Navigating the challenges of technology integration is critical for businesses to remain competitive. With the rapid pace of digital innovation, staying current is not just about advancement but survival. However, adapting new technologies comes with its own risks. Poor implementation can derail projects and strain resources. This balancing act requires a strategic approach to ensure technology serves as a catalyst for success, not a pitfall.
It can feel a bit like being stuck between a rock and a hard place. There’s plenty of opportunity for the project to go badly off the rails. Equally, failing to adapt to technological changes can mark the end of a business. Ignoring technological changes can result in becoming obsolete, losing customers, and ultimately shutting down. It is essential to consider and, if appropriate, incorporate new technologies into your business strategy to stay competitive and ensure long-term success.
But the danger is real. It is possible to bankrupt a business with poor technology implementation. I have seen it come very close. There are plenty of documented examples of technology failures at scale.
For example, in the early 1990s, FoxMeyer, a leading pharmaceutical distribution company in the United States valued at approximately $5 billion, embarked on an ambitious technological upgrade. The company invested in a SAP system and warehouse automation technologies, enlisting consultants for integration with the goal of enhancing operational efficiency. Originally budgeted at $35 million, this major IT initiative ended up contributing significantly to the company’s collapse. By 1996, FoxMeyer was in bankruptcy.
The project’s failure stemmed from multiple factors. FoxMeyer aimed to overhaul its distribution systems within an aggressive 18-month timeline, a goal that proved to be overly ambitious. The threat of automation led to resistance among warehouse staff, with the automation of the first warehouse being met with sabotage, resulting in damaged stock and incomplete orders. Moreover, the new SAP system’s performance was disappointing. It handled 10,000 orders nightly, compared to the 420,000 managed by the previous system. Compounding these issues, FoxMeyer contended that the consulting firm and SAP treated the project more as a training opportunity for novices rather than assigning experienced professionals, further exacerbating the project’s challenges and contributing to the company’s downfall.
Balancing this with the competitive forces of innovation that are required in order to continue to be abreast of new technology is an important balancing act to keep in mind. While this example is large and in the public domain, it has surfaced on projects I have worked on or next to. The most important question to reflect on here should be, “Would your business survive if the project didn’t?”
3 Risks to Work on Before Your Project Starts.
Often, when we first meet with clients, they are focused on the process of selecting the right system for them. They are not thinking so far down the track about whether things might go wrong or not. They often make these mistakes:
1. Underestimate the effort required by your team. Hoping that the vendor (or a consultant) will do it for you is not a strategy for success.
2. Fail to understand the importance of the vendor relationship. Like all relationships, if you only call when there’s a problem, you will be at the back of the queue.
3. Fail to appreciate how quickly the balance of power can shift in a crisis. Constructing the agreement so that you both have an interest in getting the job done will serve you well in a crisis.
It’s easy to overlook some things. There are no guarantees in projects or life.
However, if you can work on these before your project gets underway, then you’re stacking the deck in your favour. You are laying the foundations for a more equitable and collaborative working relationship with the vendor(s) that you choose.
Instead of making these mistakes, counteract them.
If you can, add people.
After all, you will be doing extra work, so you’ll need some more help. How this looks in your business will be up to you. Do you need more help in the AP department to free up the AP team lead? Do you need to bring in casual staff in the warehouse? Do you want someone to lead the user testing or project management? Do you need a BA? Allowing for some additional experience to add to your project skills or allowing your team to get to the project work will make a difference in how your team engages on the project and how completely and quickly the work gets done.
Make your vendor(s) into partners.
The structure of the agreement that you have with your vendors, when done well, invests them in the success of your project as though they are an extension of your own internal team. From the way the contract is crafted to the engagement at the team, sponsor, and executive level, it shows how close the vendor is to your business and how invested they are in your success. All things being equal, your success is their success.
Assume you will have a crisis.
If you at least assume that there will be a crisis moment at one or many points through the project. How vendors manage you, the project, and a crisis situation will be a reflection of the effort and energy that you’ve put in through the engagement and the project.
One last thing to think about.
The power balance and how the power balance shifts. When you sign a contract, you have more power. Before you sign a contract with a vendor, you have all the bargaining power you will ever have. When the vendor wants your business but don’t yet have it, this is the moment to ask all the burning questions. Once you have signed, it’s done.
A focus on nothing but getting the best price is a case of “careful what you wish for”. If you’ve heard of the cost, scope and quality triangle you will understand that both scope and quality will likely suffer if you focus on nothing but cost. Long term relationships, like software vendors who support the core processes of your business cannot be a relationship that’s solely focused on cost. Putting time and thought into constructing the relationship that builds ‘skin in the game’ for the vendor as well as you is the secret sauce to engaging with a vendor at a more meaningful level.
The most masterful example of this I have seen is with retailer who spent months building the engagement and trust with three cornerstone vendors before embarking on a large transformation project. Whilst they were focused on getting a good deal, they were also looking to build in review mechanisms that would keep the vendors supporting and helping each other. They understood that allowing vendors to drift away from each other could result in the ‘blame game’ and finger pointing when things didn’t go to plan. This was new technology so they ensured that each of the vendors had internal experts who could support the implementation and provide insights into the best ways to connect, develop and implement their part. Contracts were constructed to ensure that the check points and reviews were part of the cycle of the project and that each vendors responsibilities were understood from the start. They impressed upon the vendors the need to have their most capable implementation team on this project and they didn’t ‘rush’ the negotiations. This allowed them to build the agreements and relationships long before the project kicked off.
To ensure your technology implementations strengthen rather than jeopardise your business, partner with 6R Retail. Beyond expert system installations, we guide you through comprehensive business improvement strategies and champion organisational change. With our tailored training and coaching services, we equip your team for success. Contact 6R Retail to learn from the past and build a future-proof business.