Carrot over Stick
How current enterprise software leaves out an important category of business problems that can be solved, and why a new approach is needed.
The 21st Century Enterprise is Digital
Any business, irrespective of scale, geography or industry, has common factors core to its existence: its customers, employees, resources and products. Managing these factors individually is important for success; but managing the interaction between them, cumulatively, is crucial to value creation.
These business processes have all gone through a similar journey of digitisation and democratisation, over the last 2.5 decades, redefining the 21st Century enterprise. What used to be manually recorded, calculated and communicated, gradually shifted to spreadsheets and emails in the late ’80s, and to traditional enterprise technology in the mid ’90s. Companies like SAP and Oracle created ‘ERP systems’ that had component ‘modules’ to manage assets (ITMS), employees (HRM), customers (CRM), procurement (EPS) etc.
Traditional enterprise software was monolithic, expensive, had long implementation and life cycles, user-interfaces that only a mother could love, and required extra resources to manage the technology (!). Consequently (and as the cost of computing reduced), small/medium-sized companies began creating their own in-house products to manage their processes.
Soon, there came a new breed of companies that built specialised, cloud-based, mobile-first, user-centric products that owned one function, and worked for companies of all sizes (think Salesforce (originally), BambooHR, Workday, Freshdesk etc.)
Today, software that is easy to buy (and easier to use), customisable, scalable, and immediately deployable are available to digitise every function of the modern enterprise, and make your life easy.
Well, almost every function.
Deliveries are (still) managed manually
If you are a logistics/supply-chain manager anywhere in the world, you’re most probably stuck in the ’90s, doomed to manage your deliveries through back-and-forth calls and emails, long spreadsheets, very heavy books and clunky in-house software. This isn’t easy, whatever the scale of operations is.
Manual processes aren’t just cumbersome; they are risky.
Let’s take the (real) example of two of Pando’s clients — A, and B.
A, part of a larger conglomerate, is a large paper manufacturer, with a turnover of about ~US $100 Mil. B is a global electronics major, with a top-line of ~US $1 Bn (India alone). While at different scales, and in different industries, both these companies have fairly distributed operations. These businesses use simple tools to digitise and optimise different business processes; but, they have not been able to digitise delivery management.
The amount of time spent on coordination, by these companies — representative of a majority — is mind-boggling. Thousands of reams of paper, litres of ink, and calls and SMSs are invested in tracking, monitoring, reporting, and communicating progress of each delivery, across multiple stakeholders. The data about vendor performance is almost never tracked, reducing metrics used in vendor re-contracting to the cursory collection of a few documents.
Both of these companies tried digitising their delivery management workflows in the past, but eventually fell back to a combination of manual processes and in-house products. (In-house products are just a digital record of a manual task already performed.)
This no-tech reality isn’t just bad news for logistics managers, but risky for businesses as well. Delivering products to customers is a core function of any business — but most businesses have no/very little (useful) data on who they trust to to do this job.
But why is this the case? If super smart people at companies with deep pockets had tried to solve this, why is it so difficult to digitise deliveries?
The Case for Convergence
To streamline any business process, companies digitise individual entities’/users’ tasks, and converge workflows between them i.e. get everyone to follow the same process, on the same (/compatible) platform, so information and assets flow through seamlessly.
Success in doing this has traditionally depended on a) the number of entities/people involved, and b) the degree of control enterprises wield on these entities.
Processes in small teams are easily digitised. Even larger, more distributed businesses continue to implement technology top-down, establishing rules about how and when handshakes happen, a tight reporting structure, and aligning penalties to non-performance.
This top-down imposition of technology has an inherent problem, though — it implies that those who ‘buy’ the technology/product have more to gain than those who ‘use’ it. This approach has been turned on its head in the last few years: all over the world, users with credit cards (rather than purchase departments with budget dollars) are deciding what technology they will consume, culminating to the enterprise consuming that tech.
