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Single Breed System vs State of Art Multi Breed Systems

Single Breed System vs State of Art Multi Breed Systems
What is ‘Transformation’, and, how is it different from ‘Change’? This was a basic question that I grappled with when I started my journey with ‘Transganization’. It’s almost seven years since the first edition of my book came out, and, for nearly four years now, we have been operating in the market as a leader in organizational transformation, working especially with promoter-driven companies who have seen an initial success but are struggling in the next phase.

Therefore, as the years went by, I enhanced my skills and changed multiple lenses to look at the world with a better insight. When I wrote the first book, I had an intuitive understanding and the experience of working with three companies. And now, when I am writing the book all over again as a reinvented and reimagined ‘Transganization’, I have the experience of working with, as of today, 195 organizations and 250 entrepreneurs. As I present my thoughts again, the reason why I chose to rewrite the book will become clear. You can also say, I have greyed a lot more since my first book.

Let us address the first and foremost question, ‘what is transformation?’

Actually, the answer lies in the word itself.

Transformation is the process of ‘transcending’ the ‘form’, or, it is the process in which the form of the object changes, and in no way can it revert to its original state. Transformation is when nothing of the old remains. Change, on the other hand, is the process of going from one form to another with a possibility of reverting to the original state.

The second important aspect is that Transformation happens when something totally new flowers within you. While Change modifies behaviour, Transformation modifies values and desires. It occurs when one’s life energies are properly balanced inside the body and produce a complicated synergy of mind, body and self. This is the best possible condition for Transformation to take place. For example, take a piece of paper and fold it in different ways. Its shape will go on changing, but the essential quality will never change. No matter what the shape or size is, it will still be a piece of paper. However, when an egg transforms from inside, it gives rise to a ‘life’ in an absolutely different form. A caterpillar transforms into a butterfly.

Apart from creating new energy, another important characteristic of transformation is that it gives birth to absolutely new capabilities. These capabilities help the transformed body to function as an independent organism with an altogether new mind and new body but the same spirit.

So what is the context? Why am I talking about it here? No matter what you do or what your work is, the environment that you are operating in is changing at a fast pace and there is a whole lot of newness in the world that exists. Now, you have to decide whether you’ll live your ‘today’ by yesterday’s obsolete or soon-to-be-obsolete principles or you’ll choose to transform.

The fact is that the world is going through a tremendous transformation. There is so much information floating around that the mind gets confused. If any professional, or, for that matter, any human has to survive in today’s world, the only way to do is by metamorphosis and by ensuring relevance in the new paradigm.

We can apply the same for organizations. After all, these are entities living in the same environment as you and I. Organizations, like us, should also keep growing all the time and, without any doubt, I believe that the only way an organization can grow is if it follows the following statement:

Organizations can grow only and only if organizations transform.
Therefore, while ‘Growth’ was the keyword in the 20TH-CENTURY Industrial Age organizations, in the 21ST century , it has to be ‘Transformation’.

So, how do organizations transform?
Transformation, as explained above, is an intense internal process of modification in the genetics so that new capabilities take birth. These capabilities can help organizations grow in the new business environment.

Therefore, if we need to take the route of business transformation, we must first understand/decide the destination that we want to reach?
So let us understand how the business environment has changed over the last few years and what new capabilities need to evolve.

The world around us is transforming at a very fast pace, and there has been a major shift in the way consumers think. Actually the 20TH-CENTURY beliefs about the market do not exist anymore. And, if we are still operating with those beliefs, then we will soon become redundant.

LET US LOOK AT SOME OF THE COMMON BELIEFS:

  • Focus on your product, price, place and promotion.
  • Focus on segmentation, targeting and positioning.
  • Focus on building a brand.

If you look at the above beliefs, the commonly known 4P model and STP model have been and continue to be taught in management schools as the most apt to build a sustainable organization.

Let us understand the fact that none of this has any relevance in the world we are entering. Being sustainable is a very far-fetched thing, and the above model will not even help one survive.

