If we want to be productive, we must aim for continuous improvement. We need to realize that digital initiatives should be part of your continuous improvement plan. Digital IQ is very important, and our guest, Sam Gupta, explains why. Sam has been an ERP thought leader in the digital transformation space for nearly two decades, primarily focusing on financial systems and ERP. He spends his time consulting with SMEs as a Principal Consultant at ElevatIQ. In this episode, he joins Penny Zenker in discussing digital transformation initiatives for building and growing businesses. Tune in to learn more about his best practices!
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What’s Your Digital IQ With Sam Gupta
I am excited to talk about raising your digital IQ because it’s an important part of working smarter. That’s what we do here on the show is we help you to work smarter. I’m excited to have ERP Expert with us, Sam Gupta. He has been an ERP Thought Leader and Guru in this digital transformation space for decades. He’s going to bring the real deal for you, guys. His primary focus has been on ERP and financial systems, but his experience goes much wider than that. I can go on about his profile and you can read more about that online, but I want to get into it with Sam right away because I want you guys to have more time with him. Sam, welcome to the show.
Penny, thank you so much for having me. I’m super excited to talk to your audience.
You talk about digital IQ. What does that mean? What’s a digital IQ?
The way I look at digital IQ is obviously, there are two ways of completing our task. One is you are going to be completing either manually. This could be from a Fortune 500 corporation perspective or an SMB or individual. Any business process or any task that you are trying to complete, either going to be completing it manually or you are going to be completing it using some form of digital technology. Both of them have their place.
The manual effort works well with some processes. The digital effort works well with some processes as well. Having that digital IQ, what that provides you as to assess which are the process where I should be utilizing the digital process versus the manual process. In our experience, I think that’s what is missing from a lot of companies from people when they talk. For them, technology is very easy to implement. That’s what they think. They don’t understand how difficult the technology could be to implement. You need to have that digital IQ to be able to assess whether technology is going to make sense in a specific environment versus not.Sometimes it’s hard when businesses are not willing to listen to the experts. Click To Tweet
What it brings up for me is you have to have done the process manually first or know what the process is. A lot of people skip that step of getting clarity on what their process is. When you were talking, I get it. There’s the digital and the manual way of completing a task but seeing that series of tasks as part of a process, I think people don’t step back enough to look at the whole thing. Would you agree with that?
I completely agree with that. In fact, I go on to suggest that when people think of the system, they are always thinking of some computer or tool or software or hardware, but the system could be your manual system as well.
It could be a series of steps that makes the system or checklist or anything.
If you go to the library, it’s not that everything in the library that is working smoothly is because of those computerized systems. It’s also because of the organized process. If you are going to implement a digital system or digital process in an unorganized process, the result is not going to be as optimal. The fundamental assumption of any digital system or the digital process is that you have figured out the physical process first.
If you cannot go from point A to point B on a piece of paper, implementing a tool is a bad idea. That’s where I think the digital IQ is relevant. You need to understand what digital systems can do. They cannot improvise your processes. You need to figure your processes out yourself. The tool is an enabler. It can help you achieve those processes, but you have to simplify, organize and streamline your physical processes first.
It reminded me of the story of when I was responsible for this technology group. The team came and said, “We need a new document management system. Here’s what we’ve chosen and we’re going to implement this.” They already had an implementation schedule and I was like, “Tell me how you’re going to implement this. Was it working with the previous system that we had and how you’re going to improve the process and the way that we work around the documentation?” They had nothing. They wanted to go with it because it was the cool new technology. It’s garbage in, garbage out. If you don’t have your process defined, how are you going to teach people how you want them to use it? It reminded me of that. I think it’s important if what I’m hearing you say is the first step of this digitalization is to be able to know and think about what your process is.
In fact, I’m going to add on top of that. When people think of technology, it’s easy to talk about technology, but it’s extremely difficult to implement these technologies because not only do you have to figure out your physical processes, you have to figure out the interaction of your systems as well. The way you would figure out the interaction of your people and the interaction of your processes inside your corporation, systems are no different. For example, in this particular case, when you are bringing a new system such as your document management system, you have to figure out your migration path. How are you going to move your existing data to your new data? How is this system going to be talking to the other systems? If you don’t have all of that mapped out, the results are not going to be fine.
Why don’t people do that in your opinion? If they don’t start right, they’re not going to end. Why does this happen?
