Академический Документы
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Культура Документы
White Paper
By Nurul (Sy) Symoom, Industrial Technology Advisor, NRC-IRAP
Overview
To compete with foreign companies that produce goods at lower labour costs, Canadian small and medium-sized enterprises (SMEs) need to improve their productivity. They can do this by cutting the input costs (time, material and labour) of the products and services they sell. The fastest, most effective approach to competing successfully in this area is to adopt digital technology. The general Canadian population is well ahead of other countries in adopting digital technology in their personal lives. However, Canadian SMEs lag behind in adopting it for their businesses. And that is one of the primary contributors to Canadas productivity problem. SME management must take a leading role in accelerating digital technology adoption toward increasing enterprise productivity and protabilityand government must support them for the national benet (Goss Gilroy Inc., 2013). The National Research Council of Canada Industrial Research Assistance Program (NRC-IRAP) and Digital Technology Adoption Pilot Program (DTAPP) deliver on-the-ground support to Canadian SMEs exploring or embarking on this journey. This white paper explains how to capitalize on digital technology by following a seven-step process: 1) Conducting an environmental scan 2) Developing a corporate strategy 3) Benchmarking 4) Analyzing organizational capabilities, capacity and gaps 5) Dening key performance indicators (KPIs) 6) Monitoring KPIs (balanced scorecard approach) 7) Adopting technology In the seven steps, we argue for an holistic and comprehensive approach to embracing digital technology. While every framework or model has critics, experience shows that most companies using this approach see improvements in value added per employee (VAPE).
Productivity into profits: A guide to digital technology adoption for SME productivity leaders
Some productivity impacts and resulting gains that DTAPP participants have reported include: Lower cost of maintaining/holding inventory Faster, more competitive quotes Shorter production lead times Lower production costs Fewer delays in product delivery Greater data accuracy and availability New career growth and learning opportunities for employees Improved, more impactful and more targeted management decisions Improved customer service and overall experience Better ability to compete in new/global markets, win more business and increase sales Faster, more accurate product design Improved product quality Creation of new full-time equivalent (FTE) jobs
In NRC-IRAPs Digital TecHnOlOgY AdOptiOn PilOt PrOgraM (DTAPP), laUncHed in 2011, firMs tHat eMbraced tHis HOlistic apprOacH tO iMpleMenting ERP bUsiness sYsteMs sOftWare saW significant benefits.
Productivity into profits: A guide to digital technology adoption for SME productivity leaders
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Productivity into profits: A guide to digital technology adoption for SME productivity leaders
ADOPTING DIGITaL TECHNOLOGY IN a VaCUUM OR IN THE aBSENCE OF a 360-DEGREE ENTERPRISEWIDE aPPROaCH WILL NOT MaXIMIZE THE IMPROVEMENTS IN a FIRMS PRODUCTIVITY, NOR WILL IT HaVE THE BEST COMMERCIaL IMPaCT.
The seven-step roadmap to digital technology adoption: tools for enterprise productivity leaders
To help SMEs analyze, strategize and implement digital technology, we propose a seven-step roadmap to increasing protability and enterprise productivity. This roadmap will likely benet newer productivity improvement leaders the most. However, more experienced leaders may also benet by incorporating some of the suggestions into their practices. Steps 1 and 2 address strategy, while Steps 4 through 6 address operations. Step 7 simply closes the loop. A company in the midst of a strategic or operational planning cycle can start at any appropriate step in the cycle and then nish the cycle to start again.
Productivity into profits: A guide to digital technology adoption for SME productivity leaders
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Leadership Team
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1 2 3 4
Environmental scanning Corporate strategy and its fit with the environment Benchmarking Analysis of organizational capabilities, capacity and gaps
ITAL
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5 6 7
Defining key performance indicators (KPIs) Using the balanced scorecard approach to monitor key performance indicators Adopting technology to enhance organizational capacity and capabilities to deliver, manage and monitor key performance indicators
Productivity into profits: A guide to digital technology adoption for SME productivity leaders
WHile ManY enterprises HaVe a stated strategY, tHeir actiVities are Often inflUenced bY an iMplied strategY tHat can be VerY different frOM tHe stated One. In trUlY prOdUctiVe OrganiZatiOns, bOtH stated and iMplied strategies are tHe saMe.
The alignment of a companys strategy with the external environment on the one hand and its ability to deliver on that strategy on the other are crucial to improving enterprise productivity.
Productivity into profits: A guide to digital technology adoption for SME productivity leaders
Productivity into profits: A guide to digital technology adoption for SME productivity leaders
To create or modify an organizations culture, companies need three leversleadership behaviour, organization structure and management processes. Unless all three are synchronized to create a productivity-oriented culture, organizational capabilities are not maximized. The Diamond-E Framework (Crossan et al., 2008) is an excellent tool for analyzing the gaps in any enterprise and understanding the general relationship between a rm and its environment. It investigates the alignment of an organizations environment, strategy, management preferences, resources and organizational capabilities.
What should they be? What are they currently? Are they consistent?
Management Preferences
Leadership Structure Value Proposition
Organization
Management Processes Culture
Strategy
Business Unit Strategy Product differentiation Cost leadership PD/CL Neither
Environment
PEST
Resources
Value Chain
Industry rivalry Potential entrants Substitute availability Buyer power Supplier power
Productivity into profits: A guide to digital technology adoption for SME productivity leaders
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Productivity into profits: A guide to digital technology adoption for SME productivity leaders
Financial
To succeed financially, how should we appear to our shareholders?
OBJECTIVES MESSAGES TARGETS INITIATIVES
Customer
OBJECTIVES MESSAGES TARGETS INITIATIVES
To satisfy our shareholders and customers, what business processes must we excel at?