Today, we are not dealing with targeted customers. We are dealing with ‘tribes’ who think alike and have their own set of rules. So, the organization needs to know what tribe it is dealing with and what are the rules of this tribe.

Therefore, from a traditional 4P model where consumers were targeted, the new world is about ‘creating’ tribes and ‘collaborating’ with them to create future products and services.
In this new world, we are dealing with someone who is not a customer, but a human first. He is concerned about larger human values rather than short-term profits, gains or advantages.

Therefore, in today’s world, where each one of us is part of a large global family, it is not about building a personality, it is about ‘building a character’. The stronger, clearer and more transparent the character, the stronger the brand.

So, from a ‘customer first’ model, the organizations need to evolve to a ‘human first’ model. It’s the ability and willingness to understand, appreciate, anticipate, address, serve and support the lives of others that will enrich the organization.

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This is the transformation journey that an organization has to take in order to grow in today’s world.

In fact, if we dig into the spiritual philosophies of ancient Indian culture, we will know that we have always considered the ‘world as one family’ (Vasudhaiva Kutumbakam) and as the Dalai Lama says, “Spiritual practice . . . involves, on the one hand, acting out of concern for others’ well-being. On the other, it entails transforming ourselves so that we become more readily disposed to do so.”

Organizations need to see themselves as an organism, and evolve from being a functional-need fulfilment to emotional- as well as spiritual-need fulfilment organizations.
The biggest contribution that Transganization has made to these 195 organizations is that it has ‘transformed’ these organizations by making them work towards creating an impact in the world and, in the process, also grow and make profits.

Protect YOUR Business from Yourself

What if everything they told you about business sustainability is wrong, partially right, or not appropriate in your context?
I have been struggling with this question for the last one decade. I have seen many entrepreneurs seeking advice either from consultants, books or coaches, but when it comes to implementation of the same, the success rate is less than 5 per cent. This stirs up a doubt if we really know what we should to create a self-sustaining business? In my struggle to find the answer, I have been part of more than fifty business transformation journeys and have realized that anything that one receives from the outside world will work only and only if one’s inner world is rock solid.

In all the transformation journeys that I have been part of, one element that was most crucial was the entrepreneur himself. Sometimes it is a genuine blind spot that is not recognized by the promoter and he spends time, energy and resources in changing the outside world to protect his business. Many a time it is the promoter’s denial to comprehend that he possesses traits that are harmful to his business. In both cases the world is deprived of great institutions that can make a huge difference to the world.

This series of articles is a result of my observations from real-life business transformation journeys. I have tried to enumerate traits, behaviours and philosophies of promoters that have adversely impacted organizations. ‘Protect your business from yourself’ is a process of discovering and cleansing your inner world. It will help entrepreneurs create an immune system that will protect the organizations from its own promoters.

CHRONIC PROBLEMS CAUSING ACUTE PAINS
In the SME world, when I interact with promoters and senior managers, I hear many voices of pain and agony. Following are some of the common conversations you might relate to:

“I still remember those days when half of our day was spent in interviewing people and it was a daily affair. It was not because we were scaling up our operations, but because we could not hold the workforce even for a minimum period, where they could realize the benefits of working with us. The entire focus was on getting people for interviews.
Many referral schemes were floated. At a time, we were working with many recruitment agencies. We had newspaper advertisements inviting job applications. Many of our core team members were convinced that good workforce doesn’t exist anymore, or people really don’t want to work. On other hand, we had many activities going on to retain the existing workforce. Deep down we knew that no matter whatever we do, the problem will only worsen each new day.”

“I do understand the importance of proactive approach in acquiring new customers, but my current setup is such that even serving the current inflow of work is a struggle. If I invest in increasing infrastructure, there is no guarantee that I will get enough work to justify the investment. If I don’t get new customers, my dependency on existing customer is increasing day by day, which, in turn, is leading commoditization of my products. Sometimes I feel I have no control on my business. We are just floating in murky water like a broken feeble leaf and our direction is decided by the current of water.”

