An Enterprise Architecture Framework (EAF) can narrow your software purchase choices, but you must also identify key business requirements to maintain competitive advantage and daily operations.
To make the best choice when considering a software upgrade, you must keep in mind the type of business capabilities your new tools will serve and those capabilities’ key business requirements.
You can classify all businesses capabilities as one of three types:
- Capabilities that provide a specific competitive advantage and distinguish your company in the marketplace (e.g., brand management, product design)
- Capabilities that provide cost competitiveness (e.g., supply chain)
- Capabilities that are foundational for the day-to-day functioning of your business (e.g., accounting).
For example, capabilities that provide competitive advantage may require more custom solutions than your foundational capabilities, which typically require less customization.
But beyond that seemingly simple formula, things can get complicated. How does the cost of new or custom software compare to its value up and down your value chain? How well will it integrate with your current systems? And if you are transforming business processes, is your foundational software customizable?
Finding the answers to these questions begins with knowing which of your business requirements are key to your business.
The Importance of Identifying Key Business Requirements
To illustrate why identifying key requirements is so important, I once worked with a large transportation company that had implemented standard enterprise resource planning (ERP) systems for most areas of its business except for fleet management. The company had a more costly, custom solution for that. Could the business save money by putting its fleet on the ERP, too?
The company determined that while it was technically possible to manage its vehicles with the ERP, they needed to maintain the custom solution to keep their competitive advantage – even though it cost more.
The only way to gain such insights is by conducting a careful and comprehensive analysis of each business capability’s unique set of requirements.
How to Gather All Business Requirements
A good first step to identifying all of your business requirements is to interview the people who know your business capabilities (what you do) and the processes and systems underlying them (how you do them).
As you begin this work, don’t underestimate the importance of change management. To ease the fear of software changes—which will probably lead to systems changes—include representatives from each business area affected.
Then, hold follow-up focus groups and workshops with groups of employees to fill in the gaps and identify potential points of friction and additional value. They may even identify new requirements that could improve processes without additional software investment.
How to Identify Key Business Requirements
Once the employees have identified and documented business requirements, you should share their findings with other stakeholders for review. This process can help indicate which requirements are key and which you can eliminate. You are looking for requirements that:
- Deliver competitive advantage
- Maximize the business outcomes critical to your stakeholders
- Automate and simplify processes.
You should also look carefully at requirements that you can meet with the configuration of off-the-shelf solutions rather than customization of more unique solutions.
Obviously, the less customization you can do, the lower your cost — customization is one of the largest risk areas for any software project. At the same time, as the trucking company example shows, the value of a key business requirement may outweigh the cost. You can only know this by identifying your key requirements.
How to Maintain Value through Integration
Another important consideration is integration. Even if you decide you need a new or custom solution to maintain an advantage, your advantage will quickly erode if the solution does not integrate easily with your current installed systems.
For example, another former client, a large manufacturing company, decided to use a single vendor’s infrastructure for its nation-wide offices. The move was a success until the company tried to connect its manufacturing facilities.
After the company had set up data centers in the plants, they realized that the infrastructure required a special interface, with virtually no natural integration between systems. What was a big benefit to the administrative offices caused huge problems in manufacturing, showing why it’s critical to look at all interfaces in the upstream and downstream systems before implementing major systems changes.
The Next Frontier: Business Transformation
As businesses continue to evolve toward a fully enabled Business Anywhere future, software choices will increasingly come down to how to do things differently rather than just faster. In other words, you will need to consider business transformation as well as business improvement.
The catch is, as you transform more of your competitive capabilities, you will likely have to begin transforming functional capabilities. As a result, in the future, even your basic function software needs to be agile enough to accommodate change without seriously affecting costs or processes.
By getting ahead of the game on understanding and identifying key business requirements, you will position yourself for long-term success no matter what the future holds.
Conclusion
With the great variety of software solutions on the market today, you need to be smarter about buying software. Viewing your software selection through the lens of key business requirements can not only cut through the many competing claims in the market today but help identify a solution that is perfect both for helping you run your business day-to-day and for maintaining your competitive advantage.
In the next post in this series, we’ll look at how to interact more effectively with software vendors so you can head off unexpected costs down the road.
