more activities outside the system rather than within.
There has never been more urgency to address this problem than today. Every company is attempting its own digital transformation to sustain growth and longevity. The digital economy is upon us.
Today’s typical customer doesn’t want the hassle of owning things and is more content to consume — cars, software, etc. — in place of the old product-based revenue models of yesteryear.
Legacy systems were never built for these needs. Those outdated solutions — often homegrown or ERP solutions with custom add-ons — were designed for that product economy, not one featuring subscription, usage-based revenue models and more. Such systems are inflexible, with long implementation cycles, customizations and manual processes.
It’s not surprising that retailers spend 58% of their IT budget on the maintenance of these legacy systems, according to research by the security platform Cybera. Challenges include an imbalance between advanced computing needs and old software and cybersecurity concerns.
Some other reasons legacy systems go against the mission-critical needs of your business include:
- Dead costs.
- Lack of institutional knowledge.
- Lack of scalability.
- Integration challenges.
- Incompatibility issues.
Every company today must embrace transformation. It’s not a choice. Either you change or you won’t survive. If a company hopes to accelerate, it must shift to the digital economy. This is, in fact, the first step of my recommended four-step process to embrace today’s transformation.
Step 1: Recognize change is coming and that it’s not an option if you wish to remain a viable business.
Step 2: Convert your product-based business model to a service-based business model, including pricing plans and all organizational needs supporting this structure.
Such a shift certainly isn’t straightforward. Often, this includes a reconsideration of product design and, possibly, a reenvisioning of your entire organization. A few things to keep in mind to support this transition:
- Figure out your ROI. Factor in upfront and maintenance costs that may influence the total cost of ownership such as taxation and liability.
- Consider the security aspect of this transformation. When customers pay for a service and go through a cloud, the company providing those activities must consider — and work to minimize — its liability and risk. This includes thoughtfully deployed implementations, properly considered traffic analytics, device traffic flow and metadata and insight into data accessibility.
- Keep a close eye on regulation and compliance. Your changed customer contracts will be guided by legal ramifications and government regulations on your particular industry.
Step 3: Align your organization so every department is digital economy-empowered because this shift means going all-in.
A successful all-in transformation considers the following:
- Having the right in-house expertise and digitally savvy leadership to navigate. The right executive focus is imperative to make sure all pieces — including legal issues, business matters, privacy concerns and technical complications — fit together properly.
- A wide lens view. To be successful, an organization must weigh how this transition will affect everything from accounting to IT architecture, internal processes, sales and marketing. Expand your view beyond individual products or services.
- Empowering your staff to work in new ways by reinforcing new behaviors such as continuous learning or open work environments, encouraging risk-taking and challenging old ways of accomplishing tasks.
- Upgrade your organization’s day-to-day in-house tools. Order-to-cash processing demands dynamic functionality.
- Open lines of internal communication, both via traditional and digital methods, to keep the dialogue flowing.
Step 4: Operationalize the change. In this shift to the digital economy, your order-to-cash process is your central nervous system. It touches everything. Since every aspect of your organization is expected to change, your order-to-cash process must be flexible and is unlikely to resemble systems of a product-based economy.
Companies need to think with a fresh perspective. A critical component for consideration is a system built for the digital economy that can be tailored to your business rather than the other way around.
Whether you like it or not, the digital economy is here to stay. The good news is the right solutions are also out there for your business needs. You just may not have found them yet.