Digital strategy – Understanding the data needs

December 6, 2021

In case you missed it, also check out the previous article: Digital strategy - Mapping your value creating process

As the organization builds its process map across more and more functions/areas, so also will the understanding of the various users’ data needs increase. What do my employees need to know to perform their tasks at the various stages in engineering and production? How does the transparency in the system help them plan and prioritize? What data do the project managers need? The leader group?

Gradual bottom up, or all-in top down?

At Limber, we believe that digital process improvement can be achieved gradually and in incremental steps. In our experience, the fastest way to improve is by many incremental improvements. Each improvement opens new possibilities while trying to plan too far ahead without input can often lead onto the wrong track.

On the software side - introducing a company wide software implementation (such as an ERP system) to cover all the bases is a high risk play. By realizing value as digital support increases, the process will gain momentum, user and management support. By gradually increasing data harvesting from processes, while increasing our understanding of the data needs, we can provide more and better actionable data. This is, in our opinion, less risky and a more customizable approach to digitalization than the all-in (and top-down driven) route. It mitigates economic risk and user alienation (failed implementation), which are all too common in improvement projects.

ERP software and the digital trap door

The implementation of an ERP system may typically provide significant initial benefit in many small to medium sized businesses. However, most ERP system vendors have a mindset that their solutions are “one size fits all” to be implemented across most departments and functions. The trend over time will therefore typically be that an initial narrow ERP application will grow to encompass more and more functional areas within the organization. This also provides some benefits – ready made integrations between functional areas, a single source for user support, off the shelf BI reports and KPIs for managing performance across several departments. So, what is the problem? 

The business environment is changing more rapidly than ever before and business model parameters such as company size, project complexity/size, serial/custom made products, product/service orientation, partner/client constellations are in constant flux. The initial benefits of the decision to lean heavily on the ERP solution, may turn into a digital straitjacket.

Unless the client organization has a very clear digital strategy from the outset, the ERP software may well end up as a limiting factor in several areas:

  • Organization – limiting the freedom to redesign work processes and departments to match the current business model. The ERP software layout makes some assumptions about company structure and roles, driving the company in the direction into the template “silos”
  • Software – unable to implement cheaper/more optimized specialist software solutions for selected business areas, as too much prestige and “sunk cost” is invested in large implementations (with limited success).
  • Data – the ERP software typically encompasses more and more data across the organization, making the prospect of migrating to other systems a daunting prospect. Also, the ERP software typically assumes a standard data structure, limiting the control and understanding of the company source data (and how to put it to use).
  • Integrations – since ERP solutions are the mammoths of the software world, navigating and integrating data to other platforms can be cumbersome.
  • Development – since businesses need to respond rapidly to new opportunities, the software portfolio (and a heavy ERP implementation) may force the company into overly costly and consultancy based customization/development projects, in which they have little control over priority and progress delivered.

The (digital) strategy

The ERP route may seem like a tempting cure-all solution, especially when the starting point is a host of small (unintegrated) specialist software, with Excel spreadsheets and yellow stickers filling the gaps. But managing the company data and digital strategy is quickly gaining importance – equaling and in some cases surpassing the importance of industry domain knowledge and marketplace position. This is typically the case where new (digital) entrants challenge well-established industrial players on efficiency and data supported value propositions. They may not necessarily introduce disruptive new products, but rather beating the establishment (who may or may not be stuck in the ERP rut) at their own game through more efficient production, market responsiveness and/or data driven add-on services. So how do we avoid falling into an unhealthy software relationship?

We want to encourage small and medium sized businesses to take ownership of their digital future. By starting small and building momentum, we hope that more companies will opt to build their digital and change management strategies in-house. You will build skills and confidence invaluable to remain relevant in the future marketplace.

If you liked this article, check out the next one Digital strategy – Becoming data driven

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Founded by engineers and made for engineering projects, Limber Projects is challenging traditional project management.

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Limber AS, org. ID 918594965
Oslo Science Park, Gaustadalléen 21,
N-0349 Oslo, Norway

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