All organizations today employ a set of applications that allow them to conduct their business in a manner that they have chosen, either by detailed design or by default. How these applications are constructed and executed will ultimately determine how the business performs. To state that another way, without changing functionality of the IT applications that an enterprise operates on, it is impossible to change the business results in any sustainable fashion. This set of applications can be referred to as the Enterprise Applications Platform, whether it is a modern ERP system like SAP or Oracle, or if it is a combination of functional applications cobbled together to support the business. How these systems are designed and built is a vital piece of knowledge that, in order to have an effective organization, must be understood at all levels and in all functions of an organization. The more that is known by a larger group of staff, the more readily an organization can envision, redesign and implement changes to these systems in order to alter business results in a positive direction. The role of this education, however, while often viewed as a simple matter of conducting “training” classes, is usually better served by taking a lifetime competence view of workforce development.
Fundamentally, the key change characteristics that affect the ability of an enterprise to optimize their performance, from the perspective of the underlying IT appications that they depend upon, are:
1) Business Process Design
2) Cultural Barriers and Enablers
3) Dynamics of IT Strategy
4) Workforce Education.
Like most constructs like this, it is on one level an arbitrary organization necessary to understand the relationships between key change processes, but each can also be discussed independently. I will talk about other characteristics in future blog postings, but today would like to talk about Business Process Design.
Business Process Design
Business Process and its relationship to SAP implementation, as well as Business Process Re-engineering in general, has been an enigma for many for nearly two decades. We have tended to vascilate back and forth between “pure” re-engineering, where the IT applications are not considered until the process is designed, and use of recommended business processes (or Best Business Processes) defined by the Applications. Often too little attention is given to the fundamental level of understanding necessary to design an optimal solution – we tend to either defer to current processes, or grasp onto new processes as “silver bullets” – neither of which works well. What is required is fundamental knowledge of the relationship between business process and business performance as well as knowledge of the potential solutions (Best Business Processes) in the selected IT Application platform. In an integrated ERP world we simply don’t have the “band-aid” of sorting out issues in the interface designs.
So, what are the educational components necessary to develop these processes optimally? Again, somewhat arbitrarily, I would carve them into 4 categories:
1) business knowledge
2) knowledge of how current IT applications define those processes
3) knowledge of what native business processes exist in the existing or new IT Applications
4) Organizational Change Management techniques to manage the transition from one to the other. Let’s talk about each.
Frequently, business methods or processes have simply evolved over many years and many managers and the current managers know how to operate their parts of the processes, but really don’t understand how they operate for the business. An enterprise which doesn’t have the fundamental process knowledge to define where the weak points are is particularly at risk and should undertake a process to define the current situation before undertaking any transformation process. This may be incorporated into the front-end study process or can be developed prior to starting. It is also a long term process, and one that must be sustained over time to keep the enterprise healthy.
IT Applications Processes
Let’s assume for the purpose of this paper, that we have located sufficient current business knowledge. This does not necessarily imply that this expertise extends to an understanding of how the current Applications work to support that process. This can vary all the way from a situation where virtually all work is done in the Applications and they truly do define the current state, to organizaatons where the majority of the work is done on notepads or spreadsheets (or other PC kinds of programs) and then summary information is entered into the IT Applications. This process design, incidentally, occurs both with legacy systems as well as in organizations who have implemented SAP (or another ERP) and simply not done the OCM work to complete the transformation.
Native Business Processes in the ERP System
As much as organizations often don’t do the work to understand their current systems, many ERP implementations proceed without sufficient knowledge of the possibilities or potential in the new systems. This applies both to the client project team, as well as the consulting team in most instances. This relegates the design process to a discussion of repeating the current design (only thing the client knows) or implementing a process that the consultants happen to know, which is frequently limited to what they have experienced. My experience in leading major implementations has been that the fundamental area of knowledge that was missing was cross-functional business process knowledege, both within the business and among the consulting workforce. The nature of both the client business organization and consulting organizations is to develop extremely deep functional knowledge, but little attention is paid to true cross-functional understanding.
Organizational Change Management
Although I will talk much more about this as a separate topic in a later posting, it is important to note that all changes must be managed to be successful, and the importance of education from transaction training pre-go live to business education must be a critical component, but more on this later.
A Plan for Action
So, how do we do all of this? In order to be successful in producing the improved business results, all of these components must be defined and managed thoroughly. Much of what I have defined has not been a traditional skill set developed either in business or in IT consulting. Business Process knowledge doesn’t just happen, and knowledge of how work processes and IT Applications work together to produce business results is also rarely part of the business education process, but it must become integral to our overall learning process. There are many tools on the market to assist in developing this knowledge, from simple (but thorough) business process mapping approaches, to complex BPM tools that can incorporate many other technologies, like 6 Sigma and others. For knowledge of business processes in SAP, there is a Business Process Certification named TERP 10 that teaches cross-functional business processes that are defined across all of the ERP functions in the product, both functional and technical.
Whatever the approach, this must be managed in a formal OCM program that collects this knowledge of current and future state, defines the necessary changes, evaluates the organizational impact and executes programs to manage the transition. There are also products that incorporate much of the analysis and design work into a single program, like the ARIS toolset, where the native process designs in SAP are already part of the process. What tools are used, how they are managed is not nearly as important as understanding the necessity to address each of these issues. Most projects start with the client project team taking a general overview of SAP (SAP01 today) and then some appropriate functional course work. Although this certainly works better than just doing functional training, consideration should be given to having the entire team take the TERP 10 academy (by whatever means), which would develop a much deeper understanding of potential solutions for the business as well as prepare the workers on the project team to take that process knowledge back into the business at the conclusion of the project.
Lifelong management of Business Processes (obviously as supported by the IT Enterprise Platform) is a key need for long term health of a business. As such, this also requires a “Learning Environment” where, along with knowledge of analytics, strategy, and functional skills, provision is made to develop the fundamental business knowledge of how all of this works. More and more we need to encourage our colleges and universities to teach these skills as part of both under-graduate and post-graduate business education. Many of the institutions in the SAP University Alliance Program already do, including the SAP Concentration within the MBA program and the SAP Graduate Certificate Program at Central Michigan University. This inclusion in the MBA program, and the carve-out as an additional concentration for people who already may have an MBA, is a key program for long term personal development and should be supported by educational incentive programs in businesses. The inclusion of this area into traditional education has developed late but is a key component of managing in an age defined by the technology we use.