'Best-In-Class'…but for Whom?
Many Retailers are unique in their own way. While some differentiate based on the efficiency of their supply chain, others differentiate based on assortments, customer service, or the uniqueness of product. Differentiation emerges over a significant period of time and each in itself is 'best-in-class', so implementing a shrink-wrapped solution may actually be sub-optimal.
Where Do I Differentiate and Where Do I Standardize?
What makes my business unique? Where do I differentiate versus where do I standardize? Instead of looking at ERPs or packages driving best-in-class processes for excellence, it is more rewarding to look at these for best-in-class non-differentiating functions such as payroll.
In other words: I am best-in-class because I innovate, not because I standardize. All retailers that are best-in-class in any process area strive towards innovating and not at standardizing. A failure to do so will lead to others taking advantage of the gap and what was best-in-class yesterday becomes standard today.
It is important to have the business drive standardization, and not vice-versa, or the business stakeholders will know that it is counter-intuitive to replace 'unique' and 'best-in-class' enterprise processes with 'standard', 'non-differentiating' ones and ultimately drive out differentiation.
There is no surprise when to find that most businesses actually customize 'standard' packages. What starts as a business process standardization exercise ultimately ends up as a massive implementation, configuration, and customization exercise with a spiral of upgrades, enhancements, and re-implementations.
So, What Makes Business Tick?
To help understand the core elements that allow retailers to add value in a unique way. There is no way that an industry best practice will in any way fit or enhance differentiating process area – because no ERP or package actually knows more about your business than you do. All major standardization exercises are ultimately a painful experience. Given that fact, the benefits realization monitoring exercise is a major one.
The case for an alternative approach to business processes is important – an approach driven by understanding the uniqueness and differentiation in our businesses based on innovation as the primary driver. The time is now to have business drive standardization and not vice versa – and maybe relook at some of the thought process driving the IT organizations of today.
Amitava Sengupta is global head of consulting and solutions for retail and CPG at HCL Technologies.