Successful technology implementation requires research, change and a look at short- and long-term goals.

MAKING TECHNOLOGY

WORK FOR YOUR COMPANY

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SALT RIVER PROJECT (SRP), a utility company in Tempe, Arizona, was facing a challenge: Its legacy systems — customized business operations systems developed by internal IT teams — were outdated and reaching end of life. “We had existing systems that weren’t integrated and didn’t

talk with each other,” recalls Carrie Young, senior director, corporate operations services at SRP.

A new approach was needed. SRP personnel spent a great deal of time plan-ning and researching new technologies. They consulted with representatives from other utilities for lessons learned.

“This process was a way for us to get ahead of the curve, to determine what we were going to do rather than wait for a legacy system to crash,” Young says. “We took a proactive approach by considering what was the best system to match our internal requirements that we could build upon as we moved forward.”

Implementing the right supply management technology can be challenging at best for any organization. It can be hard to avoid the hype that a certain technology will solve all your needs or that the latest and greatest technology will improve your supply chain’s visibility or effectiveness.

It can be equally difficult to distinguish and assess the possible from the probable: That although many intriguing technological innovations exist, you can’t realistically implement them all. With choices that range from automated equipment and other hardware to enterprise and collaborative-hub software, as well as intermediate technologies like RFID that involve both hardware and software systems, it can be daunting for an organization to know the best tech-nology choices.

Using Technology as a SolutionOne way to evaluate whether to invest in a new technology is by looking at what

similar organizations are doing, says Uday Karmarkar, Ph.D., Los Angeles Times chair in technology and strategy at UCLA Anderson School of Management in Los Angeles. That’s a conservative approach, he says. A more proactive approach, such as what SRP took, “is to ask whether the current processes are failing or broken, and if a new approach can solve the problem in a pragmatic way,” he says.

Supply managers also can look at new technologies from a comprehensive yet balanced viewpoint, says Michelle Drew Rodriguez, manufacturing leader for Deloitte’s Center for Industry Insights in Chicago. The November 2015 Advanced Technologies Initiative: Manufacturing & Innovation report by Deloitte and the

As one of the nation’s largest pub-

lic power utilities, SRP provides re-

liable, reasonably priced electricity

and water to more than 2 million

people in Central Arizona.

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By Sue Doerfler

Council on Competitiveness, a Washington, D.C.-based leadership organization, suggests evaluating how technology innovation can be applied to enhance your supply chain by looking at: • Core possibilities. How can you

use technologies to optimize your existing products for your existing customers?

• Adjacent possibilities. How can you use technologies to expand your business into new areas?

• Transformational possibilities. How can you incorporate break-through technologies and/or invent products/services for mar-kets that don’t exist?

The report, which surveyed 38 executives from global compa-nies and organizations, found that advanced technologies — the trans-formational — help organizations gain competitive advantage, pro-vide new opportunities and create economic growth.

“You can’t underestimate the significance of companies’ short-term needs or their focus on the bottom line and driving shareholder value,” Drew Rodriguez says. “But at the same time, you must keep

an eye out for the future and also have a longer-time horizon in play — because that’s when transforma-tional technologies can truly help provide significant value to your 3business processes and products.”

Leveraging Technology Nevertheless, focusing on the

core — how a technology will ben-efit existing customers, including employees and stakeholders — is often the starting point for organi-zations looking to implement new technology.

SRP spent a year developing a list of requirements, which included electronic procurement capabilities, when it researched available tech-nologies. It selected an ERP system, which it implemented in 2013.

“We developed requirements to match business processes that would provide the best opportu-nity for us to implement a ‘vanilla’ solution,” Young says. “We had to be clear about our objectives and what we were trying to accomplish, to make sure the solution lined up to those requirements. These factors contributed to the overall success.” By implementing the ERP system, SRP was able to shut down 22 legacy

systems that no longer required support, she says. “IT could now focus on this integrated solution.”

In addition to coming up with requirements, supply managers also should investigate what tech-nologies offer and what their key strengths are. When looking for spend analytics software, Vulcan Materials, a Birmingham, Alabama-based producer of construction aggregates, spent about nine months researching solutions, including viewing demos and con-ducting pilot projects.

“We didn’t really know much about these systems but we became educated,” says Michelle Lax, procurement product man-ager at Vulcan, which ultimately chose a SciQuest solution. “What we learned is that the importance of this type of system was the way it classified the data.”

Finding Unexpected ValueOccasionally af ter imple-

menting a technology, organiza-tions may discover unexpected advantages.