“I feel everyone is making money except me. When I look at vendor payments I am making every month, I feel I am running business so that these people can make profits. When I calculate interest on my outstanding with customers (of course which I can’t claim), I feel these guys are running business on my money. Every year I calculate my expected net profit, but it never realizes in my account.”

“Why can’t people see what I have envisioned as the future of the organization. It is so obvious that if the organization grows, everyone is going to enjoy the fruits. I have been making vision, mission statements. I have personally explained them what it really means. We had danglers, posters and theme projects so that everyone can see what I am seeing. I have organized offsite programmes, called industry specialists, motivational philosophers to explain the vision. Sometimes I feel my people think I am fantasizing about the future.”

There is real pain behind these expressions and many of us can relate to these kinds of conversations. There are many more such pains a promoter lives with. Some of these issues he can talk about and many he cannot even share with others. Accumulation of these thoughts lead to disillusionment of the promoter and over a period of time, he loses hope and floats with time. He doesn’t see any meaning in what he is doing. His actions are driven by problems he is facing. From a creator he becomes a problem solver. To solve these problems, he starts looking at the outside world. He tries to copy strategies and solutions used by others to solve similar kinds of problems. Many a time, solutions copied from others do work and give immediate relief. This habit of short-term, immediate relief leads to a more complex trap. Every time a promoter uses a quick fix, he is actually creating a bigger problem. As Albert Einstein correctly said, ‘The significant problem we are facing today is a result of short-term solutions we have come across yesterday.’

Let’s look at the simple act of driving performance through incentive:

It is so obvious that if I am not getting the desired performance from my people, then I incentivize them so that they perform better. On the surface this looks appropriate, but this can turn in to a quick fix that will create a bigger problem. In many cases, when people are incentivized for achieving targets, over the period, incentive becomes a reason for performance and salary becomes ‘entitlement’.

Every time you need results from people they will expect incentives for it. It will induce huge amount of greed in the whole organization. Greed will lead to many other problems like manipulations, politics and unhealthy competition. In a way, we are communicating to the workforce, albeit subtly, that it is all about extra money or reward. Once this message is passed on, people will start leaving the organization for some extra amount offered by competitors. I am not saying that there should not be any incentive plan in the organization, but the objective of incentive should not be performance, but driving behaviours that will lead to performance improvements. People must be appraised, given
increments and promotions for performance and incentives should be given to drive right behaviour in the organization. So in the absence of robust appraisal and performance evaluation process, the incentive plan will act as a short- term solution leading to bigger cultural issue in the organization.

SO, WHAT ARE THE ACUTE PAINS AND CHRONIC PROBLEM IN THIS CASE?

Acute pains

  • People not preforming as desired
  • Not getting desired results consistently
  • Absence of heartfelt commitment

Quick fix

  1. Devising an incentive plan
  2. Inducing greed in people

Long-term problems

  1. When people consider salary as entitlement
  2. Unhealthy competition
  3. Politics and jealousy
  4. Greedy people in the system

The issue of employee performance cannot be solved by just devising an incentive plan. From sustainability standpoint, we need to look at the underlying chronic problem. We need to work on resolving the fundamental issue in such a way that it will compliment all other practices of the organization. Instead of looking at performance problem in isolation, we must consider it as a result of many things not happening right. So the correction cannot happen only on the basis of visible symptoms.

Entrepreneur’s ERP Dilemma
rom the past few years, India has been touted as the ‘Next Big Market’. The changing global business dynamics, transformational government policies and exposure to new markets have helped Indian entrepreneurs immensely.

Entrepreneurs in India, especially from medium, small and micro enterprises (MSMEs) are considered a pivotal force in innovation and employment thus fostering and contributing majorly in economic development. As per statistics in 2017, the MSME sector is the largest source of employment after agriculture in India.

