Financial Directors must prepare for an escalation in IT costs rather than a decrease unless they change their approach to IT systems radically. Change starts with procurement. Most decision makers execute the procurement process comparing similar products instead of comparing different options. The first step in procurement is to determine whether to buy an existing product or build your own product
Although most companies go the purchase route, in many case the build route would prove a lot more beneficial for the following reasons:
Developing your own solution is (in many cases) cheaper than an off the shelf product. Over the last few years the price for non core products has risen extensively, it is not a foreign concept to spend 1-3 million rand on a Customer Management Solution or a Workflow Solution. For half this amount of money, a reputable software development company can build a solution that really works for your business encapsulating the features you need. In no way am I suggesting that companies should develop their own core products such as word processors or spreadsheets. However company decision makers should look at developing their own products where the cost of the off the shelf product exceeds R250 000.
Information Technology must support your business; your business must not support Information Technology. Countless times I have come across companies implementing products, and having to change their business procedures and processes to support the product introduced. A reputable software development company will study the processes and procedures of your business and then build a solution that supports and enhances your needs.
Your business is successful because your business is unique. Implementing a stock management system, for example, that your competitors use, means that you are adjusting your business to work like your competition works. Where is the differentiation? Unless you implement an IT solution that is as unique as your business is unique, you will loose your competitive advantage.
A custom built application is a once off cost. Many off the shelf product vender`s` charge small upfront costs, but build in yearly licensing fees and support costs. Whereas a reputable software development company will charge a once off cost, which will give you ownership of not only the final solution but the source code as well. Owning the source code ensures that you are not tied in to one software development company, thereby ensuring that if you are not satisfied with the software development house you simply contact another one.
It is a fallacy that an already developed solution, is cheaper than a system to be developed. With off the shelf products you spend most of your money on features that your company will never utilise.
There are risks involved in product development but in order to minimise the risks, choose a software development company that charges on a per project basis. Thereby ensuring that the system does not exceed your budget. When choosing a reputable software development company, ask to look at existing systems that they have built and enquire about their policies, procedures and guarantees. Questions such as:
* How does the proposed software house handle change management and what documentation is prepared before development takes place?
* To what extent are users involved?
My recommendation to any company implementing a new IT system is to first investigate the costs and risks involved with building a solution rather than buying an "off the shelf product". Many decision makers will be pleasantly surprised with the outcome of this research.
For more information visit http://www.trilogic.co.za or email info@trilogic.co.za)
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