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Carl Lewis: Welcome to the Connected Enterprise Podcast. I’m Carl Lewis, your host from Vision 33, and my guest is Jim Kofalt of DX4 Research. Jim, thanks for joining me. Please tell us about yourself and DX4.

Jim Kofalt: Thanks, Carl. I appreciate the opportunity. DX4 Research is a consultancy. We work with small and midsized businesses (SMBs), applying technology for business value. We do a lot of digital transformation and determining how to take the big technology ideas, bring them down to Earth, and apply them practically and affordably. We’re a least-risk approach for SMBs. Many ideas sound great on paper or are great for large organizations that can throw a lot of resources at them and maybe tolerate a failed project.

With SMBs, that's not an option. They need a pragmatic, practical view. So, we work with SMBs to help them match technical capabilities with their business objectives regarding growth, innovation, re-engineering processes, and producing more value.

Carl Lewis: That's quite an endeavor. You mentioned big organizations already have technology like artificial intelligence (AI), the internet of things (IOT), and machine learning. What’s the SMB marketplace saying about these technologies? What are they doing?

Jim Kofalt: I'll start with digital transformation. For many, it’s just a marketing buzz phrase that’s hot in business publications. But in practical terms, businesses can do a lot to leverage technology more intelligently and pave the way for future innovation.

Some of the hot technologies in digital transformation are what you mentioned: IOT, AI, machine learning. And other stuff, like companies using drones. Those technologies have matured and become more affordable – for large organizations. They're still a bit out of reach for SMBs. But SMBs can prepare for adopting them as they get cheaper and more common.

The two foundation blocks for digital transformation are analytics and integration. They’re elements of managing and controlling all the information that spans your systems. Enterprise resource planning (ERP) is a foundational piece. If companies don't have a solid ERP, that's a great place to start. And a good CRM system. But building the integration, automated workflows, and things that make it easier to manage the business on an exception basis are critical.

Management by exception with alerts workflows is about automation, and integration is the glue that holds everything together. It ensures information flows accurately, smoothly, and effectively without human intervention. Good integration tools also enable you to do that in a flexible, low code way. It spans your systems, departments, and workflows. Then, analytics. One of business executives’ top concerns is the information locked up in their systems. They can't get to it the way they want to.

Every system comes with reporting tools. Often more than one because financial reporting differs from operational reporting. But they don't necessarily work well across multiple domains, so if you’re running HubSpot for your digital marketing automation and SAP Business One for your ERP system, you want to report against that information as a holistic unified system. Some analytics tools lend themselves to that; some don't. There are other ways to achieve that with integration, but it's ultimately about how information flows through the organization and having a holistic view of it.

Carl Lewis: It seems like many organizations should pause and work on their systems’ foundations. As you said, they could have a CRM, an ERP, something for marketing and sales, and an ecommerce system, all independent of each other and running here, there, and everywhere. Maybe in the cloud, maybe not. And integrating those, bringing them together into a one-system format, lends a lot of power to the analytical requirement you mentioned.

Jim, you said large organizations can afford to fail. They can put a lot of money into something that doesn't accomplish what they thought it would. SMBs can't do that. That seems like a big roadblock for SMBs in a digital transformation journey. What challenges do SMBs face when they aren't looking at the end game of making IOT, AI, machine learning, etc. work?

Jim Kofalt: There's a tendency around digital transformation to want to go big. That's great. But with execution, you must zero in on what provides maximum value. That boils down to building a strong business case. Look at digital marketing automation tools, for example. There's a clear opportunity to reach more customers and engage more deeply with existing customers. That drives revenue, customer satisfaction, and greater business agility.

When the pandemic hit, businesses were scrambling in multiple directions simultaneously. Agility became the new watchword. Big questions were, “How do we diversify our revenue sources? What happens if we lose big customers? How do we reach different market segments and industries?” That's where a lot of SMBs should start their efforts: digital marketing automation, ecommerce, things like that. For some companies, IOT, which is gaining a foothold in shipment sensors for high-value shipments.

If you're shipping low-cost widgets in a container, it may not be necessary to know where the container is, the temperature, the humidity, and whether anybody's opened it. But if you're shipping perishable medical supplies or high-value items, that’s important information. It’s about identifying specific, measurable results you can get out of a project, pinpointing the low hanging fruit, and going after what will have the biggest impact.

Carl Lewis: That's good advice. I spoke with someone who said many organizations are aiming at these things, but their infrastructure can't sustain adding automation. Even analytics would burden their system. They essentially have to start with the absolute basics of the infrastructure and modernize that to take advantage of current technologies. I think, regarding foundations, that's the crux of the matter for SMBs.

Jim Kofalt: That's where things can be tricky. It's often difficult to make a business case with an executive management team that doesn't necessarily understand the technical underpinnings and why the project will make them more agile. That's why it’s helpful to tie it to something with clearly identifiable/measurable benefits. I've spoken to companies moving off mainframes. They aren’t SMBs, but they’re migrating their mainframe applications to the cloud.

