Industry analyst firms including our own, have been pointing out the benefits as well as some of the hazards related to businesses embarking on a major business digital transformation effort.
Clearly, digital transformation can and does provide significant competitive benefits and new market opportunities for businesses. In some industry settings, digital transformation has become more of a requirement to counter industry disruptors. On the other hand, it is important to always call attention to the hazards to prepare firms for a more successful and timely transformation.
An important consideration and long-proven tenet is not to approach such transformation in a wide-scope implementation effort, but rather in multi-phase manageable and meaningful phases that can each provide business and functional value while having the same end-point vision and goal.
In November of last year, ZDNet published a revealing report related to sporting and apparel provider Under Armour. The innovative sports apparel producer was compelled to embark on digital transformation because of an industry shift toward fast fashion, need to become more market responsive to ever-changing consumer tastes in sports related and other apparel.
The UA brand should have special meaning for SAP technology focused customers since Under Armour’s digital transformation was one of the highlight keynotes of a previous SAP ASUG/Sapphire customer conference that included an on-stage interview with SAP’s CEO speaking with the firm’s senior executive.
The report: Under Armour cites change management woes with SAP implementation as digital transformation stumbles, points out the perils of change management in such efforts. It is more important, however, to relate change management to the human factors. That would include wider user adoption, ease of use in new applications, a full understanding of underlying data and information analysis tools, along with applications functionality.
The ZDnet report does attribute Under Armour’s prior third-quarter financial stumble to other factors beyond the digital transformation effort, including a lot of industry churn in sporting goods retailing requiring including some major retailer bankruptcy actions, and a need to restructure overall product strategies.
In its formal reporting of financial results, UA executives noted that they’ve struggled with change management involved with the SAP implementation and missed orders. The result was orders that slipped from the third quarter to the fourth quarter, in-turn, causing an inventory bloat that had to be later resolved.
The initial digital transformation involved point of sale, warehouse management, inventory control, merchandising and product allocation systems in both North America and Europe. Obviously, that is considerable scope, involving mission critical processes and supporting systems. The company’s President and COO pointed out that the overall system migration encountered several change management issues impacting the internal workforce along with manufacturing partners as they adapted to the new platform and processes. The report also cites UA’s CFO as indicating that change management was tougher than expected, including working with external inventory partners and suppliers, trying to get them up and trained on the system as well as getting all the process elements in-place.
Reporter Larry Dignan does point out that readers should not interpret Under Armour’s prior financial woes solely a stumble in transforming digital operations and ERP.
Our view is that the report does provide some important and meaningful change management considerations that any business considering such transformation should place close attention to.
As we review that state of technology being leveraged in supply chain digital transformation, a lot more emphasis is being placed on usability and adoption factors, including advanced data visualization and drill-down, singular data model architectures that support more streaming of data and information, coupled with more user-friendly analytics, simulation and what-if decision-making analysis tools. Such changes are evident among both large enterprise and ERP providers, as well as smaller best-of-breed or specialist technology providers.
To cite one provider, we continue to be impressed with Oracle’s efforts in incorporating many of these ease-of-use factors in its evolving SCM Cloud suite of applications. They include incorporating a more conversational user interface similar to chatbot that responds to a system user’s specific requests, embedding what is described as cognitive services that focus on language understanding and intent detection. Regarding the need for everyday user data analysis and information insights, Oracle has come-up with an event collector that allows users to setup their own dashboard-like screens with embedded data drilldown capabilities. Many of the Oracle SCM Cloud applications now feature a single, consistent point of access for all reports that are optimized for both desktop and mobile access. Users are further provided the ability to support collaboration in the analysis of a report.
One other important factor to mention is the increasing trend that we have observed of a specific higher-level vendor executive being assigned to each Cloud-based supply chain digital transformation effort. That executive is normally accountable for the customer’s technology as well as overall implementation success and serves as an all-important single point-of-contact for customers to seek added support or gain additional information relative to the implementation. Technology providers are further placing more emphasis on evaluating implementation partners for their track records in more responsive customer time-to-value.
The takeaway for readers and digital transformation technology selection teams is to equally balance advanced technology capabilities with application flexibility, ease-of-use, and time-to-value factors. Both internal or external process participants can shun the advanced technology if is not easy to grasp and put into action.
Equally important is to evaluate and weight technology providers with their grasp and understanding and design of flexibility, ease-of-use, and ergonomic factors. We recommend placing additional or added weight on technology vendors that demonstrate an understanding of ergonomic people and team needs along with balancing their digital technology suites with important ease-of-use, productivity, and quicker time-to-value components. Vendors need to hold their implementation partners equally accountable for such standards and methods, along with a commitment to assign a respective executive as a single point-of-contact for individual customer success.
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