Do Business Well

The first winning strategy, seen from the suppliers’ perspective, is to get the clients with whom they are collaborating up and running. This strategy addresses the problems customers find most vexing when they change or upgrade their technical (and other) products, including the compatibility between the new and existing products and the effects that the new products will have on established practices and work habits.

Buying a stand-alone product (such as a new software application for personal use or a new power tool) may involve a tricky installation and can take time to master, but the aggravation is almost always temporary. Regrettably, this is not the case when we acquire products that need to be integrated into existing systems, or that mandate a serious overhaul not only of our technology, which would be complicated enough, but of how we operate our businesses or run our lives.

Any company that has installed an enterprise resource planning (ERP) system or a customer relationship management (CRM) solution knows that the software component is a minor concern. The most daunting tasks include redesigning the organization’s business processes in their entirety, as well as reconstructing specific tasks; integrating the new systems with the jumble of existing ones; implementing the transition from old to new while, simultaneously, ensuring that everyone affected by the change is as prepared as possible for a dramatically altered workplace. Unsurprisingly, adopting a solution of this sort is usually invasive, takes months to complete, and requires many implementation specialists, also known as consultants and project management experts, who earn their keep by bringing this all about with expedience.

The leading providers of technology solutions have becomeadept at helping customers endure the ordeals of implementation. Software giant Oracle, for instance, knows that teaming up with customers is good business: Approximately 58 percent of its $10 billion revenue in 1999 came from services and consulting, not from software sales. With fifteen thousand consultants, Oracle strives to ensure that its software is properly applied. The company has successfully shepherded customers through five thousand or so changeovers to its solutions. Clients know that with Oracle software come implementation tools and support to get things up and running in a set time—anywhere from thirty to ninety days.

Taking a somewhat different tack is SAP, the ERP software pioneer. In 1993, SAP was riding the business reengineering wave with its R/3 software, essentially a prepackaged set of best-practice solutions that replaced customers‘ outmoded processes. Choosing not to offer consulting support, SAP instead formed partnerships with Arthur Andersen, EDS, Cap Gemini, Siemens Nixdorf, and a dozen other firms that handled the task of implementing its software and making sure that it fit customers‘ unique requirements. For every dollar customers spent on SAP software, they could easily spend five on advice and services pertaining to running it. In an effort to garner a share of the dollars being paid to consultants, and to help develop closer collaborative relations with its customers, the company decided to shift gears.

SAP now provides a kind of Lego-block approach to the connected processes of purchasing and installing its software. Less concerned with managing all aspects of the transition, this approach concentrates on helping customers find the configuration of blocks—or modules—that best fits their company’s particular needs.

The modules are designed to work in twenty-two different industries, including chemicals, automobiles, and financial services. For these industries, SAP offers 120 of what it calls “collaborative business process scenarios”; this means that there are 120 ways to configure specific business processes, say logistics flows or procurement. Finally, it designed three hundred different modules that arrange or define myriad ways of completing a specific task.

SAP’s shift has proven worthwhile. Helping customers get their software operational has boosted its earnings from advisory services to 38 percent of 1999 revenues, up from just 15 percent in 1993.

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