New
Breed of Enterprise
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Think of enterprise systems and SAP and Inform come to mind.
Multimillion dollar projects also come to mind — and the years needed
to acquire software, model process rules, program applications, and develop
interfaces to feeder systems.
Costs tend to limit the impressive benefits of enterprise systems to large
firms. Management consultants that undertake these mega-projects need
large staffs and extensive resources. So, “big six-like” firms
have largely had the arena to themselves.
A new type of enterprise system is opening-up the field. Vertical market enterprise systems for specific market segments are coming on-stream. The new breed of software opens the door for boutique practices. The new software places a premium on a consultant’s ability to deliver high value tasks (strategic planning, reengineering internal processes) which plays to the strength of the gray hair, scarred knuckle “partner level” expertise of boutiques. There is less need for lower value tasks (programming, interface development) and the armies of juniors that perform such work.
CRISP software from MicroNEX is an example of a market segment enterprise system honed (work rules, processes, culture) specifically for the grocery industry. It can be set-up for a fraction of the cost of a more general purpose enterprise systems such as SAP.
CRISP, as does most
of the new breed, lacks the overall breadth of SAP and Inform. In large
supermarket chains, CRISP-like software would therefore serve as an interactive,
realtime store enterprise system functioning as a key element of the overall
(SAP or Inform) system.
Even with the fast deployment features of the new software, much work
remains for a chain to do before reaping the rewards of converting to
just-in-time processes and switching from supply chain to demand chain
management. Although software and software set-up costs are largely reduced
by CRISP’s grocery market templet, years of corporate reengineering
— the speciality of management consultants — are required to
fully exploit an enterprise system’s features.
Used strategically, software packages such as CRISP are valuable practice development enablers. Every dollar spent on software typically generates $10 in consulting revenue which, in turn, increases a chain’s value (market cap) by $100.
CRISP helps consulting
firms respond to increased competition and clients’ desires for measurable
return on their consulting dollars. By reducing “systems” work
and time, CRISP enables consultants to begin showing a return on investment
earlier in an engagement and to focus on their core competency —
improving business practices. It provides tools to quantify improvements
and justify consulting expenditures with provable ROI.
CRISP lets consultants expand their practices to areas that previously
lacked practical solutions for obvious needs. The ability to advise clients
about target marketing, realtime perpetual inventory, and digitally deliverable
products has been constrained because they could not be implemented economically
(few firms can spend $2 billion as Wal*Mart did). CRISP also helps consulting
firms deliver services more efficiently by ‘productizing’ certain
consulting services — much as Anderson and others productized Best
Practice Reviews for specific market segments.
CRISP helps consultants smooth project cycle peaks and valleys with ongoing value building. Traditional fixed projects are replaced by fast reaction continuous improvement. CRISP quickly spots opportunities and helps ruthlessly exploit them. Metrics control every aspect — deals, salaries, in-stock service factors, multi-tier pricing — of shopper-driven value propositions. Fully allocated profits are measured, and responsibility assigned, down to store department level and below (see Realtime Supermarket Reporting & Control). Compensation plans are refined to reward employees who surpass established metrics.
CRISP makes practical such strategic visions as a consumer exchange (a’la Wal*Mart) by providing infrastructure needed for practical e-commerce (avoiding the lipstick on a bulldog syndrome of many e-commerce efforts). Consultants may think big, knowing standardized plumbing is in place that can scale-up to accommodate the vision.
Companies, and their consultants, have tended to view three types of value building as distinct activities performed by different practioners
- Improve specific
processes (Best Practice Review followed by Operational Drill-Downs)
- reengineer the
workplace and integrate processes
- reposition the firm for higher P/E ratios.
CRISP gives consultants tools to begin with the vision (step 3) and work backward, prioritizing activities that most contribute to value. Implementing digitally deliverable products, for example, may well increase market cap more (because of higher P/E ratio) than an alternative project which contributes more to net income (see Gap Management).
The grocery industry has proven to be a difficult market for management consulting firms. Fools are not suffered lightly and boutiques such as Kurt Salmon hold their own against the Big Six. Yet, supermarkets are more in need of help today than ever before. Consultants that develop expertise with vertical enterprise packages have “unfair” advantages over less productive competitors.
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MicroNEX management includes experts on operations, value building, and
financial markets who have helped our consulting partners capture repeat
business.
