Cloud technology is here to stay, but cloud initiatives can come and go. This is especially true for projects involving enterprise resource planning (ERP) solutions. Organizations need to avoid thinking that just because an initiative involves cloud software as a service doesn’t necessarily make implementation fast, cheap or easy.
Why do so many of these initiatives fail to achieve their promised benefits? Too often, they only focus on the technology. Many organizations today begin their cloud initiatives from a limited project perspective, without understanding the need for broader transformation.
“If you look at the 1990s through the 2010s, a lot of companies onboarded technology for the sake of technology – not for transforming their businesses,” says Chris Lilley, business applications practice leader for Grant Thornton LLP. “So, what makes business transformation more important now? In reality, half or more of these projects used to be managed and led by the IT department. Now, with software as a service (SaaS), there is more behind-the-scenes work done by the software vendor, and the IT footprint is about 20% of what it used to be. Consequently, the business units directly impacted by the technology are more in the driver’s seat around transformation.”
The sustained value perspective
Broad transformation starts with alignment. For an organization to transform, it needs everyone to be aligned to the same vision and plan, and that commitment comes from the top. “If you’re dealing with human capital, you need to have the Chief Human Resource Officer (CHRO) sitting at the table driving the initiative,” says Lilley. “If you’re dealing with finance or supply chain, you need to have the COO, CFO or division operating level executives there, and they must commit to and engage in the work. The biggest thing that gets overlooked in these projects is organizational realignment. If you’re not committed to doing this right, don’t do it.”
To enable broad transformation, leaders should consider this five-step approach:
Step 1: Establish a blueprint
This framework should divide the implementation into four quadrants:
- People: organizational and stakeholder readiness
- Process: key areas that need improvement or reengineering
- Organization: target operating model
- Technology: software evaluation and selection
“If you’re building a house, you would never get a backhoe and start digging a hole without understanding the footprint and other aspects of the house you’re about to build,” says Stephen Thome, principal for Grant Thornton Health Care Transaction Services. “In this phase, you need to clearly articulate what you’re trying to achieve and then link how the software and non-software components will achieve those objectives.”
The cloud needs to be viewed as a long-term commitment. In return for that commitment, organizations can take advantage of the continuous investment the software vendor will make to the cloud solution. With the right support structure, an organization will benefit from regular enhancements and advancements that, in the past, would require an upgrade project to realize.
That said, organizations should be honest in assessing whether they are ready to commit to this type of program. Are you willing to allocate the necessary resources and ensure they have the capacity to support the initiative? Are you ready to deal with the significant challenges that most organizations have related to data readiness and progress alignment? Do you understand and agree to address the policy, procedure and organizational changes that are required to successfully implement a cloud solution? “If you’re not ready to do these things,” says Lilley, “you are not ready to move to the cloud.”
Step 2: Outline workstreams
Next, organizations should create the pre-implementation workstreams needed for the previously mentioned four quadrants. Once an organization establishes this foundation, it can start to lay in all of the automation that will move performance to the next level. “If you push the transformational envelope, your workplace should look completely different,” says Thome. “I’m not suggesting you let people go, but I am suggesting that you reprioritize work to take advantage of the efficiencies gained through digital transformation. You have to look at what the organization needs and make sure that you realign roles and responsibilities to that new structure. SaaS provides the opportunity to significantly advance your organization in terms of automation. If you don’t embrace this idea, trust that your competition is: it’s a business imperative for survivability, now more than ever.”
Step 3: Phase Zero
Phase Zero sets the foundation for the entire implementation by confirming the strategy, scope, timeline and resources, including roles and responsibilities. It also outlines the defining guidelines and standards for project documentation, communications and issue or risk tracking. Phase Zero also establishes the project organization structure and meeting and review cadence.
In the SaaS world, Phase Zero requires strong business support to complete. Business is heavily engaged with design, testing, training, user adoption and policy. “As you get deeper into the project, that’s where IT has a larger role,” says Lilley. “As you bring in new functionality, the IT team must make sure that it hangs together within the ecosystem. It’s a different role than IT traditionally has had on ERP projects. There is no longer a heavy build requirement, so IT tends to be focused on integration, data conversion, data cleanup and understanding how the cloud solution co-exists with your other software solutions.”
Step 4: Implementation
The next step is to complete the larger system implementation. To succeed here, the solution must be more than implemented: it must be adopted.
“Software adoption is the number one success factor that we monitor, as it is directly related to a successful implementation,” says Danielle Miller, Chief Nursing Officer and director for Grant Thornton Business Applications. “Most implementation teams ensure that the software works, the methodologies are sound, and the team can convert the data, but they might not effectively drive adoption. If you don’t get people using the tool, bad behaviors will immediately creep back into your organization, and you will lose the benefits of automation. For example, you will see spreadsheet programs seep into your environment if you don’t get people to embrace change, understand the technology and appreciate its new power.”
Step 5: Optimization
The journey is not over at go-live: an organization must stabilize and optimize. “Best-in-class companies don’t stop their journey at go-live,” says Thome. “If you do, you will fall short of expectations. You should fund your optimization phase right out of the gate and appreciate you’re going to have one.”
Organizations must also plan to evolve. “There’s an evolution in how your customers want to engage and if you’re not embracing that, you’re going to lose those customers: that’s just the bottom line,” says Lilley. “You have to be as efficient as possible at processing the core transactions across your business, so that your business can invest in those differentiated value-add services and products that customers seek.”
Choosing your cloud partners
As organizations focus on developing differentiated products and services, they should ensure that their cloud partners are moving in the same direction.
“In the cloud world, you’re in a larger ecosystem,” says Lilley. “You have to make sure that your vendor is aligned with where you want to be as an organization. It’s important to understand what they’re going to build and release, what partners they’re going to have and how you’re going to access that ecosystem. Make sure you understand the vendor’s roadmap and meet with them regularly to figure out how you’re going to integrate that roadmap into your business going forward. You should embrace a three, five, and seven-year outlook with the vendor and make sure that you’re aligned to where they’re taking the product. In addition, it’s important to connect with peers and learn from their experiences. Talk with organizations that have underachieved and those that have overachieved. Bottom line: don’t go it alone.”
Stephen Thome is principal for Grant Thornton LLP Health Care Transaction Services, Chris Lilley is practice leader for Grant Thornton Business Applications, and Danielle Miller is the Chief Nursing Officer and director for Grant Thornton Business Applications. This article is based on a February 2020 presentation to health system executives.
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