Honesty is at the heart of successful enterprise software projects

Profile picture for user Darren Roos By Darren Roos July 2, 2019
Summary:
On your digital transformation journey, building trust with your enterprise software partner is essential to creating real business value, writes IFS CEO Darren Roos

IFS Six Box Model template diagram

After 20 years of negotiating multimillion dollar deals across Africa, a senior executive at a major industrial cleaning company told my team that we had succeeded in surprising her, a rarity throughout her impressive career. This is what she told our team:

Your Business Value Engineering method is the best I've come across in my two decades in this business.

Such digital transformation initiatives are often best described by the phrase "over-hyped and under-delivered." So how did we succeed in outperforming this customer's expectations?

We all know that simply 'going live' with software is never the end game. The real victory lies in implementing a system that delivers value as you define it. What's crucial is how a vendor goes about gathering that definition. At IFS, we have developed a Six Box Model template (pictured above) that gives this engagement a professional structure. It helps avoid confusion and misunderstanding while ensuring that the engagement is aligned with strategic business initiatives. Business trust requires

  • a shared vision
  • careful control of risks, and
  • a structured approach to achieving value.

This model, together with its underlying framework, is the cleanest structure for delivering that I've seen in almost twenty years in the industry.

We are so committed to this approach that we don't send our sales team in until we have objectively established that our solution can deliver value. We have one team devoted exclusively to helping customers identify these tenets, and a separate sales arm that doesn't get involved until later in the process, when their role is to demonstrate how technology can help achieve these goals.

The importance of defining value

During a meeting with a publicly-listed Australian telecommunications company, the finance director peered over to my team and said:

No wonder we've had so many problems with previous digital transformation projects before - we never took the time to agree on what mobilizing value means.

At IFS, we hear that it's all too common in our industry to omit this basic fact-finding mission from the outset. Often this is due to technical leads steering the conversation without much input from the C-suite, who hold a wider strategic vision.

Business Value Engineering is a way of getting under the skin of your business challenges and outlining what must be delivered for a digital transformation initiative to create value, but also to change, improve and grow your business.

Yet this journey can be daunting at times. In fact, in 2012, McKinsey famously researched 5,400 IT projects. They found that, on average, large IT projects run 45% over budget and 7% over time. The total overspend alone amounted to a reported $66 billion. And 56% of those surveyed felt the project also delivered less value than predicted.

If McKinsey repeated its study today, it's likely (and unfortunate) that the findings and failings would be the same.

As an end user of these systems, you need to demand that your partner, or prospective vendor, shows you how the intrinsic value is delivered. Truly savvy executives will want to be a part of these projects. A Middle Eastern customer of ours was recently in the midst of consolidation and change. When the Chief Executive Officer got involved with the fact-finding process, both my team and our customer discovered millions in cost reduction through efficiency, but also potential business and revenue growth.

The true test for a software vendor is not how aggressively they push their own technical products, but rather the confidence and commitment to take this middle step to help realize value.

The solution is inclusive engagement

Having adopted a new process that demands inclusive engagement with senior customer decision makers, we have found that our transformation outcomes are more specific and realizable. This ability to agree on outcomes makes moving forward easier, but it also makes stopping easier. In other words, if joint discovery with your vendor reveals the value gains simply don't add up, it's fine to agree not to go any further.

This strategy-level engagement requires trust, but sometimes having too much faith can also send you on the wrong path. For instance, a major UK utilities company was outsourcing all of their IT functions for decades with a hefty price tag. Taking them through the fact-finding exercise revealed they had abdicated too much. Good enterprise change management was impossible without involvement of those who fundamentally understood their business requirements.

My team then focused on helping them reclaim their power, by building an ERP program that also allowed them to realize their long-term business ambitions and at a lower total cost of ownership for the new technical assets.

Work with people you like

As a CEO, I push our sales teams to strive beyond our targets. But I also realize that sometimes we need to walk away from a deal that will be bad for our customer. A deal that doesn't provide a clear path to value delivery will come back to haunt us. Equally, buyers must feel confident to have transparent conversations with their partners if value starts to slip.

Having control of your digital transformation journey is possible - I've seen it happen when organizations take the time to qualify and quantify the business value.

This shared vision is the key to success today. Only by applying the practice of Business Value Engineering collaboratively, by bringing stakeholders, software providers, users and others to the table, will your team experience more fundamentally controlled and value-realized projects.