Categories
Enterprise Transformation

Successful Transformations

Enterprise transformation projects are notoriously prone to failure. Most fail one way or another, some fail spectacularly while some projects simply do not deliver on the promised business case.

Traditional transformation projects often introduce new Enterprise Resource Planning (ERP) systems such as SAP and Oracle to solve any and all business problems. These implementations almost always end up being more painful and expensive than originally planned. Does it really have to be that way?

SAP, the monolithic German ERP giant.
SAP, the monolithic German ERP giant.

Back in the day I wrote my master thesis about enterprise systems implementation success and have spent most of the time since implementing SAP and transforming business processes. I do not have all the answers to how to manage a successful transformation but I have some ideas. Let’s start out with a few basic questions: Why, What and How?

Why?

The first thing to consider when attempting an enterprise transformation project, be it big or small, is to ask yourself: Why? Introducing a new piece of software does in itself not justify the expenditure. The sponsor of the project must have a crystal clear picture why initiating this project will transform the business for the better.

Empire building just for the sake of expanding an executive’s area of responsibility or to show initiative is not a compelling reason to perform open heart surgery on your company.

ROI calculations and business cases are all fine and dandy but if you are not transforming the business for the right reasons you will not succeed. The Why must also be clear for all the affected parties or the change management process will end up more painful than it should be.

What?

You now know why you want to transform your business through a massive project? Fantastic! Next question: What?

What software do you want to use? ERP Giant, Small niche or custom built in-house? The answer, of course, depends on what kind of problem you want to solve and what your core strength as a business is.

Often times buying off the shelf software can solve your problem efficiently. But sometimes it is better to build your own. There is no right way but play to your strengths. It is often quicker and easier to buy then develop in-house. Especially if you lack a strong IT organization that is used to building large applications and workflows from scratch.

I’ve worked a lot with SAP FI/CO (Finance & Controlling modules) and SAP has outstanding support for global accounting requirements. It would not make any kind of sense for most global companies to develop accounting solutions in-house. This is an edge case but a clear example where buying is preferable to building from scratch.

How?

Even if you know what and why you want to transform, the how remains.

If it is an ERP system that the C-Suite want to implement, will you use a system integrator, such as Accenture or IBM, or build the competency in-house by recruiting new talent and contractors?

Building and setting up whatever system you choose is one thing but change management is almost more important than the solution you choose. Without motivated and engaged staff and end users it does not matter if you have the best software in the world. You will fail.

One approach to strongly consider in most cases is to conduct a pilot in a segment of the organization to ensure that the system works as expected and that the training scheme is sufficient. There is nothing revolutionary about pilots but allocate sufficient time to evaluate and improve prior to ramping up roll out speed. It tends to be time well spent.

It is almost impossible to predict and remedy all issues that will emerge in production. There is a reason venture capitalists want startups to ship a minimum viable product (MVP) as early as possible. Nothing beats real life experience and feedback from end users. This is true for transformations as well. Aim for a MVP, where possible.

Management Support above all

Once you know what you want to achieve and how. One important thing remains: Management Support. For big projects, support from management is critical. Top management needs to be involved and engaged. Without their support it is close to impossible to successfully complete a large transformation project.

Top management have the explicit and implicit power to enforce a change. Small changes are hard enough but fundamental transformations of processes are very hard and without the power that comes from top management involvement it is close to impossible. The CEO, CFO or COO doesn’t need to be involved daily but must back the project when required and ensure that management on all levels of the organization understand why the transformation is happening and that it is the firm belief of the CXO that this project is fundamental to the success of the company going forward.

The change curve, some will never be in the Denial, Frustration or Depression side of the curve.

Top management and the transformation project must have the same idea of the general direction that the company aims towards and clearly communicate this direction to all affected parties.

Some key stakeholders will almost certainly not be convinced that the transformation is the correct way forward and will be stuck on the low performance scale of the change curve. It is up to the management to stop these individuals or teams from directly or indirectly sabotage potential ROI of the project. Clear the path so the project can deliver.

