Supply Chain is the New CRM: Digital Transformation, Customer Experience, and the End of the TLA

One of my favorite aphorisms is the somewhat snarky comment that most industry conferences are about selling tomorrow’s message to yesterday’s audienc e. Too often the keynote messages start with a nod to innovating a specific line of business product and then quickly go on to describe a brave new world that makes a whole lot of sense to forward thinking strategists and other like-minded people, but matters little to the business types in the audience looking for the latest and greatest bells and whistles that promise to make their specific jobs better.

Lately I’m wondering if there’s a yin to this aphorism’s yang. It goes like this: when the vision part of the keynote is over, most industry conferences default to telling a product story that focuses on what the vendor is most comfortable selling, instead of the story the audience needs to hear.

In a funny way they’re not as mutually exclusive as they may seem. What’s not funny is how the bipolar nature of this messaging problem means that vendors are missing an important opportunity to do more than promote the sale of the next few hundred licenses of a highly-touted three-letter acronym product in order to meet some sales team’s quota. And in the process of missing the opportunity to truly lead their customers, vendor conferences are increasingly examples of how the enterprise software market is continually driving itself directly into a marketing and sales wall.

Unfortunately, there’s a price to pay, and the day of reckoning is nigh.

What am I talking about? In the last couple of months I’ve been to a series of vendor events centered around TLAs like ERP, CRM, HRMS (an FLA, actually) and SCM. Pretty much each conference managed to sell tomorrow’s message to yesterday’s audience while simultaneously telling an innovation story that was more about selling the current product line than about what the customer needs in order to succeed in the future. To paraphrase the punchline from an old joke, it’s not just that the food was awful, the portions were also too small.

This disconnect between what vendors sell and what customers need is becoming a major problem for vendors and customers across the board. Whether it’s a vendor selling a single TLA or one that has acquired its way to a suite of the products and is now trying to sell an integrated vision, there’s a massive disconnect between what the future will look like and how the major vendors are going to respond.

Let’s start with the future – one that is basically upon us now. That future is based on a simple, well-known truth: companies need to run integrated processes that span formerly siloed domains like CRM, SCM, ERP, etc. in order to meet customers’ needs for digitalized experiences that mimic their experiences in a consumer world defined by Amazon, the Apple Store, and others. This of course means starting with a consumer-like customer experience, but one that has a modern backend supporting the just-in-time, lot-size-one experience at the frontend that B2B, as well as B2C, customers are looking for.

That future embodies another simple truth honored way too often in the breach: you can’t do a modern customer experience if the ERP, supply chain, and HR side of the house isn’t on board both from a process and a technological standpoint. Likewise you can’t run a modern supply chain if your sales people aren’t closely tied to the demand planning effort. You can’t do the best HRMS if you don’t know what the business needs in terms of skills and labor, and you can’t do enterprise resource planning without connecting….everything. I think you get the point.

But behind those visions, many of which are bruited about from keynote stages across the industry, are some very old-school ways of doing business in the field that pretty much guarantee if not failure than a result that falls far short of the promise.

The first way of doing business that needs to go away starts with the fact that our industry is pathologically organized around its TLAs. The sales and marketing teams on the vendor side are usually focused on a single TLA, even if they theoretically have a broader mandate to focus on an alphabet soup of TLAs. And on the buying side – same thing. ERP people buy ERP, CRM people buy CRM, SCM people… you get the picture. What’s even worse is that at larger companies with heterogeneous environments, which is most of them, the people working primarily with ERP Product X don’t talk to the people who manage ERP Product Y, all of whom have nothing to do with the people working with Product Z. The result is a two-dimensional matrix of disconnect: siloed stakeholders aren’t connected, and vendor product stakeholders – within and without silos – are also disconnected.

Kind of hard to sell an integrated vision to this mess. Much less execute it once the vision had been sold.

This isn’t just an internal problem, it’s an external problem that is best seen by looking at the conferences in our industry. Supply chain people don’t go to CRM conferences, and vice versa, despite the fact that you really can’t run a modern supply chain without thinking about the end customer. HR people don’t hang out at ERP conferences, even though people are more and more acknowledged as the premier enterprise resource. And of course, you don’t see SAP ERP stakeholders at Oracle OpenWorld or Microsoft Dynamics people at Infor’s Inforum, despite the fact that there’s a huge overlap inside their respective vendors’ customer bases.

In a nutshell, most conferences, and therefore most go-to-market efforts, revolve a round a particular three-letter acronym that represents the core of the company’s product focus. If you’re an ERP or CRM vendor you’re going to run a conference almost exclusively about ERP, ditto with CRM, SCM, HRMS, etc. And in that conference will be largely those ERP, CRM, SCM, and HRMS users who have bought your product and hopefully will buy more. And no one else.

Which means if you’re a vendor that sells a broad product line of multiple TLAs, you’re in conference messaging hell. To justify billions in acquisitions you need to paint a fully-integrated vision, that aforementioned vision of the future. But what is the event for that story? If the main flagship event is an attempt at a free-for-all of TLAs mashed into one event it probably won’t work to tell the integrated story to the right collection of stakeholders. They either won’t be there or they’ll drown in a messaging overload coma.

