Death to All Silos, With Aphorisms*

I’m serious. The more I look into the problems of technology in service of the enterprise, the more I see the insidious hand of siloed technology, siloed business processes, and siloed employees wreaking havoc across the business world.

We dream of the heterogeneous enterprise creating new and differentiating end-to-end processes that drive digital transformation at the edge and in the core, making user experiences universally superior and boosting tech-driven efficiency like never before. That sure is a mouthful of jargon, but that’s pretty much how the industry sees its future. But these are just dreams: What we usually get the same old adherence to a status quo limited by the reality of silos yesterday, silos today, and more silos tomorrow.

Only a few maverick CIOs, CEOs, and LOB execs care to know what a real heterogeneous, end-to-end process could do for their company, only a handful of really smart salespeople can actually put aside their quota-driven mindsets and help a customer succeed on the customer’s terms, and it’s the rare systems integrator that relishes the chance to officiate over such a fortuitous, and uncommon union. For everyone else, it’s the same old same old: misaligned goals, oversold and underdelivered products and services, change management that doesn’t, and pervasive project failure after project failure. All because we – the sellers, buyers, implementers, and, yes, the punditocracy – can’t stop rushing headlong into a siloed evolutionary dead-end that, contract after contract, pilot and pilot, project after project, we seem destined to perpetuate.  

The problem is so pervasive it I’ve even coined what I call Josh’s First Aphorism of Enterprise Software, which goes like this:

The biggest mistake enterprise software vendors make is that they try to sell product the way they build it, not the way it’s consumed.

That’s just the vendor side. Silos are such as huge problem that this aphorism has what I call a recursive corollary. As in, this problem is so bad it feeds itself like a black hole consuming all the energy in a galaxy:

Customer buying strategies recapitulate vendor go-to-market sales strategies.

The unfortunate truth is that the well-established ERP, CRM, HRMS, SCM vendor silos have their analogs in a matching set of silos on the customer side. In too many companies, when it comes to budgeting, decision-making, strategizing, and implementing new tech, the vendor silos are faithfully matched – and therefore perpetuated – on the customer side. No synergy, cross-pollination, or holistic thinking. In some companies it’s so bad that the team that works with Vendor A’s ERP doesn’t talk to the team that works with Vendor B’s ERP, and on and on down the line.

Think I’m being hyperbolic? On the contrary, I’m being charitable. Because there’s a final corollary aphorism that defines why silos prevail, despite their obvious negative impact on the concept of rational and effective digital transformation:

There’s too much revenue to be made in the silo business. For everyone.

Too cynical? Hardly. This divide-and-conquer strategy benefits everyone, even as it wastes the customer’s budget and innovation potential. Let’s start with the vendors: All too often they’re selling a piece of software – say a procurement system – that may also have other functionality, like logistics management, which could be used by the people who manage logistics. Except that they have their own logistics management system, and even if the one they use and pay for isn’t necessary any better than the one in the new procurement system they could use for free, they won’t use it. Hell, they may never have been told it’s even available. I’ve even run into situations where a piece of functionality has effectively been sold twice to the same organization because it appears on two different SKUs sold to two different buying centers. Sometimes the silos have silos.

Vendors love this for the extra revenue it generates, and therefore turn a blind eye to the absurdity of what ends up in their customers’ portfolios. It’s almost as lucrative as the last-minute quarterly deal making that throws a lot of software on the shelf if the buyer will only help make the AE’s quota.

Customers are complicit as well: This internal silo-ization of the enterprise is secretly aided and abetted by the use it or lose it budgetary nonsense in many companies that leads buying centers to walk away from possible synergies with other buying centers because they are effectively rivals for scarce budget dollars. Spending less just means my department gets less budget for next year, and where’s the corporate political power in a diminishing budget?

With this dysfunctional setup firmly in place, SIs can’t help making bank on the ensuing mess and the ton of customizations needed to sort out the technical, process, and experience gaps that result. And the analyst firms pile on as well, using often overlapping and redundant services to maximize their revenue opportunities. Why subscribe to a single service when you can subscribe to…more, and more, and more?

Unfortunately, this self-perpetuating combination is a huge threat for our industry. The vendors have created silos – mostly as artifacts of their development and acquisition processes – that have in turn created buying centers in the enterprise that focus on a single product line – because that’s how vendors go to market  – that in turn are aided and abetted by service providers for whom this self-perpetuating silo problem is a huge money-maker – all the more necessary now that the cloud has robbed them of a lot of high margin work. And the final nail in the coffin comes from the analyst community – usually the large firms, but we’ve all played a role in this charade  – that have created analyst practices and reports that focus on the speeds and feeds in a given silo, as if the innovations that happen inside the silo are the only ones that really matter.

As if the innovations that happen inside a silo are the only ones that matter….

Meanwhile, it’s pretty obvious that what’s needed in the mad rush to digitally transform, or die, is interconnectivity, fueled by end-to-end business processes that transcend silos and allow all manner of stakeholders to do an increasingly complex set of tasks with a highly engaging user experience that hides all the underlying technical complexity. The goal is to reduce not just technical debt, but the process and experience debt that grew out of that technical debt.

In fact, it turns out that process and experience debt can be remediated without necessarily removing all technical debt, as long as it’s understood that these processes and experiences have to transcend the silos of underlying technical debt without burdening the user with being part of the solution to the silo problem. In other words, keep your damn silos if you must – and in most companies those silos are “load-bearing” and too embedded to break down easily or quickly – but make sure that your old and new processes transcend those silos so that users have no idea that they just traversed 25 years of technical debt on the way to a transformed digital experience.