Since independence, this is a more favourable era for Indian entrepreneurs as the government has created a conducive environment to stimulate growth by committing to give impetus to infrastructure development, skill-set development, technology assistance, association development, financial assistance, tax reforms etc.

Entrepreneurs with years of expertise in their industry and with improved government policies try to boost the efficiency of their organization by implementing technology, which assists them in scaling up their business to newer heights.

However, while doing so, there are continuous technology hiccups, which act as speed breakers and eventually delay the overall process of achieving sustainable and scalable business operations. These hiccups occur due to less or no awareness about the science of technology implementation and complete dependence of implementation on third party implementers.

Since long, MSMEs have been facing shortage of funds and limited access to right information. MSMEs give greater importance to current business operations and problems than future sustainability. Even implementing or upgrading any kind of technology for business operations is considered a ‘capital expenditure’ (CAPEX). In literal accounting terms that seems to be okay. MSMEs try to minimize the CAPEX in order to reduce cost, which reflects in their profits, but this short-term action affects their future sustainability and they eventually become uncompetitive in local as well as global markets.

MSME companies need to understand that technology can help the organization in building ‘scalable business operations capabilities’, which will eventually help the organization to grow in leaps and bounds. Thus, technology is an investment and not an expenditure. The day entrepreneurs start believing in it, their organization will be viewed in a completely different perspective. Let us understand the science of technology for businesses, step by step.

WHAT IS BUSINESS/INFORMATION TECHNOLOGY?
The adoption of information technology in business is like the use of hardware and software application (Enterprise Resource Planning – ERP) to support operations, management and decision making.

Source: Research paper by Davish and Olson (1985)

HOW DOES ERP SOFTWARE HELP BUSINESS?

Streamlined processes: ERP integrates various departments of the organization to a common platform and aligns the workflow of tasks to be executed in order to manufacture finished goods or provide service to the customer. Tighter integration among various departments or tasks increases collaborative work in the organization, which is aimed at reducing the delays, (improving the lead time) and automate other manual works into ERP for better and effective results (automation of redundant manual activities/processes). ERP increases efficiency and productivity by helping users navigate complex processes, preventing data re-entry and improving functions such as production, order completion and delivery.

Scalability
ERP systems allow new users or functions to be added over time. When the business is ready to grow or needs more resources, then ERP could facilitate growth.

Let us take an example

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A factory at location A is running successfully with all their processes built in ERP. The employees are successfully running the factory with the assistance of ERP with no or very less work done manually. The management now decides to start another factory with similar capacity or more at location B. In this case, the organization will just have to add new resources in the ERP setup for the new factory and the rest of the processes will remain the same. The business operational processes will be ready for use at the new factory with the click of a button.

DATA ANALYSIS:

With multiple tasks being performed in the software, the final outcome is an integrated data-set at a common platform. With loads of internal data available, the management can analyse the data on a regular basis to understand the flaws, delays, inefficiency, gaps and bottleneck identification within the process. The continuous monitoring of data can help in taking internal decision to make the organization function efficiently and effectively.

Paradigm shift:

There is a possibility of mindset shift from individual-driven processes to collective conscious- driven processes. A set of actual data fosters ‘forecasting and planning’ culture within the organization, which aims at improving productivity and efficiency. Data at a common platform also bolsters interdepartmental collaboration, which drives the organization towards growth. With technology evolving and ERP features available in mobile devices, it results in quicker decision making with the click of a button.

SINGLE-BREED SYSTEM OR STATE-OF-THE-ART MULTI-BREED SYSTEMS

The macro-economics, local as well as global industries and the overall market situation is getting complex every day. Businesses are becoming multifaceted and evolving quickly than ever. They are working hard to carve out unique niches to differentiate themselves from their competitors. These ever-evolving priorities are not feasible and facilitated by single ERP product or vendor. Whereas the state-of-the-art multi-breed systems provide software that are built to serve a specific functional area, which delivers strong results than a single ERP product covering all functional areas and addressing all corners of the organization.

