Thinking beyond the ERP: Your decision makers need the right data tools for their jobs

by Chris Farkas

If your company data is indeed the new currency, then you better make sure you know where it is.

That’s the notion that drives today’s top companies to invest in building a “system of record.” In big companies, this often takes the form of an ERP (enterprise resource planning) solution — which becomes the sole source of truth when it comes to a company’s financial or operational data.

“Your company needs BOTH a system of record, where the real data lives and is protected, AND systems of engagement, where real work gets done.

But what about actually using that currency? That is, how about the many employees in an organization that rely on data to do their jobs? This is where a lot of companies have gone wrong.

There’s an assumption that a massive ERP implementation can be the one-size-fits-all solution for the many different types of users across and organization.

Time and time again, this assumption fails — and not necessarily because the core ERP implementations aren’t successful (though you can read about a series of spectacular ERP failures in this CIO Magazine article). The IT leader(s) may have succeeded in solving the problem they were asked to solve — creating that single source of record for a company’s data.

But executive and technology teams that sponsored the ERP projects often fail to realize that these systems alone aren’t enough to deliver the insight or tools, in the right form, that their key decision makers need to do their jobs. As the CIO Magazine article described in one of the documented failures, “the root cause was a failure of the business to fully understand its own processes.”

And that’s where “systems of engagement” come into play. A company’s decision makers need tools that are tailored to their specific roles — to help them identify, analyze and solve their unique day-to-day tasks.

Systems of engagement vs. systems of record

In 2012, I first read an article in Forbes about the differences between systems of engagement and systems of record. Written by HR industry veteran Josh Bersin about HR software, the topic is still perfectly relevant today in the world of data and operations — especially when it comes to how companies spend their IT dollars.

Bersin writes about Workday, a new kind of ERP that at the time was just getting started — and designed from the ground up for HR professionals. What made Workday different from the ERP giants was its focus on a particular type of user. It didn’t try to do everything.

Bersin suggested at the time that Workday represented a movement away from systems of record and toward systems of engagement.

But today it’s not an either-or decision — companies need both. In this era of big and not-so-big data, having a trusted system of record is more important than ever. Data, after all, is the new currency. But the key decision makers in the trenches also need tools designed for how they work, systems of engagement that help them tap into organizational data stored in the systems of record.

These systems of engagement could be integrations between the ERP and other day-to-day tools like email, enterprise chat clients like Slack, or a customer relationship management (CRM) service. Here at eAlchemy we typically serve up systems-of-engagement solutions for business analysts, creating custom tool sets in Excel or BI services like PowerBI and Tableau. These tools offer up new insights or automate reporting based on the specific user needs.

The point is, companies that are truly embracing data are both protecting their data with their systems of record and helping their team to harvest that data by building systems of engagement. Together.

Why a system of record can’t also be a system of engagement

I mentioned earlier that executives who sign off on massive ERP implementations sometimes neglect to fully consider their diverse business users. Where many make a wrong turn is in believing the sales story of some ERPs that, when properly implemented, these systems of record can also be systems of engagement. You may be told that with proper training, everyone will learn to use (and maybe even love) these one-size-fits-all tools.

The fundamental flaw with that story is design. Systems of record are built to control data. Everything about these interfaces is geared around this control. And by design, the motivation to control data leads to guardrails that can stifle the ability of decision makers.

Systems of engagement can, however, be designed to work alongside systems of record. And ERPs solutions today are becoming more flexible — so that other types of single purpose-built tools can be plugged into these systems of record.

As Gartner analyst Mike Guay recently wrote, “Fortunately, the ERP of 20 years ago is not the ERP being developed and delivered by many vendors today. ERP today is more flexible and adaptable and better permits you to focus resources on value added activities, not feeding the beast.”

Budgeting for systems of engagement

So, hopefully by now you’re convinced that your company needs BOTH a system of record, where the real data lives and is protected, AND systems of engagement, where real work gets done.

But to make that happen, executives need to budget appropriately. Companies can’t just sign off on that ERP implementation without following it up with resources for systems of engagement.

When it comes to budget, one interesting trend is the growth of technology spending by the line of business (LoB) within the enterprise. IDC forecasts that LoB will actually outspend IT on technology by 2019.

Why is this important? The LoB is much more likely to be motivated by its team’s needs to do their jobs more efficiently and intelligently — while IT is naturally more motivated by things like security and control. All companies budget differently, of course, but we see a future where IT teams own budgets for the systems of record and the LoB owns budgets for systems of engagement.

Regardless of where the budget comes from, your company needs systems of engagement if you’re truly going to take advantage of your data. Knowing where your data is — and locking it down — isn’t enough.

The point is, you need both. And, here’s the deal — if you don’t help create systems-of-engagement tools for your teams, they may go off and do it by themselves. And in so doing, the integrity and security of your expensive system of record might be compromised.

Chris Farkas is founder and CEO of eAlchemy.