Daily Archives: March 8, 2011

How to Tell the CEO that Your Legacy ERP is a Disaster Waiting To Happen

This recent post over on the HBR blogs about a system for speaking IT truths to CEOs is a must read for every CIO and CPO alike. Both the CIO and CPO know that every IT purchase has a life-span and that every piece of legacy software is a ticking time-bomb waiting to detonate and cost the company millions of dollars in a matter of days (or hours, as Comair found out in 2004) if it is not safely disposed of before the clock runs out, but both often have problems conveying the message.

According to the author, who modified a methodology used by medical doctors who often have to deliver bad news on a regular basis, the following seven-step process will often make the process easier.

  1. Understand the CEO’s perceptions
    Does the CEO grasp what a legacy systems issue is?
  2. Hold the calls
    Deliver the bad news in one, uninterrupted, focussed session.
  3. Enlist a business ally
    Make it a business problem, not just a technical one.
  4. Stick to the Facts
    Focus on the risk and the associated loss. CEOs are generally NOT technical.
  5. Don’t Improvise
    Have a set of best-, typical-, and worst-case scenarios prepared in advance and do not deviate.
  6. Insist on Immediate Action
    Infuse a sense of urgency and a time line for corrective action.
  7. Have a Clear Next Step
    Have a specific plan for getting to the goal.

It’s certainly worth a try if you don’t have a better option (and, chances are, you don’t).

Four Ideas to Make Your Procurement Department More Strategic

It’s a new year, and your Supply Management organization is again being asked to step up its game, which is getting harder and harder to do as there is only so much cost you can squeeze out of the supply chain. So what can you do? You can start by taking a fresh look at the strategic mission of your procurement department and look for ways to be the driver of change and value for your organization. As per our recent posts on Value Focussed Supply and High Definition Sourcing, the value in Next Generation Sourcing savings will come as much from Supply Management’s contribution to profit margins as it will from their contribution to cost reduction as Supply Management is in a unique position to bridge organizational silos and help the organization understand not only the drivers of cost, but the drivers of value and what value is available to be had, for little or no cost, in the supply base.

In an attempt to help your organization get started down the strategic path to Supply Management, BravoSolution has released a white-paper that provides 10 Ideas to Make Your Procurement Department More Strategic that is quite thought provoking. Containing great ideas on how to increase price, take better advantage of volume, and reduce fixed and variable costs, the white-paper is a must read for any Supply Management department struggling with how to improve value when there isn’t much cost left to take out of the equation.

For example, the white paper points out that you need to:

  • learn more about your company’s customers and what is really important to them
    as this will not only allow you to zero in on what they really need, and lower cost, but identify suppliers and products that could provide them with more value and allow them to increase price
  • learn about the markets you aren’t currently serving
    because maybe there is a profitable niche that you could easily serve with your current supply base and minor changes to product designs or pricing models
  • learn about technologies that could reduce your variable costs
    even if the technology is designed to be utilized in production and has to be utilized by your supplier because if it costs 100K and saves 1M a year, it should be a no-brainer
  • teach your organization about where it spends (too much) money
    because it really doesn’t know (and that’s why analysis has to be ubiquitous). It might not know that every department is buying its own toner off-contract at 2x the negotiated contract price. If you’re a large organization buying thousands of cartridges a year (because everyone is print-happy) that’s hundreds of thousands of dollars a year being flushed down the virtual toilet.

So check out these 10 Ideas to Make Your Procurement Department More Strategic. (They’re not vendor platform specific and will be more than worth your time.)