Why is the term ‘business transformation often absent from expressions of interest (EOI), requests for proposal (RFP) and requests for information (RFI)? Is it because the concept of transformation has been so overused that it has become meaningless? Or because the benefits of previous transformation programmes have rarely been realised? Perhaps it is because organisations which are embracing cloud solutions think that it will be easy to implement, with no change impact.
Today, when organisations talk about implementing cloud solutions for their corporate functions (Finance, HR, IT, Procurement), it seems they are eluding the word ‘transformation’.
Instead, they insist on business drivers which are related to the obsolescence of their existing systems, the end-of-life of their software licences, or the need for modern user interfaces. But there is more to it.
Over the last decade, it made sense that the goal of every major system changes should support a business transformation imperative. Software vendors were claiming that new technology will let you do things in new ways, to deliver services more effectively and efficiently, to unlock potential value.
We have seen this time and time again over the last 10-15 years. Most organisations have been through multiple transformations, business process re-engineering embedded in large ERP programmes. But more often than not, they have struggled to realise the expected Return on Investment (RoI). They have centralised and put in shared services for Finance, HR and other business functions. In some cases, they have outsourced or relocated entire functions offshore. They have genuinely tried to simplify and standardise processes and cut costs. But few have delivered the intended benefits.
One of the main reasons can be summed up in one word: customisation. Organisations’ business processes are still too complex because despite trying they haven’t really standardised. Previous transformations, typically supported by major on premise ERP software, allowed for too much customisation. The result was idiosyncratic carrying complexity due to the inability of the organisation to challenge the status-quo, leading to highly expensive processes and systems to maintain.
Nevertheless, in a world of constant disruption, there is a renewed pressure to change from within the organisation, from the board or from shareholders to further optimise corporate functions. It has become easier to quantify organisational performance in relation to their peers and within this context, it is apparent that organisations still need to optimise their corporate functions or in other words to complete their transformation.
Here, we could talk about a third wave of transformation after a first wave of ERP on premise implementations – and a second wave of introduction of shared service centres or BPO deals. However, at KPMG, we prefer talking about ‘continuous transformation’.
The good news is that the cost of continuing the transformation job adopting cloud solutions for corporate functions is now only a fraction – as little as one 5th – of earlier projects which could cost $100 million or more. And when systems are configured – not customised – starting with preconfigured prototypes, implementation time is less than a year compared to lengthy previous transformation programmes (2 to 3 years).
At KPMG, we believe so and our methodology does away with detailed functional specifications that only a traditional systems integrator would understand. Instead, with KPMG, you see live prototypes, designed around proven best practices, and can have conversations about what really matters from day 1: the real need for change, how to empower your managers with self-service, make better decisions leveraging real-time embedded analytics or help repositioning the corporate function as a strategic partner for the execution of the business strategy
With our KPMG Powered solutions supported by leading cloud-based solutions, organisations get the agility and proven best practices from previous implementations that they need to address their continuous transformations challenges.
With no customisation, upgrades are almost automatic, and every 6 months organisations are somehow ‘forced’ to take advantage of new features released by the software vendors. In reality, this ‘obligation’ to evolve twice a year is a fantastic opportunity to embrace the virtue of continually improving operational performance instead of going through a painful major upgrade every 5 years!
Definitely not! The ongoing challenge many organisations face is change management. Overcoming that is about the conversations to have, about who is in the workshop discussing the E2E solution. There is a crucial need for people with the knowledge, experience and courage to push for standardisation within the organisation and on the implementation partner side.
Because there are changes in multiple dimensions, there is an also important need for people who understand the business function involved, as well as people who can implement a system, and people who can drive change in the organisation. Because of cloud and a ‘zero-tolerance’ for customisation, organisations don’t need a system integrator, they need a business integrator, a partner who can say, for example, “This is best practice, this is what others are doing, these are the roles and responsibilities that should be in place for your target operating model.” Or, “Tell me why you can’t do things in a standard way?” Many earlier transformations failed precisely because the people involved lacked the credibility or maturity to effectively challenge process owners and change the culture.
Finally, as most organisations started to simplify and standardise their corporate functions 15 years ago, the transformation job today seems to be easier today but adopting cloud doesn’t mean an easy road for continuous transformation which will require to rethink operating models. And when people are involved there is always complexity!