Let me give you some data points here. I’m sure you have heard this before and your audience has heard this before as well. Any of the digital transformations, when you look at the success rate of any of the digital transformation initiatives, that’s probably going to be 20% to 30%. 70% to 80% of the digital initiatives typically fail. Many people can look up on Google, everybody knows about it. If you look at the percentage of failures among the people who are implementing it for the first time, I can almost guarantee this, it is probably going to be 80% to 90%.
If you ask a person who has implemented 5, 6, 7, 8, 9, 10 or 200 systems, they are going to be the most nervous people. They are going to be the most irritable people. They are going to freak out as soon as you are going to be talking about implementing new technology. The reason why they freak out is because they have lived through this life. It’s not easy to implement. I’m not saying that you should never implement digital technology or you should freak out but their success rate is going to be far higher.
They have figured out the first step that you need to do and to implement any technology is going through that process. The first-time buyers or the implementers, would they think of easy technology? Whether you are implementing hardware or software, it doesn’t matter. For them, it’s like buying a package from The Home Depot. They flip the power button on and that’s it. I’m done. My technology should work magically. Technologies are not supposed to work that way.
Clearly, a lot of people online here are in the corporate world or entrepreneurs, but anyone, even for their personal, they’re going to download an app. They’re going to do something for themselves to make themselves more productive in an app. There are thousands of different app out there. If you don’t know what it is you’re trying to do, you’re going to have a failure process in that too. How many times have you heard somebody that they started this new app and it doesn’t work or it failed? It’s not that the app doesn’t work. It’s that we failed in using it the way that it’s supposed to be used.
In fact, there is a massive difference between the personal productivity app versus the enterprise. The app that is going to be cross-functional in nature is going to automate the process across the departments. There’s a massive difference. Nothing can simplify that. I am looking at the software that is running on my desk. Why is it so difficult to implement an ERP system? It is difficult because a lot more organizations are going to be more.
You have to look at every single factor of where are going to be your failure points overall when you are looking at this enterprise-wide app. When you are looking at your personal productivity app, it’s easy because you are the only one who’s mapping it. Nobody has to interpret your processes. You are trying to customize it as per your needs, but the whole organization is not actually dependent upon that. When you talk about the standardizing of the processes across the organization, that cross-functional alignment among different groups, among different people is where the real challenge is. It’s hard, to be honest. It’s hard in the physical world and it’s hard in the digital world.
What are some best practices that you have for people as they’re looking into either putting in place an ERP system, which is more organization-wide or evaluating to shift from one to another? What are some best practices you suggest?
There are millions of best practices. We have millions of failure points and lessons learned, but one of the best practices I am going to bring here is going to be to stop thinking like binary. This is the problem in most digital implementations. Business executives are going to come. I’ll tell you a story of one of the businesses that we were working with. They found that when I am implementing this ERP system for the first time, I have done my research. I am going to download these templates. I am going to put 500 different requirements. My system is going to be amazing. I don’t have to work with a consultant because I have done my research. I’ve read through the documentation, but in case of additional requirements, the way requirements were, you need three things.
Number one, you need to your business deeply. You need to understand how other businesses are going to utilize this process or the way they have this process map and that is what it’s called best practice, overall. Learning from the industry. None of your people are going to have that because most likely, they didn’t spend enough time in the industry or they are not spending time because these things are changing on a daily basis. The third piece of the puzzle is going to be your technology or the tool.You have to have an organized system mapped out in your business to get great results. Click To Tweet
There are thousands of ways of implementing these same scenarios. You need to figure out the optimum way of implementing and optimizing it for your business process is. When I look at this requirement sheet from this business that I’m talking about, they had these 500 to 600 different requirements from the ERP perspective. Requirement one was accounts payable. Requirement number two is account receivable. Requirement number three is human resources management. Requirement number four is human capital management. They are going to go to a vendor. There are a million possibilities here when you talk about yes or no. What is the vendor going to do? The vendor is going to say, “Yes.”
“Yes, we have HR management. We have accounts receivable.”
It doesn’t mean anything. Think of this as building a physical product. How would you build a physical product? Let’s say, if you were trying to be at a keyboard or mouse or some of the physical products, you need to know each of the components. You need to know the process of how you are going to go from point A to point B. What is going to be your quality process? This software isn’t a giant mathematical formula. Just because you don’t see it, it’s not supposed to be a binary switch. The more you embrace, understand, dig deeper, kind you are to yourself and kind to your team, the easier the path is going to be. For me, the best practice is going to be either you researched it deeply and spent two years researching this or work with somebody who has done this 100 times.
