Aligning software with the business
Alignment is more than “getting your ducks in a row”
Common wisdom says that new ERP software needs to be aligned with the business. But what is alignment, why does it matter, and how do you do it?
What is software alignment?
From one perspective any business can be considered as an organized collection of business processes and process outputs. Aligned software simply means that the new software must enable the company to execute those business processes and deliver those process outputs more efficiently.
Why does software alignment matter?
Any for-profit company is in the business of creating value for their customers, and their profit is a share of the value created. For example, think of the value Steve Jobs created with the original iPhone. That value was so great it made Apple one of the most valuable companies in the market. Apple’s customers chose the iPhone because it delivered great value to them. The more value created by a company, the happier their customers, the more workers can be paid, and the greater the profits. Everybody wins.
How do you align ERP software with a business?
When starting an ERP replacement project for a new client we interview senior leadership and use the Values – Vision – Goals – Strategy model to align the new software with the company. Don’t worry about the labels, because everybody uses different words for them, but rather look at the ideas behind the labels.
Core values – the core values of the company, e.g., honesty, integrity, respect.
Vision – used to translate core values into business goals. When business goals are achieved, the vision is used to create new goals, which is why you should not be able to achieve a vision. (A vision is a direction rather than a destination.) The vision is also used to align business goals, so they support each other.
Business goals – achieving business goals is the only consistent way a company can create value.
Strategy – the plan you put in place to achieve business goals.
After explaining this model, we ask the senior leaders to describe their business goals, and what the new ERP software must deliver to help them achieve those goals. What is interesting is that many CEOs and CFOs struggle with defining their business goals, and this framework helps them think through the issues.
While conceptually this is a simple framework, thinking through everything to figure out the goals is much more difficult and takes much longer than people assume. However, once the short, medium and long term business goals are documented, the ERP software can be selected that best helps a company achieve those goals.