Patrik


Learn more about Chrono.se. If you want to get in touch, feel free to reach out on Twitter or email me at Patrik[at]chrono.se. I appreciate any and all feedback!

Categories
Retail

The Post Covid19 World: Customer Expectations in Retail

The coronavirus has taken many lives and wrecked many a business. Let’s look at the impact on retail, specifically how the virus and the lockdowns has affected customer expectations.

I think it is safe to say that the customer expectations on retailers have shifted massively in the past few months. The customers have realized the benefits of actual omni-channel sales in a socially distanced world and the retailers that have only made a token effort will soon find that the customers are no longer going to accept a subpar experience.

Lockdown and social distancing’s impact on retail

So, when in lockdown, you cannot go to your local fashion retailer and buy a t-shirt or a pair of socks, do what do you do? Order online.

Even if you aren’t in lockdown anymore you may want to socially distance and browsing for a pair of socks in a crowded store doesn’t seem all that appealing so you order online, and at most, pick up your new socks curbside by the store.

Even when the world has emerged fully from lockdowns, the customers will be used to ordering online, and expecting a seamless ordering experience across sales channels. This is especially true for customers who have previously avoided ordering online, such as older (at risk) customers.

Changing customer expectations

Great retailers have weathered the storm of Covid19 and have adapted to the new age of real omni-channel sales. I personally thought customers would not be expecting a proper omni experience for at least a few years but this spring has shown me that we are in the omni-world already. No excuses, customers will not accept it for much longer

Seamless omni

So what do I mean by real/seamless omni(-channel), really?

Integrate online and offline inventory, make it available to purchase in either channel. Use stores to fulfill online orders, and either ship from the store or let customers click and collect.

Curbside pickup will be more popular where applicable and reasonable. City center shops have less scope for curbside pickup than big box retail locations with ample parking. I see curbside pickup being a big thing for electronics, furniture and to some extent groceries.

Seamless omni means that any type of order, be it online-to-home, online-to-click & collect or shop-to-home-via-online, is a first class experience. This is a challenge for most retailers, especially those with older IT infrastructure and a long brick-and-mortar retail history.

A real omni experience requires breaking up long established silos within organizations and aligning incentives so it is of mutual benefit for staff and managers within both channels to sell items thorough and cross either channel. This change of mindset requires strong leadership within the management team.

If you are lagging behind, do not wait.

There are many retailers lagging behind in their digital transformations combined with facing real cash flow challenges in the short term. I only have one advice; adapt as quickly as possible. Do not wait. The customers will surely not adapt their expectations to your timetable.

It will be expensive and complicated for many of the older brands to change and a lot will go out of business due to the shift in shopping patterns and expectations. This is not all bad as new competitors will rise and have a chance to meet customer expectations in a world where rents in attractive locations could be significantly cheaper.

As a side note, be sure to negotiate turnover rent, and consider how online returns in store, Click & Collect and other initiatives affect the rent calculation.

Mediocre stores in mediocre locations = big risks

There are a lot of mediocre stores in mediocre locations. Take the opportunity to reevaluate the store portfolio. Lots of malls and high streets across the world will not recover from Covid19 and most larger brands will have a significant number of stores that are no longer be profitable.

Act early to, at least, reduce rents in these locations and cut costs but the best course of action is likely to unprofitable close stores. It sucks, for the communities and for the staff, but for many retailers it will be the difference between survival and going out of business.

Don’t waste the crisis

Above all, don’t waste this crisis. Take the opportunity to adapt to the customer expectations, align internally around a true omni-channel strategy. Close unprofitable stores and streamline operations to meet the customer’s expectations.

The virus has caused untold damage but it has and will continue to focus minds on the future and the future is already here, years earlier than expected.

