K2 Consulting Partners - Enhance or Replace - Is it that simple?
Some months ago I was approached by a potential client that was facing the dilemma of enhancing its existing finance system, upgrading or replacing it. They had already received a rather expensive quote to replace the system and their strategy didn’t really allow for a replacement at that time. However, the current system was not allowing them the functionality or reporting what they required.
How many companies have been faced with this problem? How many end up with a less than satisfactory and expensive upgrade? Who should they believe as to whether there really is a need to change the existing system?
In this particular situation we were able to work with the client’s existing software, the client team, and some additional report writing capability to fix over 90% of their functionality gap. Training and knowledge transfer were key components of our approach; making sure the client team were more familiar with what they had already bought and how best to use it. The cost advantage was a spend of around £100k rather than the £1m+ to upgrade or approximately £5m for a new software product. The added advantage was limited disruption to the business, a faster delivery of benefits and enhanced knowledge of the existing software.
Research tells us that 2 years after going live most companies are using less than 50% of the available functionality of their chosen software. So why look for something new unless you really have to? Also, in far too many cases companies are moving from what they know into the unknown, usually with a high price tag attached.
My advice to clients who are faced with this dilemma follows 6 key points:
1. Don’t always rely on the software vendor for independent advice. Whilst you may have an excellent relationship with your provider it is always best to remember they are in the business of selling licences.
2. Be honest with yourself. How well do you really know the system you are using? Most companies put an enormous amount of effort into an RFP process or system selection. However, from my experience the level of ongoing training is less than adequate.
3. Are your system patches and updates up to date? Software vendors generally send out regular patches and fixes, but not all companies have a good governance process to ensure that the system is fully up to date.
4. Training and ongoing system knowledge transfer. Most companies carry out system training on their software once – during the initial system implementation. However, the system changes, people change, people forget, and processes change. Reporting needs are forever changing. Ongoing or regular training are a must to get the most out of your software.
5. What have you bought? I am continually surprised by clients who are often unaware of exactly what they have bought, and in many cases are not using everything they have bought. Buying a software package to manage accounting, the company’s supply chain, or manufacturing process is a long and complex process, and will involve the purchase of licences for various ancillary products. Far too many companies, in my experience, are not getting full value for what they have bought.
6. Independent advice and support can add real value. The market is full of experts who can help with getting more value from your existing software. However, this can be a minefield as far too many “advisors” will be focused on the higher fee earning potential of system replacement. So how can you ensure you are getting real independent advice that is value for money? Independent advice and support can add real value but it is important to find the right partner. From my experience I believe there are 7 simple criteria to be certain of when selecting an “advisor” to help you:
a. Value for money – the price point should be consistent with the work to be carried out.
b. Real experts – be certain the actual team members you will be working with really know your software product. Be careful about being sold capability as opposed to real experts.
c. Overall market knowledge – whilst detailed product knowledge is key, it is also essential to ensure you have a bigger picture on what the relevant software/COTS market is doing.
d. Don’t overbuy. Make sure your scope is clear BUT also be open to guidance from your advisor if you really trust them.
e. Trust – this is absolutely fundamental. I always tell my clients if you don’t trust us don’t buy us. Hard decisions often have to be made based on the consultants input, and this is made far more complex if you have to second guess them and continually challenge their honesty.
f. Flexibility – as you take on the advice or fixes that your consultant(s) provides it is important that you and the consultant are flexible on working arrangements so you are not paying for large amounts of “down time” simply because key users are tied up with their day jobs.
g. Optimisation –optimising the current use of the system helps you better understand the real limits of what you have, so that when you do finally upgrade you will be in a much better position to define exactly what you want and need.
Whether you enhance or replace your core system(s) is a very big decision so following some of these points will help ensure you make the right cost effective decision for your company. Implementing new software can bring significant savings and improvements for most businesses, but making sure you get full value often means regularly enhancing how you use what you have already bought.
CEO K2 Consulting Partners
Tuesday 20th of March 2018