Understanding your businessesยด differentiators is key to choose the solutions that improve your comp

released: 4/3/2014

I do think that ´Toolary´ is a great initiative. It does what it says: share information about tools related to specific business issues. Issues, that real companies with real clients encounter. The variety of solutions out there is growing by the day and the supplier landscape becomes more diverse. This makes the life of the CIO or IT manager increasingly complex. And there is no specialist on earth that has an overview across all domains. Too much choice has about the same effect as ´no choice at all´, and many decision makers within companies choose what they think is the safest bet - because their competition also does it...
Hopefully this initiative leads to a rich flow of information that makes the software solutions world a little bit more transparent, so that decision makers can more easily find real-life references with other companies, learn from each other, and make ´informed choices´. However, it is not the quality of the individual tool that determines todays´ business success. I can buy a set of knives for cooking for € 5.000 but that does not make me a better cook. The ´tool´ itself is of no use if it is not being chosen by a craftsman or -woman who exactly knows what it is needed for and how it fits into the surroundings of other tools.
That introduces two perspectives: the business and the application landscape. The business perspective indicates what it is needed for. The application landscape is about how solutions work together with other existing tools such as ERP in supporting the end-to-end process flow, data integration, governance and security.

What really matters is to understand what makes your business truly competitive. What are the differentiators to your customers and what are the internal capabilities that help you to ´be different´? When you are aware of these, this helps in making the right choices, not only about functionality required but also about investment and cost associated with it.

For non-differentiating areas you are more likely to apply ´standard´ ERP type of applications. Proven technology. End-to-end. With an integrated underlying data model. For the differentiating areas, you need to check if ERP does really fit the needs in a way that matches functional, cost and use-ability requirements. There, specific solutions may be more effective then customisations. When you REALLY look at it, those differentiating areas are only a few within a company. However, many companies seem to make them well hidden. For competition that is OK, for your own people is less effective…

Everyone will always tell you that what they do is special. For them it is. But the real value is usually in a few really unique core capabilities AND how these capabilities link to other surrounding functions. For example, the skill of Dell to build value-for-money computers, in combination with a fabulous supply chain that delivers to promise in even the most remote places, made them preferred supplier for the US defense and boosted their growth. Or, less positive (anonymous), the huge investment in 3D CAD software that doesn’t pay off because it supports the companies´ unique and innovative design capabilities, but fails to link to a consistent bill-of-material record and thus creates poor maintenance service to clients, who massively turn to competition that do have a reliable service.

Shared insight pays off. The more clearly the insights of senior business- and IT management, the better you will be able to make informed choices where to invest your money. And it´s not difficult to do this. However, the outside perspective is often needed to uncover and articulate the real differentiators and to translate these into the right application landscape and select the right tools to populate it. Often, you have a heritage of the past. So creating a concrete vision and working towards it step by step is usually the route to go…. On this, I will write my next blog. I hope you enjoy reading, please let me know.