Lax says that not only does Vulcan’s new software benefit the procurement group — it gives the

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“WE HAD TO BE CLEAR ABOUT OUR OBJECTIVES and what we were trying to accomplish, to make sure the solution lined up to those requirements.

THESE FACTORS CONTRIBUTED TO THE OVERALL SUCCESS.”

— Carrie Young, senior director, corporate operations services, Salt River Project (SRP)

team more visibility on its data — but the company’s financial analysts also are starting to use it.

“Instead of only using it for cost-saving projects or under-standing the spend from a pro-curement perspective, they are looking at it from a financial analy-sis-perspective to understand what the spend is,” she says. “They are communicating with operations personnel so they can understand who they are buying from and what they are buying. Thus, plant man-agers can now make better buying decisions.”

Vulcan also has been able to use the technology in unexpected ways, particularly adding new data fields that increase analytical capa-bilities, Lax says. “We added a field called ‘spend manager,’ which has enabled us to enter the department that is managing the spend. It could be our department, which is more of a centralized, strategic sourcing group, or a local procurement department, which manages spend from a more regional perspective. Or it could be managed from a func-tional perspective, such as benefits, insurance or IT.” Because the com-pany is able to designate the spend manager, it can better examine its spend and determine the appro-priate department to reduce costs in those areas, she says.

“Another example is large mobile equipment. When you buy from dealers across the country, such as a Caterpillar dealer, each has a different name in your data base,” Lax says. “It doesn’t say Caterpillar. So if you want to know everything you’ve bought from Caterpillar, you can’t tell. We were able to add a new field called ‘reporting parent’ and name all the dealers as Caterpillar or the designated brand. Now we are able to run reports and we know all of our spend with Caterpillar and other companies.”

It’s important to think outside

the box of what a system can do, Lax says.

Implementation ChallengesIt’s not uncommon for orga-

nizations to experience hurdles or challenges when implementing new technologies.

For SRP, installing the ERP system was the easy part of the process, Young says.

“The most challenging and most difficult part is the change management, because you are turning people’s worlds upside-down,” she says. “You have employees who have been in those jobs 20 to 30 years, and now you’re telling them you’re going to change and do something different.”

New technologies always create process and organizational change, Karmarkar says. “It is pretty much a rule that there will be winners and losers in the course of change, not to mention a lot of new work,” he says. “Thus, getting buy-in from senior managers and overcoming resistance — both vis-ible and unseen — is both crucial and difficult.”

Lax says Vulcan’s procurement group received management sup-port to buy and implement the new software. “In our company, if we are doing something that affects the stakeholders, we need to get them on board. In this case, we didn’t need to do that,” she says. “It didn’t really change anything our field personnel were doing. We just had to make sure the new software was valuable from a procurement perspective. But our stakeholders are now seeing value in the data we receive. I get calls now from the field asking me to run reports for them.”

SRP established an organiza-tional change management group, whose members included stake-holders, to help with the transition to the new system.

“We spent months talking about the process flows that were going to change,” says Steve Francois, director, purchasing services at SRP. Training has been key to a successful implementation. “You definitely move toward process consistency when everybody uses the same system, when it’s fully integrated, and when the cause and effect is under-stood by everyone,” he says.

The Bottom LineNew technologies often contain

the promise of providing more value to the customer or improving pro-cesses, Karmarkar says. “But at the end of the day, the only justification for implementing a new technology is improved business performance, or in the common parlance: a posi-tive ROI,” he says. “This may sound conservative, but experience teaches us that backroom improvements are best treated that way.” However, if a new technology also provides cus-tomer value or process improvement, that’s even better, he says.

To achieve positive ROI, supply managers need to look at both short- and long-term implications to see what can help solve their business needs today and in the future, Drew Rodriguez says.

Some of those needs or perfor-mance benefits may not be realized immediately after implementation. And the implementation of one tech-nology may spur the need or desire for another.

Young says, “We have a tech-nology roadmap for supply chain. We put in the core ERP system. We got rid of the legacy systems. But now, in that roadmap, we have other requirements we need to build upon.” One is a work-management system, she says.

“We had an analogy during the project that post-implementation we were going to crawl, walk and then run. Now we are no longer crawling, we are walking. And we need to get to where we’re running.” ISM

Sue Doerfler

is a publications

coordinator for

Inside Supply

Management®.

AUTHOR

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© Institute for Supply Management®. All rights reserved. Reprinted with permission from the publisher, the Institute for Supply Management®.