Patrik


Learn more about Chrono.se. If you want to get in touch, feel free to reach out on Twitter or email me at Patrik[at]chrono.se

Categories
Retail

85% of Zalando vists are on Mobile

Zalando, the European e-commerce juggernaut, published their 2020 Q1 (1st Jan – 31st Mar) report awhile back and one key figure stood out to me.

Fil:Zalando logo.svg

Almost 85% of site visits in Q1 2020 on Zalando.com are from mobile users. Up from 82% a year ago. That is a bonkers figure, considering the history of online shopping. Zalando has always been online first (it is an e-commerce site after all) but it is clearly Mobile first these days.

84.6% of Zalando visits were from mobile.

These figures goes to show, as we all know, that the smartphone has completely taken over for most consumers. Really, most people do not need a desktop or laptop in their private lives, a smartphone and/or tablet is enough these days.

Mobile first

The consumers are now fully on board with shopping on smartphones and feel safe doing so. I would argue that they, in fact, are safer than before. Smartphones have way less problems with malware and similar nasty things than desktops. iOS is slightly more secure than Android in most scenarios but both are better than your normal user’s desktop computer.

The smartphone payment landscape has also matured with technologies like Stripe, Square, Klarna and others. The seamless and quick shopping experience is a vast improvement over the old, often clunky, checkout experiences.

It is quick, easy and secure to purchase online these days. Let’s not forget it is also very easy to get credit via Klarna or other alternatives. Most of the times it is enough with our email address and wham, that T-shirt is sent the same day and you pay several weeks later.

I would be very interested to see what figures other retailers have for mobile visits. I would presume that majority of of sales in most, if not all, markets are mobile first.

Mobile – Shop anywhere, any time.

This is a fundamental shift for many retailers but probably a net positive for the shoppers and down the line better for retailers. After all, an online shopper could previously only shop at home or work. These days 85% of Zalando’s customers can shop practically 24/7. Not a bad thing in the long term. Temporary stay at home orders non-withstanding.

Zalando’s Q1 is just at the start of Covid lockdowns across Europe so it will be very interesting to follow for Q2, where most of Europe has been in lockdown and how the share of mobile visits trends in Q3 when most countries will have opened up and resumed some kind of normal life.

Patrik


Learn more about Chrono.se. If you want to get in touch, feel free to reach out on Twitter or email me at Patrik[at]chrono.se

Categories
The Future

The Post Covid19 World: The Office

The Post Covid19 World

In this series of blog posts I attempt to collecting my thinking and reasoning about how the post Covid19 world will look. I do not know more about the future than anybody else so much of what I write will be wrong but by cataloging my thoughts I at least get a chance to review my predictions

It is my belief that a lot of commentators underestimate the ability of humans to return to normal. Obviously some segment of the population will not return to their previous habits and this will affect demand in the medium to long term. The Economist calls this the 90% economy.

The office

That said, I believe the world’s offices are due for a change. The rise of open plan offices and hot desking are not necessarily a thing of the past but they will change and become significantly less attractive as more white collar workers work from home and the concerns about spreading the coronavirus, and other viruses such as the flu for that matter.

The open plan office was always a cost reduction measure first and foremost. Everything else was secondary, despite what company management may say. There are benefits but it is a significant vector in spreading the corona virus.

Workers, especially high paid ones in attractive industries will likely demand the ability to work from home more often than before and they will not accept cliches about collaboration and innovation as reason to redo offices into open plan. Risking ones health for the privilege of using someone else’s keyboard is hardly a great deal.

Offices will remain but, at least initially, will not be filled to the brim with workers. Expect CFOs to cut office space, renegotiate rent, and where possible move to more flexible setups such as WeWork.

WeWork is screwed anyway due to the mismanagement and the likely fall in office rents but a more prudent alternative like Regus may be a better bet. One day we may even see the return of the private offices. One can hope anyway.

The office will remain, it will be changed but most of us do actually want to get away from the house sometimes. Despite the commute and constant distractions.

Patrik