And at best they’ll be shown a marketecture slide of a bunch of technologies and products with little lines or arrows or boxes stringing them together. There may even be a bit of a nod to the cross-silo processes that could be enabled, though most likely they won’t be named. And how well will that work? If you’ve ever tried to sell a big business process upgrade on the merits of its underlying technology alone, you’ll know that once you leave the office of the CIO and start talking to the lines of business, nobody wants to buy an integration platform, they want business outcomes. And no one seems to be able to build a really solid business case – one that appeals to business stakeholders – for a technology upgrade or integration platform implementation. Especially when the messaging isn’t about process, it’s about technology.

This won’t end well. ERP stakeholders are telling me they are having trouble selling their CEOs on the massive ERP upgrade their vendor is trying to get them to buy into. And some are reporting that they’ve been instructed to “look around” at other alternatives. Why? If all you do is look at it from an ERP standpoint, and bearing in mind that the shift from the old to the new is for many many companies really a completely greenfield implementation, then there’s no business case that can justify the cost. This is of course because the business case the ERP people are being handed at their ERP conferences and by their ERP vendor reps is largely devoid of the larger picture of how the ERP shift has a profound impact on the other lines of business in the company.

ERP isn’t enough for justify the cost. There’s has to be more at stake and more value accruing to more stakeholders than just the ERP side of the house.

CRM and HRMS stakeholders tell me similar stories: They’re being sold on speeds and feeds and bells and whistles for their specific TLA domain, with barely a nod towards the bigger integrated picture of cross-silo processes stitching all the pieces together. SCM buyers among the larger, multi-product vendors are relegated to hearing about supply chain bells and whistles, but the story of how their responsibilities fit into the larger story of the integrated enterprise is off in an adjacent breakout session far from the keynote stage. Or completely missing.

Of course there are exceptions. I was at Kinaxis’ Kinexions conference recently and heard the continuation of a theme that emerged at last year’s conference: the smart, forward-thinking SCM executives more and more see their job as providing a product or service directly to a customer. We heard that from pharmaceutical companies, manufacturers like Lippert Components, and others extolling the virtues of a having customer-centric supply chain. Pretty radical stuff for the rather nerdy, dour world of supply chain planning and management.

Lippert is a great example of this thinking: they’re starting to integrate their Salesforce CRM system to their Kinaxis Rapid Response supply chain planning system. It’s baby steps for now, but deeply strategic for the company. In a complex business like Lippert’s, if the sales side is promising a turnaround time measured in weeks and the supply chain is sourcing supplies based on a timeframe measured in months, there needs to be some serious coordination or all efforts at providing a modern, digital customer experience will be for naught.

I couldn’t help thinking of another aphorism as I heard yet another pharma SCM exec talk about how pharma SCM is all about the patient and another customer on the podium at Kinexions opine that marketing was a key input into his company’s supply chain planning.

It goes like this: All customer experiences live and die in the supply chain.

And that’s precisely where more and more customer experiences actually do die. I’ve already ranted about the all-to-many examples of retailers trying to create a killer digital store experience while depending on warehouses running AS/400 systems or the like. You can pretend to create a veneer of modern customer experience with all the attendant bells and whistles on the front end but it will be all for naught if the rest of the company isn’t on board.

The challenge is on and the extended supply chain vision I heard at Kinexions – one Kinaxis can play a strategic role in but will also depend on other vendor products to execute – is a great example of the game that needs to be afoot in the enterprise software market. What is becoming more and more obvious is that digital transformation is ultimately about discovering, creating, and deploying cross-enterprise, silo-busting processes that change the game for everyone – customers, employees, and partners. When you try to digitally transform a single domain, like CRM, what you get is something that hopefully transforms some aspect of the customer’s experience. But really transforming the customer experience means tapping into a whole lot more functionality than any CRM suite can provide today.

In fact, when I sit in on a TLA-specific event, I can’t help thinking that focusing on extending the feature/functionality of a single TLA like CRM only tends to entrench it further in its silo and harden the positions of its stakeholders to resist what actually needs to take place. Which, in the case of CRM, is to end CRM as we know it. Same with SCM, HRMS, and pretty much every other TLA.

In a nutshell, these silos need to go. Which means vendors need to stop just pitching innovation a single silo at a time, and start mixing things up. If we’re going to keep having our CRM, ERP, SCM, and HRMS conferences, and I don’t see that going away any time soon, we need do something dramatically different with these conferences. We need to get supply chain, ERP, and HR people to show up at CRM conferences, and customer-facing employees and HR professionals to show up at SCM and ERP conferences. The supply chain gang needs to sit in on the contingent labor track at the HR shows to understand how to plan labor as well as supplies, sales people need to show up at SCM shows to understand their impact on demand planning. And HR has to be everywhere, because without the right employees there are no customers. Etc. etc.

Real innovation and digital transformation is no longer a matter of convincing any of these individual domains and their stakeholders to transform. We now need to convince them to reach across the aisle and be part of a cross-enterprise, silo-busting process. Or else.

Or else what? A final aphorism: Digital transformation by silo is a one way ticket to mediocrity.

Over and out.


Article by channel:

Read more articles tagged: CRM