Of course, every software vendor has a vision of how to fix that problem, as long as the fix starts within their silo. It’s a reflex partly because field sales culture is totally broken – AEs are incented to sell to meet quota, not to ensure customer success. And this quota carrying corps is believed to be infamously unable to understand a complex selling message. Whether that’s fair or not, and I have my doubts, the result is a competition between go-to-market strategies that intentionally dumb the message down so the field can regurgitate an “elevator pitch” that never actually reaches the top floor. The “all roads lead to my silo” strategy is also promoted because Wall Street says it doesn’t really care for customer success or long-term value, they want quarterly results, or else. And to that I say, screw you.

So, fixing this starts with the vendors, who are going to held accountable when a project goes south, regardless of who is actually to blame (Josh’s Tenth Aphorism: It take all three parties to really screw up a project: the vendor, the SI, and the customer.) Here’s a short list of what I think they should do to get ahead of this problem:

1. Cross-pollinate your go-to-market activities. Invite CRM execs and managers to your supply chain events, get HR and procurement in the same room to talk about contingent labor, make sure your ERP strategy is understandable to your customers’ sales and services team, etc. etc.
2. Be supportive of your customers’ complex, heterogeneous landscapes and the complex decisions they have to make regarding upgrades and new technology. It’s a long game, and you might lose a deal or two on the way, but either you’re supporting your customers’ success or you’re just in it for your own success. Either way, the customers will figure it out if they haven’t already.
3. Modernize your partner strategy to focus on customer success, even if that means calling your partners on the carpet for a project failure. Even if that partner is a global SI you might normally kowtow to. In return, give partners clear and dependable guidance on where they can invest on innovative products and services without getting squashed by your next big initiative or acquisition.
4. Change your sales culture to be focused on real customer success. Not your success, their success.
5. Change how you measure success to include outside, independent analysis. Self-reported score cards and customer satisfaction metrics need to be chucked in the garbage – they’re utterly useless for gauging real success.
6. Cultivate an analyst corps that sees the big picture. The ‘scapes and quadrants have an important role to play, though I believe they mostly perpetuate the problems I’m covering in this post. Regardless, you also need people who aren’t just focused on one three-letter acronym or product silo at a time. Customers need synergistic perspectives, not just a report that can used in a feature/functionality bake-off that will have little relevance in the long run and most likely in the short run too. Having a set of ERP analysts, a separate set of CRM analysts, a third set of SCM analysts, with no one looking at the big picture, doesn’t serve you or your customers well enough.

Don’t worry, I have some to-do for the SIs as well:  

1. Open your work to transparency and accountability. There is nothing that strikes fear into the heart of an SI, particularly a global SI, than those two words: transparency and accountability. Opacity is a great shield to cover up mediocrity, and it’s worked for decades, despite most large SIs having a pretty abysmal track record in project success. This transparency and accountability is absolutely essential: SIs have a lot of the blame for the crap that has come out of the silo death march we’ve been on for the last 30 years. They need to be more on the side of customer success, and that means actually going to market with real success metrics that differentiate them from the competitors who just take the money and run. (For a view of what that means, visit Raven Intelligence: their project reviews are second to none in the industry.)
2. Just say no. Sometimes, the best thing a partner can do is stop a customer from change orders or other strategies that waste time and money, even if that customer’s waste would add a lot to the partner’s profit margin. You want to be a strategic partner – that’s what all your marketing literature says, right? – so just do it. It will pay off in the long run, taking the high road always does.
3. No more “sell the A team, deliver the B team.” Stop moving your talent in and out of projects like you’re coaching a football game. Team integrity is essential – one of the biggest reasons projects go south can be blamed on frequent personnel changes. (As you already know from looking at Raven’s data, right?)

And because I already said that it takes all three parties to really screw up a project, I have some tasks for the customers as well:

1. Establish enterprise-wide centers of synergy that focus on holistic business practices, particularly the development of end-to-end processes that aren’t limited by your artificial silos. Your company needs a team that can look across silos and build synergies, even if it means breaking down well-entrenched technology and process silos. Be sure to endow that team with real authority to break through the silos, or they’ll be ignored for sure.
2. Create and then adhere to a new set of metrics for understanding the value of end-to-end processes to your company. Too many companies rely on old school KPIs that don’t factor in the value of cross-pollination. Another reason silos are self-perpetuating.
3. Use the above to figure out a way to incent your buying centers to coordinate buying without losing budgetary or political capital. Make innovation across silos a virtue that is well-rewarded, not something that occurs as a happy or begrudging accident.
4. Work with vendors and SIs who get it. Fire the ones who don’t.

I’ll close with a final aphorism, Josh’s Eleventh Aphorism of Enterprise Software:

Vendors oversell, SIs underdeliver, Customers pay.

This post started with the need to eliminate silos, but it’s really about righting 30 years of bad practices. Isn’t it about time we finally dealt with these problems and made my 11th aphorism obsolete?

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*Credit where credit is due department: Inspiration and aspirations for this post came in part from a recent Twitter exchange with @tcrawford, @maureenb2b, and @royatkinson. I’ve also benefited from the wisdom of the honorable @briansommer and @jonERP. The latter each have posts worthy of a read that touch on this and other important topics: Extracting value from cloud ERP in a customer-first world – what should we be pushing for? (diginomica.com) and ERP’s new direction – it’s coming from the outside (diginomica.com) are highly recommended.