Does Your Apps Strategy Support Your Corporate Business Drivers?

Successful packaged apps strategies require business process and applications professionals to align with corporate business drivers. But because business drivers for individual IT projects often shift with time, the portfolio of apps initiatives requires ‘organisation’ and ‘alignment’ by economic state and project risk. Once the alignment is achieved, business process and applications professionals should identify the high-priority initiatives that best align with current business drivers and create a business technology (BT) value plan that connects the dots between corporate strategy and application tactics.

Remember - poor alignment to business drivers leads to failure

Failure is not an option for business process and applications professionals embarking on long-term apps strategies. With millions of dollars and critical corporate strategies at stake, long-term packaged apps strategies often fall short because they do not:

More from Biztech

Future Group - Reliance Retail Deal approved by CCI RBI ban on cryptocurrencies takes effect; prohibition could force investors to tap the black market

• Adequately secure business/IT buy-in. Failed projects rarely include the deep commitment of both business and IT teams. Without active accountability and participation from the business — especially senior leadership — efforts usually sink before they swim, leaving requirements and strategic alignment undocumented and unstandardised. Meanwhile, the lack of engagement by IT often means that requirements do not undergo rigorous scrutiny for issues such as integration, scalability, and security.
• Carefully consider economic state. Economic perception drives corporate strategy, especially when dealing with long time frames of three to five years. Efficiency and regulatory compliance gain importance during economic downturns, while growth initiatives are prioritized as the economy improves. Apps strategies that don’t flex to stay aligned with changing economic conditions will quickly become obsolete.
• Properly factor the importance of project risk. Sponsorship levels, organisational impact, and project duration represent key variables in assessing project risk. Rising risk levels require stronger project governance, longer-term funding, and more dedicated staffing — leading to higher organisational barriers to approval — while projects with lower risk face fewer barriers. Apps strategies that don’t account for the firm’s current risk tolerance lose credibility immediately.

Organise Apps projects according to risk and state of economy

Funding prioritisation for apps projects should align to business drivers. This means that business process and applications professionals should organise the portfolio of application initiatives into four categories of business drivers:

1. Growth projects that focus on increasing top-line revenue. These projects focus on sales and marketing with specific revenue growth goals like order size enlargement and improved response times. Examples include campaign management, high-value customer segmentation, and price optimisation initiatives. In times of expansion, this segmentation fares best in the boardroom and encounters lower project risk.

2. Efficiency drivers deliver bottom-line savings. Drivers target improving operations and creating systemwide efficiencies. Typical initiatives include improving supplier and procurement leverage, mitigating aggregate credit risks, improving days sales outstanding (DSO), reducing analyst relation days, reducing cost of sales, and improving overall sales cycles. Due to lower project risk, business and IT leaders often prioritise these projects during times of economic contraction.

3. Compliance initiatives mitigate risk. These initiatives zero in on adhering to external mandates from government entities or other governing bodies of authority. Emblematic efforts include addressing public market regulations, supporting privacy preferences, delivering internal controls, and meeting security requirements. This category is the least sensitive to economic conditions, but the visibility of such engagements brings with it a higher project risk.

4. Strategic efforts support a company’s long-term vision. Strategic efforts deliver on market differentiating strategies. Apps projects focus on building customer loyalty, identifying customer value, fostering stakeholder collaboration, addressing stakeholder retention, and improving master data quality. Given the high project risk and long-term commitment, strategic efforts receive the highest level of prioritisation during times of economic expansion.

Develop a BT plan for high-priority Apps projects

With apps initiatives organised by business drivers, business process and applications professionals can develop a BT value plan for the highest-priority apps projects. A BT value plan will help connect the dots between high-level business goals to the actionable project(s) and IT strategies. The result: unwavering business buy-in. There are three key steps required to create a BT value plan:

• Start with business goals. Explain the business drivers or the “why” of the plan. Determine corporate business and IT project objectives. Use this opportunity to set a baseline to then set realistic targets. Some examples could be business drivers focused on improving business performance via market share, retention rates, profitability, and segment ownership. Targets could include improving profitability by 20%, reducing DSO by 1.5 days.
• Identify BT strategies. Determine the substance, or “what,” of the plan. Seek to “move the needle” and apply a stakeholder-centric approach to create strategies that support the improvement of business goals. For instance, analyse, segment, and target a specific market using value propensity, risk, or product trending information. Then focus on an area like increasing products per customer or reducing exposure in product recalls.
• Create tactics and measurement plans. Put into action the plan or “how.” Craft specific business and IT actions required to implement each strategy. One approach is to create trigger events or initiate actions such as incentives and determine outcomes. Data can be used to decide which customers are candidates for cross-sell, and when to make the offer. This can also be used to identify which plans could be out of compliance or what procedures increase compliance risk. Metrics can then be compared with initial baselines as tactics are tweaked.

In today’s high-tech environments, most business strategies require a technology component. Align long-term packaged apps strategies with business goals to add relevance and prioritization to corporatewide initiatives. Business process and applications professionals should regularly assess packaged apps strategies with business drivers in mind. Best practices often include not only a current assessment of apps strategy, but ongoing periodic review. Forrester’s long-term packaged applications strategy framework will be useful to gauge progress.

The author is Principal Analyst, Forrester Research. Ray analyses trends in ERP for the enterprise and midmarket. He also delivers strategic guidance in software licensing and pricing, and assesses functional areas such as customer data integration and the impact of SOA on packaged applications. With his understanding of the overall ecosystem of solutions, technology, and system integrators, Ray provides strategy and guidance to many clients navigating through the vendor selection process. To contact Ray, please write to sgosavi@forrester.com.

_His previous take: Forrester’s Long-Term Packaged Applications Strategy Framework http://www.forrester.com/Research/Document/Excerpt/0,7211,43965,00.html
_