I totally disagree with you there. Your business has changed. It’s different. The tool’s not even the same. I don’t know what you’re saying there, but two years of research is going to make you less competitive. What do you mean by that?
When I say two years, meaning if you are trying to do it yourself, if you have to learn those three requirements, which is going to be number one, you don’t know your own business. That is the biggest problem with everyone.
Two years to know your business, I would agree with that.
Six months, nine months, it’s going to take probably to know your own business.
It shouldn’t, but it might.
The second thing you need to know is the best practice. Your business is not optimized the way it is supposed to be running. That’s probably the reason why you are looking for ways to improve. If everything is working, then probably you should not be reading to this show or you should not be talking to people who are doing the digital transformation. You have the scope of improvement. You need to look at, “If I have five competitors or 100 companies in the industry, how are they functioning? What are they doing differently that they are more superior? They are able to sell them the same product for a cheaper price and they don’t have as much cost as I do.”Understand the failure points of your system to increase the potential success. Click To Tweet
That is going to be a reflection that you are not going to get unless you talk to somebody who goes to 200 different businesses then understanding the tool. You talk about these ERP systems. They are very complex overall. You need to know at the line level what is going to be the implication of each of those lines when you are going to make those decisions. Either you can make these decisions yourself or hire somebody who can make these decisions for you. Again, they might not be able to make the decisions for you, but they can at least provide you, “If you do this, this is the pro. Pro number 1, 2, 3, 4 and 5.” You still need to make those decisions, but at least you can hire somebody who knows what they are talking about and assess whether that is going to be the right fit for your business or not.
This is one of those situations where things are often more complex and take more time than we think they’re going to take. Therefore, why not hire an expert in the space to make sure that you do it right the first time because it’s painful. It’s expensive to not do it the first time for this type of thing. As you said, 70% or 80% failure rate is huge and you don’t want that to be you. This is one of those spaces that it’s going to cost you a little bit more, but it’s going to be much less expensive in the long run. I will agree that if you’re going to be implementing a new system, that you want to bring in somebody who has expertise.
In fact, what I am going to suggest is it’s not that if you hired somebody from outside, they are going to fix the problems magically. You will still need to work with them. You need to figure out how to work with them. It’s almost like hiring a building contractor. If you are not going to be listening to them, they are going to tell you the best practices. If you don’t listen to them, obviously they will follow the orders. My friend in the chief management role talks about this concept of a compliance culture. You don’t want your vendors to be complaining. You are hiring them because you care for their expertise and you know what they are bringing to the table. You need to figure out how to listen to them and how to take advantage of their expertise.
We’ve talked about best practices. When you go into an organization and you start this process, what’s the number one thing that you work first to accomplish with them?
Typically, I think every organization is going to be at a very different stage. I can probably talk about some of these stories from my experience. I’ll take one example.
That’s perfect. Share a story with us.
I’ll give two examples of one of my businesses and one not-so-organized business and they were looking for the ERP. I’ll take the example of the positive ones where these guys knew what they were doing overall from the process perspective. The CEO invited us. He had implemented at least 6 to 7 different systems in the past and they were very well researched when they contacted us. In their case, we need to have each of the flow diagrams documented and aligned to, “We would like to see this.” They have done research about our company’s profile, my profile. They have listened to a lot of different podcasts and videos. They had done pretty much everything.
When they spoke to us, they were like, “This is not going to be perfect. We are looking for you to come here and tell us what we can do to align this. We want you to be our mentor in streamlining these processes first before we can talk about a specific tool.” They simply took out the tool from the process mapping exercises and they were even delivered as super experts. If you look at their warehouse, their manufacturing facility, everything was so well drawn as if you walk to an airport. When you go to the airport, everything is so systemized because they spend a lot of time figuring out how airports are supposed to be done.
If you go to a small to medium-sized business, they are not going to spend as much time organizing their facility and processes. In this particular case, these guys were very well organized overall from a process perspective. That was reflected on the paper that they had spent a lot of time figuring out how they should be replicated on the paper. By the way, they were continuously improving always that, “I am going to use this as a training tool.” Whenever you are going to train your new employees using the same tools, obviously you are going to come to know that, “There are a lot of gaps in this process, so I need to make changes so that it’s a living and breathing document.”
