Although “dreaming of the possibilities” is an important part of any effective technology strategy development, all final plans should be sprinkled with a good dose of realism.
For every successful business technology story, there are hundreds of tales of catastrophic failures, many of which can reach into tens of millions of dollars of bottom-line business impact. Nonetheless despite costs, functionality, maintenance and security concerns the right technology strategy and deployment IS a game changer for a business’ bottom line profitability.
Technology strategy should always begin by considering past universal calamities as well as specific company historical opportunities in technology deployments. Although “dreaming of the possibilities” is an important part of any effective technology strategy development, all final plans should be sprinkled with a good dose of realism and potential corporate risks of not meeting the initial goals on a timely basis. This is particularly true when relying on emerging technologies.
Below are examples of ERP implementation failures in 3 larger corporations.
Nike and a $400 Million “Glitch.” Nike upgraded its ERP system and invested $400 million dollars total, including a separate sophisticated forecasting software called i2 targeted to manage supply chain and forecast the demand for products. This decision became a disaster for shoe giant Nike with $100 million in lost sales and 20% stock price decrease because of a software glitch in i2, which in turn, left stores unable to fill orders for the Air Jordan shoes. “Software glitch” headlines followed by millions of dollar of business losses are generally better headlines than the reality. In this case there was a strategic failure in Nike’s supply chain decision-making. Nike decided to buy an additional “bolt-on” software solution, i2, as part of their ERP package that was evidently sold as THE crystal ball for inventory demand forecasting, rather than sticking with the best practice simplified ERP approach grounded more in historical actual shoe orders and invoices.
Hershey and a Halloween Disaster. When Hershey launched a new ERP system a few months before Halloween expectations were high for an increase year-over-year in sales. Instead the timing of the launch proved to be unsuccessful, leaving a minimal period to mitigate any people, process and technology launch issues before the all-important Halloween period. A total of $112 million in investments were supposed to create an integrated ERP environment. However, the decision instead led to $100 million worth of sweet (candy) delivery problems for the crucial Halloween period.
Hewlett Packard and Lost Orders. HP’s new ERP implementation was supposed to result in cost savings, shorter delivery time, and development of a world-wide distribution network but in its place brought $160 million of losses. A sub-optimal myopic strategic decision NOT to migrate the best data set necessary for ongoing operations resulted in 20% of open orders being trapped in the old ERP system.
“ Technology projects and programs that are identified as strategic imperatives are oftentimes more complicated solutions and challenges that require significant oversight."
These well-known lessons learned or “learning moments,” translate well to small and medium sized companies as they consider implementing today’s emerging technology such as machine learning and business intelligence solutions. Ultimately each learning moment can point to the strength of the initial technology strategic plan developed prior to implementing the technology solution.
The technology strategic plan is the overall blueprint to meeting all or part of an organization’s strategic goal(s). It includes the technology necessary to achieve the business’ strategic goals over the next 3 – 5 years. It does not included all the technology necessary to run the business. The technology strategic plan should be the business’ priority sub-set of an overall technology plan. A technology plan is a specific type of plan that lets an organization know where they are now and where they want to be some time in the future with regard to all the technology and infrastructure in the organization.
The technology strategic plan development practice comes in many formats, the best methods are developed to fit an organization’s internal processes and politics.
1. Integrated Approach. Creates the technology strategy as part of developing the overall company business strategy.
2. Long View. The appropriate technology solution to a business goal may take more than a year to implement. Taking the long-view to deploying enabling technology ensures the right technology is deployed for the right solution while establishing “gap” technology solutions wherever necessary to meet the business’ short-term strategic requirements.
3. Comprehensive Inclusive Perspective. A valid technology strategic plan should include input from all priority stakeholders including business, technology and customers.
4. Establish Achievable Short-term Goals. Many organizations may not approve multi-year technology projects, however it is important the technology strategic plan for the next 12 months is a priority for both project and funding approvals.
5. Create Success Metrics. What we measure improves. For each IT strategic plan (and components) it is important to establish success metrics.
6. Identify the Accountable Stakeholders. Generally, technology projects and programs that are identified as strategic imperatives are oftentimes more complicated solutions and challenges that require significant oversight. Therefore, it is important to identify sponsors within both business and technology organizations accountable for achieving the overall technology strategic plan goal(s).
7. Embed Cyber Security into the Overall Strategic Goals. Today there are numerous examples where an organization took a short-term “bolt-on” view of cyber and physical security. Ideal solutions should (where necessary) build cyber and physical security into the overall technology strategic plan(s).
The best strategic technology plans have an integrated approach to their development. The CXO Group offers the essential integrated CXO services that cover the necessary financial (CFO), technology (CIO) and strategic sourcing (CPO) functions. CXO will deploy these services in a strategically prioritized manner to address any Financial Health Assessment initial baseline, and ongoing priorities based on their impact to bottom-line performance. If you are interested in establishing an integrated strategic technology plan please send an email to firstname.lastname@example.org. #togetherwesucceed.