In our last blog we discussed why it is still so hard to integrate your business with so many business software options available. Our conclusion was if you approach buying business software and integrating business processes from a systems point of view, you were more likely to integrate successfully. Let’s further elaborate on this idea.
Thinking about your business as a system will allow you to buy software that advances the way you do business, to buy software that can integrate across boundaries and to integrate the software you already have. It will also allow you to distinguish between activities that add value, and “water carrying” — activities that are mere mechanical transactions that are wasting your peoples’ time and should be automated. What is systems thinking?
Systems Thinking is about looking at your business as a set of interconnected processes, not as “functions” or “silos”. For example: You publish a product list or issue a quote. An order flows from a customer into your company. Someone makes sure you have all the information required to fulfill the order. You plan the fulfillment of the order, and ensure you have the materials and resources necessary to complete it. You produce the order and deliver it to your customer. They are — hopefully! — happy with it: you check with them. And the cycle begins anew. Other processes — to develop new Customers and offerings, manage material, hire and develop your people, ensure sufficient finances, communicate with your market, constantly improve how you do business — feed into and wrap around this core process. That is your business as a system.
Think of where you add value in these processes.
Value added is: converting a prospect to a client, creating a successful quotation, taking an order, sourcing just the right amount of material before it goes out of stock, making product, delivering it to the customer and collecting payment.
Water carrying activities are unavoidable drudgery such as transferring a new Client’s details from the CRM to the ERP systems, transacting material from inventory to a batch, recording production statistics for a shift, hand distributing changes to production plans, establishing how much material is on hand vs requirements, checking the status of Jobs vs delivery dates.
You’ll have noticed that the “value added” activities often happen between your IT systems, not in them, and that “water carrying” happens between these IT systems, or between them and your value adding activities.
Why? Because core IT systems were — and still are — largely conceived of as record keeping systems, not activity systems. You perform your value added activity, and then record the result, so that you know where the money is. Very, very important, but it’s got little to do with creating the value that is the purpose of your business in the first place.
So now we can see that our business is a system whose core process is to capture customer demand and turn it into fulfilled sales. Next week we can look at how our IT systems get it the way of making this happen as efficiently and effectively as possible — and start to understand how to fix that.