To achieve our vision, how will we sustain our ability to change and improve?
A common error in designing a balanced scorecard is monitoring historical numbers such as last years sales increase over the previous year or last months margin over the previous month. The company needs both leading and lagging indicators, but in the balanced scorecard approach, a company should focus more on leading indicators to influence the outcomes of strategic goals.
Productivity into profits: A guide to digital technology adoption for SME productivity leaders
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Step #7: Adopting technology to enhance organizational capacity and capabilities to deliver, manage and monitor KPIs
Adoption of digital technology to enable, deliver, monitor and continuously redesign a companys enterprise KPIs is the nal step in the enterprise productivity journey. It happens in two phases: the management decision to adopt it, and user acceptance of it for their daily work. Choosing technology that is the right t for an organizations culture is a critical success factor in any technology adoption. And Druckers phrase, Culture eats strategy for breakfast can also apply to the adoption of technology. The culture will influence the answers to certain operational questions such as: S hould an ERP system have mobile capabilities and to what extent? Should the ERP system be hosted in a cloud or not? W ould the organization give employees access to the business system from their personal devices, and to what extent? What is the total cost of ownership (TCO) of this proposed technology? A n organizations digital maturity must also be measured by prioritizing and adopting appropriate technology (MIT Sloan Management, 2012). Drucker pointed out that an organization has two functionsto innovate and to market. In choosing digital technology to enhance productivity, therefore, an enterprise must have an overall digital THe ecOnOMic strategy that includes both production and marketing sides of grOWtH Of natiOns the business. With the strong emergence of social media and is linKed tO One factOr: rising usage of smartphones, for example, an enterprise has adOptiOn Of infOrMatiOn and to constantly monitor and adjust its marketing and customer relationship. cOMMUnicatiOns tecHnOlOgY.
DigitiZatiOn and PrOsperitY, strategY+bUsiness MagaZine (BOOZ & COMpanY) IssUe 68, AUtUMn 2012
Digital technology adoption must also prioritize elements of the process and curtail ineffective business processes, systems or technology. For example, a large distributor might benet from establishing a barcoded inventory management system before implementing e-commerce. In other cases, technology-savvy companies may hinder their enterprise productivity by overburdening themselves with too much technology that may be redundant or only partially functional.
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Productivity into profits: A guide to digital technology adoption for SME productivity leaders
Too often, SMEs acquire enterprise resource planning (ERP) systems to automate business processes, expecting productivity to improve automatically. That is partially true because automating manual business processes saves time immediately. However, companies need to ask whether this increased productivity maximizes prot, whether the right processes have been automated, and whether those being automated support the enterprise strategy. Before automating or digitizing business processes, a rm must scrutinize existing business practices utilizing proven and appropriate processes and quality improvement tactics such as Lean manufacturing, value stream mapping, Six Sigma, total quality management (TQM), just-in-time (JIT) manufacturing, Kaizan, Konbon, 5S methodology, ISO and the like. ERP or any business systemswhether material requirements planning (MRP), customer relationship management (CRM), ERP, e-commerce or othershould be implemented to monitor productivity and protability goals, and integrated systematically into business processes.
Conclusion
Digital technology is quickly changing the competitive landscape of business everywhere. Operatingand succeedingin this highly competitive economy is especially challenging for SMEs, which have been slow to adopt digital technology.
Productivity into profits: A guide to digital technology adoption for SME productivity leaders
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Through the National Research Council of Canada Industrial Research Assistance Program and the Digital Technology Adoption Pilot Program (DTAPP), the government has so far supported the productivity improvement and technology adoption efforts of more than one thousand Canadian SMEs. DTAPP is being delivered from October 2011 through March 2014.
THe financial Help prOVided bY DTAPP Was fUndaMental tO acHieVing tHe efficiencY On prOcesses and prOcedUres tHat enables OUr cOMpanY tO becOMe MOre cOMpetitiVe in tOdaYs aggressiVe ManUfactUring indUstrY. DTAPP client.
Results from an evaluation on DTAPP (Goss Gilroy Inc., 2012) show that:
T here is a productivity gap between Canadian SMEs and those in other countries. The adoption of digital technologies is one way to address this. S MEs do face barriers to adoption, and DTAPP addresses their digital technology challenges. T he federal government does have a role in raising awareness among SMEs about the benets and importance of adopting digital technologies.
A study conducted recently by the Centre for Business Innovation, Conference Board of Canada, The State of Firm-Level Innovation in Canada, 2012, reports that:
Many companies in Canada consider governments to be the second-most used source of nancing for innovation, and that more than half of the rms see federal government support for innovation as being valuable to themselves and their industry sector. I n addition, Firms that appreciate government support for innovation exhibit higher performance in the market than rms that nd government support to be of little value.
DTAPP cOntribUted greatlY tO OUr firMs sUccessfUl adOptiOn Of a VerY cOMplicated digital tecHnOlOgY tO Manage alMOst all greenHOUse and bUsiness OperatiOns. DTAPP client.
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Productivity into profits: A guide to digital technology adoption for SME productivity leaders
Acknowledgments
Sincere thanks to the following colleagues for helping with reviews, comments, suggestions and other support in putting this paper together. Pauline Walsh, Industrial Technology Advisor, NRC-IRAP Tomas Matulis, Director, NRC-IRAP Lesley Cushing, Sr. Marketing and Communications Ofcer, NRC-IRAP Shaileen Stanley, Marketing and Communications Ofcer, NRC-IRAP Dr. Tanweer Hasan, Professor, Roosevelt University, Chicago, IL Dr. Musabbir Chowdhury, Niagara College
References
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