See how coordinating your approach to technology strategy and selection can support strategic business objectives and enhance technology performance.
In an age of digital transformation, companies are struggling to answer questions such as:
The answer to those and many other questions can be found through a coordinated framework and common approach to technology strategy and selection (TSS), which helps organizations develop the strategies and identify the technologies that support strategic business objectives, drive business value, and enhance performance. According to Donna Meshaka, managing director at KPMG in the U.S., TSS can help companies create a transformation vision, design an integrated roadmap, and get started toward reaching their technology goals.
Over the past several years, organizations have wanted help determining the right Enterprise Resource Planning (ERP) platform, as well as which applications should support HR, finance, supply chain, and other functional areas. “What we found as we embarked on that process with our clients is that many of them hadn’t thought through a lot of strategies needed to make a comprehensive and valuable transformation, which is necessary in a very cloud-based and solutions-oriented world,” Meshaka explains.
Applications were often seen as pure technology plays, as opposed to fully aligning with the business and understanding the imperatives the business is asking IT to fulfill, as well as the preimplementation opportunities they could be taking advantage of.
Today’s savvy businesses want to learn more about how disruptive technologies—such as blockchain, AI, and RPA—can support them in creating competitive differentiation. As a result, they are pushing IT to be more than just about plan, build, and run. “The business wants IT to step up and be more of a strategic partner to them and help them to think through those opportunities,” says Meshaka.
In addition, organizations across industries have realized they have been handcuffed by what may be two-decade-old implementations that they have, at best, done a technology upgrade on. IT may never have taken the opportunity to say, “This is the world today and here is what our business is asking us to do, can we do that?” They find that they cannot support that. Meshaka recalls one client having 26 systems in place supporting their HR department. “It is just something they are used to supporting, but imagine all the increased cost related to supporting that number of applications as well as integrations,” she says. “It doesn’t allow them to be nimble and support the business.”
TSS helps take organizations far beyond software selection to a business-led, technology-enabled strategic effort. Putting together this thorough framework and common approach can help organizations accelerate transformation and take advantage of some of the newer disruptive technologies that can provide immediate benefit, even before going live with the actual implementation. A typical TSS effort can take between 12 and 18 months, depending on the maturity of the organization and its ability to sustain transformation. In one specific client instance, we found there would be an immediate opportunity in the payroll area using robotics process automation (RPA), Meshaka states. “The potential benefit was so great that it made sense for them to move forward.”
1. It’s about coordination between IT and the business. The TSS framework is all about coming together to develop a target operating model that will allow the organization to get to a foundational space and the business to be more aspirational in leveraging technology. The majority of ERP implementations don’t fail because technology fails, or because processes fail, but because of the lack of adoption by the employees within the organization. Getting buy-in earlier and creating a coordinated and aligned vision around disruptive technologies really helps to ensure the success of transformation.
2. Establishing a Transformation Management Office is a must. An essential part of the TSS approach is tying everything together with a Transformation Management Office that provides a governance framework and an organizational vision around tracking the value of the transformation. Many CIOs find it difficult to quantify the benefit of their ERP implementation. The Transformation Management Office ensures the ability of the C-suite to continue to support a decision they made 18 – 24 months ago.
3. It allows IT to understand business goals across functions. The TSS approach allows the IT organization to tackle more than one function at a time in an overall ERP strategy and selection—creating opportunities because of the dependencies from one function to another. Doing this singularly creates more rework later in the process and may even require reimplementation, because the organization hasn’t thought through the implications of HR on finance, or finance on supply chain, for example. This can be a launching point to make sure there is alignment on ERP selection requirements based on unique things the business needs to be doing for competitive differentiation. “One of the immediate benefits is cost reduction: Some businesses have realized hundreds of millions of dollars in savings through such an exercise, where we’ve done together the process work as well as technology requirements in implementing disruptive technology as ways to drive immediate savings,” adds Meshaka.
Requests for the thoughtful, integrated, strategic work of the TSS framework often come from the CFO and the COO rather than the CIO. “That’s why it has not been terribly difficult to get the buy-in,” says Meshaka. “Executives quickly understand that this is probably why they didn’t get the full benefits when they did their technology implementation before, because typically it was a pure technology play—now it’s a different world.”
The TSS-style framework will continue to evolve as disruptive technologies such as cybersecurity—as a business imperative—become more and more critical. “There is even more stress on the framework to make sure it stays current and valid and brings the latest capabilities to our clients for them to consider,” she says.
This article is available for download below.
KPMG complies with the auditor independence rules of the AICPA, SEC, PCAOB and DOL. As a result, some services described herein may not be available to our audit clients. KPMG audit clients should check with their respective lead audit partner for more information.