That’s a big, expensive project, but it comes with risk reduction and dramatic savings, including lower annual operating costs. You can do a lot with foundation projects that include a step forward in enabling lower costs, greater efficiency, and higher accuracy. The key is identifying those benefits and articulating them so the executive team understands.

Carl Lewis: Absolutely. It’s less mysterious when you do that. More about business. Jim, the world goes faster all the time, and new things are constantly developed. And the whole COVID crisis necessitated even more technology. What’s next?

Jim Kofalt: Collaboration tools will continue to be a big deal. People say they're sick of Zoom meetings, but people who weren't using collaboration tools are using them now. Tools like Slack are invaluable. And many companies have decided they don't need as much office space. Remote work has many virtues, and executives are realizing it.

There’s technology to enable that, like the collaboration tools, ERP, and accounting systems. I've seen more use of collaboration tools for month-end closing, period closing, and sharing information between accounting and people who need to interact with accounting. Some specialized tools do that, although mostly in the enterprise space, not for SMBs. But we’ll see improvements in collaborating remotely.

Carl Lewis: I agree. Although I think tools like Zoom, Teams, GoToMeeting, etc. are due for a major overhaul. A new perspective. Part of what makes them frustrating is that they’re not that collaborative. It’s more like show and tell.

Jim Kofalt: Right. I've done a lot of work with design thinking. I do it with clients to help them explore how to discover value and develop/implement a plan. Design thinking is very much an in-person workshop scenario. You get people together in a room designed for creativity and inspiration. You divide people into ad hoc workgroups, give them markers and post-it notes, and they brainstorm and put sticky notes on the walls. How do you do that remotely? It could be a better camera, better lighting, and digital whiteboards. Tools like GoToMeeting and Zoom can evolve into a more collaborative environment.

Carl Lewis: Business communication has changed immensely in 25 years. I used fax machines. Then we got mobile phones, which were as big as briefcases. Then email became a primary means of business communication. Some people are transitioning into social media, and this pandemic made everyone more isolated, working remotely. What's it been like for you, Jim, in terms of communication through these times? What are your primary business tools?

Jim Kofalt: I'm using the same tools as everyone else – emails and texting. I also have a virtual phone number that rings wherever I am. I've noticed people using texts more, which brings up the question of preferences. Some people prefer phone, some email, some text. Then there’s social media, and many of those platforms have their own mechanisms for communicating.

Eventually, we must consolidate that communication so it's more manageable. It’s overwhelming to check Facebook messenger, text messages, multiple email accounts, multiple voicemails, etc. What's great is that there are companies seeing those problems and creating solutions.

I like Calendly, which is a calendar tool. When someone says, "We need to set up a meeting," I say, "Here's my link. Go find a free time and book it on my schedule." It’s a simple exercise working with clients who often have visibility into each other's calendars but can't see mine. I love sending my link to clients; the meetings just appear on my calendar, and we're good to go.

Carl Lewis: That's great. Jim, DX4 is your business, and you're helping customers achieve their goals. Those of us who work in consulting understand being third parties and helping clients implement technology. What do you see in your work? What are the biggest challenges for clients working with third parties?

Jim Kofalt: The biggest challenge is the same as always: multiple people, each with their own perspective on the organization and where it needs to go. Being a third party requires sensitivity and a willingness to step back and listen more than you talk, at least initially. I like to talk, so it’s hard to take that ‘listen-first’ perspective – but it’s necessary to learn what’s top of mind for each person.

For me, the trick is identifying points of commonality. What can we create out of this discussion or collaboration that produces value for the organization and aligns with the needs of people and organizations within the company? That's a people problem and a people-in-an-organization problem, not a technology problem. But it’s critical to listen, learn, and find solutions that work well for everybody.

Carl Lewis: Yes. And recognizing that an organization is more than just a business. It's a collection of individuals. If you're a technologist, you tend to think of the technology, not the people. But building relationships can be more important for success.

Jim, I have one last question. When businesses are working on foundational things or finishing the implementation of fabulous new technology that will save them thousands of dollars and improve their processes, how should they measure/track their effectiveness?

Jim Kofalt: Define clear, measurable objectives at the beginning. Which requires ensuring there’s alignment within the organization and then aligning with those objectives. Goals must be specific and measurable. Have a timeline.

Focus. You interviewed someone involved with the entrepreneurial operating system (EOS). I’m a big fan. One of the key concepts in EOS is focus. It talks about big rocks. You’ve probably seen the illustration of trying to fit a bunch of sand, pebbles, gravel, and larger rocks into a container. And when you put the small stuff in first, there's no room for the big stuff. EOS advocates defining the objectives so the big stuff gets taken care of first, and the other things fit around them as needed. And some things won’t fit. There are always limits. So, focus is a critical part of the conversation around metrics and defining project success.

Carl Lewis: Big rocks first. I like that a lot. Well, Jim, thanks so much for being here, and best of luck to you. To everyone else out there, stay connected.