So does that mean we should prefer state-of-the-art multi-breed system over single-breed system?
Preferring multiple systems (best in functional areas) over single fully functional system is like opening a ‘Pandora’s box’ with unexpected results. With multiple best-in-class software, it is difficult to choose from varied options available in the market for different functional areas thus increasing the combination of systems exponentially (mix of CRM, accounting, manufacturing, HRMS etc.).
Organizations without much experience in selecting and implementing ERP solutions find it difficult to implement the right ERP software as it is, but these inherent challenges are magnified when considering a state-of-the-art software solution.

CONCLUSION AND INTERPRETATION

First and foremost, Indian MSMEs need to accept and have complete belief that processes and systems (automated processes) are the first step on the journey to self-sustainability and growth. For MSMEs to survive in the global as well as local market, it is pivotal for them to deliver <> desired product or service. To achieve this consistency and to take the leap to the next level of growth the business enterprises have to keep doing activities/processes in a systematic and synchronized manner every time.

So how do I systemize my processes – with the help of single ERP or state-of-the-art multi-breed ERP?

Can the same shoe or shirt or trouser fit each member of the family the same way? No!
The strategy to adopt and implement ERP varies from organization to organization or promoter to promoter. So what is best suited for a particular organization depends on few elements mentioned below in detail. Few organizations would prefer one route whereas some may prefer exactly the opposite.
Accordingly, an organization has five important elements which needs to be addressed not only for sustainability and growth, but also for selecting the right strategy for implementing certain kind of system.
Keeping these elements in mind and strategizing for the future would probably help arriving at the right solution for your <> MSME organizations would think of implementing an ERP only when they are unable to monitor their resources or manage delays in order processing or when cash flow is stabilized or when the promoter is thinking of scaling up the operations. On the other hand, what if a promoter builds the organization with the help of written processes, which are systemized with help of ERP. This, in any way, provides consistent output on a regular basis, and also provides crucial data inputs for improvements in the organization, which takes the route of structured growth of the organization and scaling up of operations would just be a ‘thing to do’.
So what are the important parameters to choose the kind of implementation of system:

CLEAR BUSINESS REQUIREMENT DOCUMENT

Elements to be considered: Processes, resources, speed of resources and leadership

Information of all the processes automated with the help of software solution should be documented thoroughly. The resources and leadership should be aware of the processes getting automated and how they match or improve the speed of processes. The document should also clearly define the current pain points or bottlenecks and how should they be automated and managed in the ERP environment with proper resource role bifurcation.

This is important for two reasons: first, it will help define what criteria will be most important in selecting the right software solutions, and second, it will help better define the scope of what systems you are looking for.

This activity is important regardless of any decision on single-breed ERP and state-of-the-art multi-breed software solutions. This document is the only core factor in order to take a decision on the kind of implementation to be done in the organization.

 Criteria  Single-Breed System  State-of-the-Art Multi-Breed System
 
Total investment and recurring investment
Low to medium Medium to high
Overall system complexity Low High
Seamless user experience Same navigation screen for all Navigation screen will change
Business requirement fit Manage processes as per system Close to expectation
Integration complexity Low High to extremely high
Upgrades Single point upgrade Upgrades are individually done but unaware of their consequences in complete IT landscape
Data duplication None to low Medium to high
Infrastructure consolidation Already consolidated Tight integration skills required
System flexibility Skills required Yes
Customization level Skills required Possible
Organization change management & adoption ease Low to medium High, as user interface are different and processes are in different systems
IT maintenance Low to medium Medium to high
Regulatory compliances To be built as per compliance
or could be readily available also
Readily available – industry standard complied

ANALYZE THE ‘CORE’ BUSINESS PROCESS

Elements to be considered: Processes, resources and speed of resources

Business requirement document for any functional area within the organization needs to be analysed and prioritized as ‘core’ or ‘non-core’. For example, assembly/manufacturing unit – automating complete supply chain (SCM) from work order generation to indent raising for raw material to purchase order release to vendor to quality check (QC) of raw material (RM) to inward of RM to deployment of RM in assembly to finalizing the finished goods (FG) to QC of FG and dispatch ‘ this process flow is considered as ‘core’ functional area whereas for the same organization, HR system or IT management system or CRM might not be the ‘core’ functional area. It is important to understand that data for core business processes needs to be in single/same database so that monitoring, reporting and analyses can be seamless and effective.

