The Crit­i­cal Role of Man­age­ment Con­trol Sys­tems In Dig­i­tal Transformation

Accord­ing to mar­ket research firm IDC, inef­fi­cien­cies cost com­pa­nies up to 30% of rev­enues each year. Many busi­ness­es have siloed, com­plex or bad­ly defined process­es. This is com­pound­ed by the fact that com­pa­nies lack the tools and meth­ods to ensure that their process­es are per­form­ing as expect­ed. At Renoir, we call these tools and meth­ods the Man­age­ment Con­trol Sys­tem (MCS).

Today, it is more impor­tant than ever for a com­pa­ny to have a well-designed MCS. An MCS will improve a company’s pro­duc­tiv­i­ty and effi­cien­cy. A well-defined MCS that is under­stood by every­one in the organ­i­sa­tion can ensure that resources, be it cash, work­ers or raw mate­ri­als, are used in an opti­mal way.

A digi­tised one will give com­pa­nies a com­pet­i­tive edge in an ever-shifting mar­ket­place. As process­es are digi­tised, there is still a need for human intel­li­gence to under­stand why there are gaps in per­for­mance and imple­ment actions accord­ing­ly. These required rou­tines are pre­scribed by the MCS.

Defin­ing an MCS

A good way of describ­ing an MCS is that it is the dash­board for a process. The MCS incor­po­rates the var­i­ous meth­ods used to set the expec­ta­tions for per­for­mance, describes the way things should be done, mon­i­tors how well things are being exe­cut­ed, mea­sures results, analy­ses gaps, and improves future performance.

Every process has an MCS. Unfor­tu­nate­ly, many of them are infor­mal or not well thought out. MCSs are rarely con­scious­ly cre­at­ed. Instead, they are infor­mal­ly evolved by indi­vid­u­als in iso­la­tion of oth­er func­tions and lev­els of hier­ar­chy, and this may not align with the company’s goals and strategy.

As a result, there are many inef­fi­cien­cies. And because they are infor­mal, the con­trols may end up dis­ap­pear­ing when an indi­vid­ual leaves only to be replaced by anoth­er man­age­ment sys­tem based on the new individual’s per­son­al his­to­ry and preferences.

What can MCSs bring to a business?

In a world where dis­rup­tions can force a busi­ness to piv­ot quick­ly, the abil­i­ty to under­stand per­for­mance and quick­ly react to change is cru­cial to remain rel­e­vant. Organ­i­sa­tions that have well-defined MCSs stand to gain a com­pet­i­tive edge in the mar­ket. Here is what they bring:

1. Con­nect­ing strat­e­gy to reality
   A key com­po­nent of MCS deploy­ment is to cas­cade com­pa­ny goals through­out the organ­i­sa­tion in terms of per­for­mance met­rics and plan­ning activities.
2. A struc­tured and delib­er­ate approach to management
   Man­agers can focus on where they’re going to get the biggest busi­ness improve­ments, with full trans­paren­cy on the assets and resources at their disposal.
3. Pro­mote seam­less knowl­edge sharing
   Data is not siloed but stream­lined, ensur­ing that infor­ma­tion flows freely and smooth­ly to stake­hold­ers. The MCS pro­vides man­age­ment with the right data and infor­ma­tion at the right time to make the right decisions.

Set­ting up your MCS for success

Digi­tis­ing man­age­ment con­trol sys­tems is the new fron­tier. How­ev­er, it’s often a com­plex, multi-layered process. Clients who want to digi­tise their MCSs might not have a clear­ly defined roadmap.

We often find clients hasti­ly imple­ment­ing dig­i­tal trans­for­ma­tions, only to end up with tools that do not meet their busi­ness needs. Often, these dig­i­tal solu­tions are slapped over inef­fi­cient process­es – many of which lack an MCS. The com­pa­ny may end up spend­ing mil­lions to cus­tomise the dig­i­tal solu­tion to fit their bro­ken processes.

Here are our best prac­tices in ensur­ing that the digi­ti­sa­tion efforts bring results:

1. Step 1: Under­stand your data needs now and in the future
   Too often, com­pa­nies col­lect a slew of data which fails to dri­ve sig­nif­i­cant change. Digi­tis­ing KPIs that aren’t well designed will cause prob­lems and con­fuse employ­ees. There­fore, it’s impor­tant to under­stand how you will lever­age data to improve your busi­ness. Be clear on the result you hope to obtain and what it means to employees.
2. Step 2: Set up your MCS
   Make sure that the MCS you plan to imple­ment and inte­grate into your exist­ing process can bring val­ue to your share­hold­ers and help meet your lead­er­ship’s objec­tives and goals.
3. Step 3: Make sure the MCS is run­ning well
   Imple­ment using behav­iour­al change man­age­ment meth­ods, such as Sit­u­a­tion­al Lead­er­ship, to ensure full adop­tion by the work­force. Once your MCS is work­ing smooth­ly and deliv­ers the right results, your MCS is ready to be digi­tised. When effec­tive process­es and MCSs are digi­tised, they are more like­ly to be sustained.

Make sure your MCS brings in the right results

MCSs are essen­tial for all com­pa­nies and are espe­cial­ly impor­tant for organ­i­sa­tions that have a large geo­graph­i­cal spread or have a large cus­tomer base and diverse prod­uct offer­ings. Com­pa­nies with well-designed, digi­tised MCSs can ensure that the employ­ees are aligned with the com­pa­ny’s goals, be that increas­ing rev­enue, improv­ing effi­cien­cy or reduc­ing costs.

How­ev­er, the right imple­men­ta­tion approach is cru­cial. Suc­cess­ful digi­ti­sa­tion ini­tia­tives must first con­sid­er whether the process­es are fit for pur­pose and if sup­port­ing MCSs are in place. This need to cor­rect­ly con­fig­ure the pro­ce­dur­al envi­ron­ment before digi­ti­sa­tion can’t be under­stat­ed. Sec­ond, when it comes to going live, the human fac­tor is placed cen­tre stage – all users are exten­sive­ly coached through the learn­ing curve.

If you’re ready for the next step, con­nect with us for more information.