The second story. This particular company, when we’ve been there, for them, they simply wanted a port of the ERP system. I’m like, “Do you want a port? We will provide you a port of the system. Do you know which system you are going with?” They were like, “I have selected two. In fact, if you were thinking that, I am not going to go with the second one. We are very firm on the first one.” I asked them, “What was the reasoning to select that first system?” They were like, “I have done my research. My IT person did a lot of research and he feels that this system is the ideal for our business.” I asked him, “Did he tell you anything else? Why is it ideal?” The IT person mentioned, “I have been doing this for years. The reason it is ideal is because I am telling you this.” I said, “Do you have any requirements?”
They didn’t have any specifications, no criteria. They didn’t have it well-defined. They went from, “We’ve always used Microsoft, so we’re going to use Microsoft,” or something of that nature.
There were no objective criteria. It was a very biased assessment, in my opinion. I understand that sometimes you’ve got to trust your people. I completely get it, but at the same time, you at least have to have some criteria, so you are able to justify yourself that you are not going to buy something that is going to be completely unfair for your business. Even if you analyze these 500 requirements at a very minute level, I will still be nervous because I’m the guy who’s typically implementing this. I don’t want to overcome and do with these skills processes because it’s very hard to implement these IT systems. If you go over, then it’s going to fail, then you are going to get a bad name in the market that nobody wants. Sometimes it is hard when businesses are not willing to listen to the experts.
Listen to the experts. We’re coming to an end. I think we got a good feel for some of the best practices at a high-level thing to look at, to bring those objective criteria and define things, know your business, look at the interfaces and be careful in the selection of your technology. Is there anything that you want to leave the users, the audience with before you go? Is there any piece of wisdom that as they’re undergoing this process, in addition to what you’ve given that you would give them?
I would leave your audience with one thought because I know that your show is about productivity. How can we be more efficient? When we look at efficient productivity, we are always thinking about continuous improvement. When you talk about the system implementation, you typically don’t think this is going to be your continuous improvement or you are going to be continuously investing money in this particular initiative.In any business process or any task, you will be completing it manually, or you are going to use digital technology. Click To Tweet
When you look at the digital initiatives or the digital confirmation methods, they should be part of your continuous improvement agenda. You should have the mindset that, “I am improvising myself on a daily basis. I am trying to evolve my KPIs.” Those KPIs are going to be enabled by either the physical process or the digital process depending upon which is going to be the right fit. Again, have that continuous improvement mindset always, even that the digital system is what I would like to leave your audience with.
Thank you so much, Sam. Where can people get ahold of you? A website or a giveaway that you might have for them?
I’m easy to find. I’m a popular guy on LinkedIn, social media. Even if you google Sam Gupta, the first profile and LinkedIn profile are going to be mine. If you want to go to a website, that’s going to be WBS.rocks. It is the name of the website. There’s going to be a contact form to let them. The business name is ElevatIQ and the site name is ElevatIQ.com. Fill out the contact form there as well, and we’ll get in touch.
Thank you so much. Thank you, Sam.
Thank you so much, Penny, for having me. I appreciate it.
Thank you all for reading. Here’s the tough love that you’ve got to hear is that 70% to 80% of the technology projects that are being started are failing. They’re failing because you’re not taking time to step back, think and work your process, and understand your business and how your business flows and all the interactions and interfaces. Even though it might seem tedious and you don’t have the time, this is absolutely critical for you to grow sustainably in your business. You want to make sure that you’re spending the time and bringing in the expertise so that you do it right the first time. There’s nothing more productive than doing things right the first time. That’s how we work smarter. Thank you all for being here. I will see you in the next episode.
About Sam Gupta
Sam Gupta has been an ERP thought leader in the digital transformation space for nearly two decades, with the primary focus on financial systems and ERP. He has been part of large transformation initiatives for fortune-500 corporations but now spends his time consulting with SMEs as a Principal Consultant at ElevatIQ. Sam’s deep expertise in the manufacturing value chain combined with cross-industry expertise enables him to have a higher success rate with digital transformation initiatives in the manufacturing, distribution, and retail industries. Sam has been involved with the startup ecosystem in the last 10 years and has experience in building and growing businesses from scratch. Sam regularly speaks at industry conferences and contributes his experiences through many popular blogs and publications. He also hosts a podcast called WBSRocks focused on business growth through digital transformation and ERP where he interviews top influencers and executives from ERP, Supply Chain, Digital Transformation, Supply Chain, and Accounting.