Here, it is imperative to go for state-of-the-art functional software for complete assembly/manufacturing processes as it would provide industry’s best practices and quicker implementation speed. Some may even plan to have a single ERP system as none of the products available in the market provide similar processes or would prefer building own structured automated solution.

INTEGRATION OF DATA

Elements to be considered: Processes, resources, speed of resources, values and leadership While exploring the best-in-class system or multiple-breed systems, it is important for any organization to integrate the data with other software, which is already implemented for effective reporting and analysis purposes. Functionality and system-user interfaces can be visually different between the various systems, but creates a need to ensure smooth and integrated business processes. Integration of related software is the <> if any organization prefers multi-breed software over single software. In single software solution, data and user interface is the same across the breadth of the organization whereas in multi-breed, the database (location of data where it is stored) is not same thus increasing the chances of data duplicity, maintenance issues and no single point control.

USER ACCEPTABILITY VS TECHNICAL COMPLEXITY – A TRADE OFF

Elements to be considered: Processes, resources and leadership

Another variable that comes into play is the balance between user acceptance and technical complexity. A single ERP system is often less technically complex as it doesn’t require a great deal of integration or disparate data structures. However, the fact that state-of-the-art multi-breed solutions often provide more powerful capabilities within their functional areas of focus can increase user acceptance and make it easier for end-users to learn. In either case, an effective organizational change management and training programme is critical to a project’s success. Trade off call between users (resources) and technically feasible solution (for better automation) should be taken by promoters by weighing both the elements and finalizing the solution.

LONG-TERM AUTOMATION (IT) STRATEGY AND EVER EVOLVING TRANSFORMATIONAL MANAGEMENT

Elements to be considered: Processes, resources, leadership and values

In today’s economic conditions with strained IT budgets and thinner margins of profitability, it is not uncommon for organizations to choose point solutions that will give them the most immediate return on investment rather than committing to a full-blown ERP implementation. However, it is important not to make this decision in a vacuum without first understanding the long-term automation strategy. A complete roadmap of automation plan finalized by promoters or the management could help the team refer to the plan and take a call to go for best-in-class software and integrate it with the ongoing software or implementing a full-blown ERP software encompassing all the business requirements.

Below mentioned are few criteria which will help evaluate and weigh the different options. The options are based on the general market understanding across all industry and not on the basis of any particular industry/sector/range of products.

So, if you choose a single ERP system, you are usually giving up some state-of-the-art in-depth functionality in exchange for a more tightly integrated system that can be easier and more cost effective to manage. If you go the state-of-the-art multi-breed route, you are giving up this tight integration for more depth and capabilities within specific functions. As with most decisions related to ERP systems, there is no one-size-fits-all answer; instead it depends on the specific business needs, priorities, competencies, risk tolerance and most importantly on the five key pillars of the organization i.e. processes, resources, speed of resources, values and leadership.

There is no right or wrong way of choosing ERP; weigh your options based on the above mentioned parameters and then take a decision. Once you pursue a path (single or multi), you also know your weaknesses which in the journey needs to be strengthened, which eventually can become your future strength. Weigh your requirements, prioritize them to core and non-core business processes, thoughts of integration of all/few databases for effective monitoring and reporting, weigh useracceptability and technical feasibility against each other and lastly follow the automation strategy document, which shows where you would like to see your organization after a few years or decades.

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