Knowing Where to Put the “X’s”:
Thoughts on the Role of Advisory Services
By Sonny Origitano, VP Advisory Services, PSC Group, LLC
Once upon a time there was a steam generating plant that was not producing much steam. After a frustrating search for the cause, the plant manager, in desperation, called in an expert. After only two hours on site, the expert found the problem and placed “X’s” on two pipes that were causing the problem, saying that they had to be removed.
When presented with the bill, the plant manager asked the consultant how he could charge $5000 for only two hours of work. When he asked for an itemized bill, this is what he got:
1. Placing “X’s” on two pipes $ 400
2. Knowing where to place the “X’s” 4600
Total amount due $5000
The plant manager got what he paid for and probably a lot more. He had already used up more than that amount on his own staff not to mention the loss in revenue while the plant was shut down. For him, securing the advisory services of a consultant was the right thing to do. It was a matter of make versus buy. He could have funded his own internal staff but chose to “buy” outside advice. In today’s business climate, particularily for mid-sized enterprises, advisory services for many of us makes good business sense.
What are Advisory Services?
They are the advice, guidance and direction provided by an individual or a firm that has developed a client relationship with their customer. The key word is client. Let me give you an example. If a company wanted to staff a full service legal department, they would have to hire ten lawyers – one for product liability, one for affirmative action, etc… Most companies are not big enough to do this, so they place a law firm on retainer. Every time they have a new legal problem, they don’t hire a new lawyer. Instead, they leverage the relationship they have built over the years with their law firm and let them deal with the problem. They have established a client relationship with the attorneys at the law firm -- their trusted advisors who deliver the advisory services.
The same logic applies (or should apply) to solving business systems and technology problems. But it doesn’t, at least not yet. Most companies address such problems one at a time. They prepare RFP’s, read proposals, conduct interviews, and award projects. This was acceptable during the software purchasing and ERP boom of 1990’s, but with today’s focus on the bottom line, a broader view is required. You can’t just look at a problem in isolation. You have to look at it in context with the overall business process. This means developing an architectural strategy that looks at the overall business process and the enterprise-wide ROI.
This is where advisory services come into play. Your core competency is to make a product or deliver a service, not designing business processes. So, if you try to do it yourself, you will likely miss the new ideas and fresh point-of-view needed to make real change. On the other hand, if you have access to an advisor that has taken the time to develop a good understanding of your technology, processes and culture, you will get the advise you need to make the changes you need.
What to look for in Advisory Services
The obvious starting point when looking at advisory services is to find a firm that ‘speaks your language.’ Communication is the most important of any relationship, so you want someone that listens well and does not try to sell their own agenda. Because we all have our natural biases and perspectives, this is often easier said than done. For example…
If you ask a transmission store about your rough running car, you will be given a transmission related answer. Ask the same question at a muffler shop, and you will get an exhaust system answer. When it comes to business processes, if you ask your ERP vendor, you will get an ERP solution; the CRM vender the CRM solution, and so on. What you really want, therefore, is an advisor that views the world just as you do, from your perspective – an advisor that speaks your language.
Beyond the obvious, we suggest you look for the following additional attributes. Keep in mind that balance is important. You want a firm with the broad view that can ‘see’ the entire business process – you can engage the pinpoint expertise later, when you need it.
Business people who understand technology. You want the advice of business people that know the power of technology and how to apply it in a way that best suits your business. Business people know the importance of customer service and profitability. Those that understand technology know how it can be best achieved. They also know how to communicate with the technology side of the organization.
Technologist who understand business. You also want the opposite as well. Most technical managers are so involved with keeping the “machines” running that they don’t have time for the business issues. As a consequence, they often deliver what the technology provides instead of what the business needs. The better a technologist understands the business, the better he or she can provide the right solution to the right problem.
Cross industry perspective and experience. On the surface, getting advice from an industry specialist would seem to make the most sense. However, in our experience, the opposite seems to hold true. While having an understanding of the different industries is important, it is the expertise in business processes that really matters. (When you think about it, under the covers, all business processes are basically the same, so it is the business expertise that makes the difference, not the industry expertise.)
We have also learned that there is always more than one way to solve a problem. So, we think developing an expertise that is gained from working in a multitude of industries not only takes advantage of cross pollination, but is the best way to avoid the pitfalls of inbreeding.
Reengineering and Reintegration
In the 1990's, during the enterprise application boom, the emphasis was on integrating specialty applications with the host ERP system. We were in the one-at-a-time, product-centric, spot integration mode. This was a good start, but as the number of applications grew, the integration often resulted in a systems or process conflict. Spot integration was not without its problems. Today, with the increased pressure to reduce head count and eliminate inefficient processes, we need to take another look at integration -- this time from the business end. We need to focus on integrating the entire business process, not just the applications. We need to reengineer and reintegrate.
To just stay alive in today’s fast-paced environment, organizations must juggle the growing list of business initiatives – application integration, information security, taking EDI to the next level, and the development of web services. They must do this as they work to bring the many parts of the business process together more effectively as well as comply with Sarbanes Oxley, HIPAA, UCCnet, mergers and acquisitions, and other changes in the supply chain.
At the same time, there is the need to incorporate the newer technologies such as mobility, RFID, automation, and business intelligence as part of the growing trend to better integrate with customers and distributors. What this means is that companies have to combine business with technology as it has never been done before. They need to execute business process integration without disrupting the business process. They need to get the right message to the right people at the right time and in the right place.
With so many more pieces in play -- different operating systems, multiple technologies and remote locations -- the business integration process has become much more complex. This is where advisory services, for the reasons stated earlier in this essay, can provide what is needed to take your business to the next level. Your advisory services provider can show you how to create a seamless, collaborative business process that extends the enterprise to where ever it needs to go. And, best of all, they can show you how this can be done within your budget and with a return-on-investment that can make your business process integration self-funding. It is all in knowing where to put the ‘X’.
PSC Group, LLC., 1051 Perimeter Drive, Suite 500, Schaumburg, IL 60173
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