Business Value vs. ROI
By Tanu Sood on Jan 13, 2014
Author: Rick Beers
Rick Beers is Senior Director of Product Management for Oracle Fusion Middleware. Prior to joining Oracle, Rick held a variety of executive operational positions at Corning, Inc. and Bausch & Lomb.
With a professional background that includes senior management positions in manufacturing, supply chain and information technology, Rick brings a unique set of experiences to cover the impact that technology can have on business models, processes and organizations. Rick will be hosting the IT Leader Editorial on a regular basis.
I still remember a conversation that changed the way I looked at enterprise systems as if it occurred last week, even though it was 17 years ago.
I was on the balcony of a convention style resort in Phoenix during an annual conference held by a large manufacturing technology research organization. I had recently been given responsibility for the supply chain technology portion of a global ERP program and was at the conference to learn more of an emerging (and at the time heavily hyped) technology known as Advanced Planning and Scheduling (APS). Systems such as PeopleSoft’s newly acquired Red Pepper and SAP’s APO were promising to replace the manual processes at the core of existing supply chain planning systems with automated modeling, detection and response technology. I was easily convinced. It was sexy, compelling and carried with it ROI’s in excess of 30%.
While at the conference I was pulled aside after dinner by a marketing executive at the research organization after he heard me in a panel discussion extolling the promise of APS. Out on the balcony, over a glass of wine, he advised “Be careful. Just because you have a system to tell you what to do doesn’t mean that you should do it, or even can in the first place. Your legacy manufacturing equipment and business processes must change to keep pace with the shorter run lengths and more frequent changeovers that the system will require.” This one piece of advice opened my eyes to three dynamics that have stayed with me ever since, and have guided my recent work with Oracle on AppAdvantage:
It’s the last one that was the most profound and is an issue still today. Our industry (providers, partners and practitioners) is still in search of quantifiable ROI from enterprise technology. It’s like the search for the Holy Grail: a worthy mission that cannot succeed because its basic premise is flawed.
Instead we should focus on business value. In effect, a contract with business leadership that identifies the outcomes that a technology project will be measured upon and the steps necessary to deliver them. This has five key components:
Oracle AppAdvantage, and the layered framework that it comprises, has been developed around the delivery of Business Value as opposed to more traditional technology ROI. In particular, its seven Entry Points are designed to facilitate Business Value discussions between IT leaders and Lines of Business leadership. Its visual similarity to a compass is deliberate; it provides directional guidance based upon desired business outcomes.
During February and March we will be conducting Oracle AppAdvantage Executive Roundtables in Asia, the Americas and Europe that will prompt such dialogue amongst the audience. I will discuss these in my blog next month.