You forget sometimes that until 2020 a CEO’s job was to look at long-term strategy, review current performance and monitor the external environment. Now, as a result of COVID, CEOs are forced to change their frame of reference by getting involved in strategic decisions early and becoming more engaged in making major investment decisions. Recognizing the increasingly pivotal role of IT in this once-in-a-lifetime era, CEOs are re-positioning their businesses to use IT in a very different way and do it much faster than they would have done in the not-too-distant past. They are moving away from the mindset of “IT for improving operations” to “IT as a capability builder”.
CEOs and digital transformation
A term being increasingly used is “digital transformation”. This refers to using technology and data to remake processes so that they become more efficient or effective. It’s not just about changing existing processes into digital versions but improving or revolutionizing them. The disruption caused by COVID has spurred many CEOs and their executive teams into innovative thinking. This has been enhanced by a dose of paranoia driving companies to implement new tools before competitors do. The chances are if you’re not on a digital transformation rollout, your competitors are. But it’s not just about new technology. Using digital transformation allows organizations to:
- Get closer to their customers (who are rapidly moving online)
- See how products are performing
- Find out whether they’re meeting customer expectations
CEOs and technology decisions
The role of technology is tied tightly to the future of the business. A survey by KPMG (2020 Global Emerging Technology Survey Report) showed how expectations of the potential for digital transformation is growing.
- 59% of respondents believed that the pandemic has created an impetus to accelerate their digital transformation initiatives
- 56% of respondents said cloud migration is now an “absolute necessity”
- 43% of executives expected process automation to increase within the next year; 25% of respondents expected decreases
- 39% of executives expecting increased investment in artificial intelligence (AI)
Decisions about investing in new software, such as ERP, process automation, e-commerce, AI, are now major priorities for CEOs. These investments, which are key to enabling the organization to weather the storm and recover as soon as possible, require a change in the way the business works. And when it comes to organizational, process and IT changes, the CEO can do more than other executives. CEOs should consider:
- Elevating IT to the ranks of the top-priority, highest-visibility opportunities
- Deciding the balance between using IT to control costs and improve operations, versus build capabilities
- Managing IT investments and priorities in line with the corporation’s overall investments and priorities
- Structuring the IT management model so that the operating components are separate from the capability-building resources, maybe with different managers leading each.
CEOs and software to manage the enterprise
In the new business environment, CEOs are looking for enterprise software to support the organization, and that will drive the significant changes that are needed. Enterprise solutions should:
- Ensure cost-effective production, on-time delivery, and satisfy customer expectations
- Streamline daily operations and reduce complexity
- Take the volumes of data and turn them into useable information to improve operational efficiency
- Provide a single view of the truth across the entire enterprise
- Reduce the time it takes to make informed decisions.
Some consultancies advise the best way to do this is with best-of-breed applications. There are three problems with this approach.
- CEOs want a backbone solution to house all information that the company needs; not separate, unconsolidated information silos.
- They don’t want the effort and expense of having to maintain the integration of these separate applications.
- Dealing with different vendors and their implementation teams or partners takes up valuable time of executives and staff and involves managing multiple contracts.
A comprehensive integrated ERP solution makes it possible for the CEO of a manufacturing or distribution company to more easily improve visibility and control over different aspects of the organization. It’s also easier to manage a single architectural foundation rather than multiple different systems. The right ERP solution can serve as a multi-purpose vehicle to realize the CEO’s vision for the company and drive it forward.
CEOs and selecting the right ERP vendor
Delegating the decision on an ERP system to technical staff is understandable but removes the CEO from their place of leading the organization to embrace transformation and do things differently. The CEO needs to ensure that the technology selection team recognizes the importance of selecting an ERP vendor that has deep experience and a track record of success in their particular industry and their size company. Businesses with less than 500 employees – small and midsize businesses (SMBs) – make up over 95% of all companies in the US and Europe. Some of the bigger ERP vendors have installed bases of multi-billion-dollar “tier one” customers. They try to convince SMBs that they can easily transfer their knowledge down the market. But this isn’t the case for the following reasons:
- Financial considerations – some websites detail the multi-million-dollar, multi-year ERP projects that failed. Smaller companies can’t afford to have an ERP selection mistake and project failure. Error-ridden, delayed deployments can kill the profits of a mid-sized business.
- SMB values and considerations – priorities and choices made by CEOs differ based on business size and other factors.
- Service partner considerations – There is nothing more frustrating to a CEO than a large vendor that is inflexible, and difficult to reach or work with after the purchase.
Selecting an ERP vendor that can offer both cloud and on-premise options ensures flexibility and resilience and is a safer, more pragmatic choice for mid-sized manufacturing and distribution organizations.
CEOs should be selective about the vendor they interact with. Pick the vendor and its strategic partners to be closely engaged with by meeting their CEO or senior management.
Business will be different
COVID has created a burning platform for CEOs to reconsider their enterprise software investments. They had big issues before the pandemic, now those issues are more urgent. The success of digital transformation hinges on many factors but starts with the CEO’s vision. The type of CEO leadership needed for ERP selection, implementation, and ‘go live’ requires quality time. It is also an exercise in organizational leadership, convincing employees of the importance of transformation, learning new ways of doing things, and adhering to new processes and activities.