User = Buyer; Σ User Consumption = Enterprise Consumption
While this democratisation (where users choose products that work for them), is awesome, efficiency is achieved only when everyone concurs on the process, and uses the same/compatible product(/s) (think Dropbox Business, Slack Enterprise Grid, GitHub etc.)
This is where things get interesting. Let’s say a large number of users picked their own (different, incompatible) products, and the enterprise couldn’t control any of them? Although individual entities, in this case, are technically ‘digitised’, the digitisation doesn’t result in efficiency because the information and assets don’t flow through seamlessly — it is still held in silos.
Digitisation without convergence is useless; Convergence without digitisation is impossible/inefficient. Convergence + Digitisation is hard to achieve.
This is the nightmare that is reality for most traditional businesses today. While transporters are getting more digitised by the day (GPS is a commodity, many transporters have in-house fleet management systems), the tools used are so varied, the number of entities so high, and the degree of control so low (fragmented, multi-tiered supply) that companies resort the the Lowest Common Factor: Calls, Emails and Spreadsheets, coordinating between hundreds of transporters, drivers, brokers and clients manually to ensure safe passage of their goods. Urgh.
The solution to this problem is not standard (even new-age) software
Your team of four-five huddled across the floor, or a few hundred across the globe, uses one product to manage Customers (CRM) or employees (HCM) not just because each of you find it easy to use — but because cumulatively, the team benefits as well. Be it top-down technology imposition, or more democratic bottom-up adoption, the success of a product depends on both the users and the enterprise staying satisfied.
When the user is the buyer, this is relatively easy. When the user and the buyer have shared/aligned priorities (either because the enterprise can control the user through negative penalties, or because ease of adoption is enough positive incentive to align priorities — delightful interfaces, easy support and on-boarding etc.), this is fairly straightforward as well. There is, however, a third bucket of business functions where the interests of the user do not align with the interests of the enterprise, or worse, are diametrically opposing to it.
When the interests of the users don’t coincide with the interests of the enterprise (as in outsourced logistics), traditional approaches to technology implementation have to be rethought.
Like travel expenses, outsourced logistics falls into this tricky third bucket. In both these cases, businesses want to streamline processes, have visibility over the spend and reduce costs; the users want more from the enterprise, more frequently. The traditional control-mindset will not work in such cases, because the net cost of adoption is higher than the benefit of adopting a standard product. Good UX doesn’t cut it deep enough — some users still loose more than they gain, while others gain more than they loose. Plus, you (the enterprise) can’t really do a thing because these users aren’t really on your team.
A new approach to technology implementation — Carrot over Stick
Interestingly, there is a new breed of enterprise software companies that are turning such pain-points into value propositions, by rewarding users for active use (not in any esoteric psychological way, but with actual money/business opportunity), furthering the pin in the quest for democratisation of enterprise software. This carrot over stick approach works well not just for business problems within companies like — “How do I reduce the travel expenses in my company, while keeping my employees happy?” but also for problems that require multi-stakeholder interactions, like outsourced logistics (“How do I digitise my delivery operations, and reduce per-transaction costs, while ensuring higher returns for the transporter?”)
This trend is super exciting for us at Pando, as we are big believers in inclusive growth. While Pando’s vision is to digitise deliveries of all kinds, for shippers of all sizes, we believe that technology (in logistics) is a democratising agent; whatever product we build will add value to multiple individuals in the ecosystem. Be it through the Pando-Port Application that digitises documents for transporters (reducing costs), and makes these GST ready documents available for Shippers (reducing time), or through the Pando-Paisa feature that provides a host of financial products for transporters to reduce costs, passing on these savings to the shippers, in turn, we are committed to this approach.
We are aware that the trade-offs to be made in an environment, and the complexity of that environment are directly proportional to the number of transacting stakeholders/transaction (which is huge, in our case), it is our belief that every stakeholder will benefit from more information; and the ecosystem will benefit from a more structured platform to collect, organise and exchange such information.
After all, what is a marketplace, if not a platform to collect, organise and exchange information?
Watch this space for more on what we are building!
Check us out at: pando.in | Write to me at: nitin.jayakrishnan@pando.in
