Ageing ERP: Should you shift to newer technology?
By Ronald Laxton, MD of Computer Initiatives
It is an inevitability that despite upgrades and constant development, many enterprise systems will age and eventually become obsolete. The potentially multimillion-rand question for the organisations that depend on such systems is whether or not they should be replaced. Or rather, says Ronald Laxton, MD of Computer Initiatives, the question is when they should be replaced.
"Probably the most important consideration for executives faced with this issue is the necessity to separate the decision to change from that of deciding when to migrate," says Laxton. It`s something he says has become apparent in his quarter-century experience in the industry. He explains why.
"Deciding that it is time to move off the existing system should have little to do with the choice of its replacement." The reason is quite simple. "At issue at this juncture is a really quite simple evaluation: is the existing application no longer suitable? If the answer is `yes`, then replacements can be sought."
When evaluating the existing system, he says key issues to consider include its ability to support the business operations and strategy. "The system may be acting as a constraint, perhaps as a limitation of the underlying technology," he notes; for example, many DOS-based accounting systems prevented companies from performing functions now considered the norm. Automatic production and e-mailing of PDF invoices and statements was not possible. Companies using such systems were limited to cumbersome paper and fax-based solutions, resulting in unnecessary costs and processing time.
"More recently, integration and workflow technology have evolved significantly. Many older systems cannot provide for integrated business processes, requiring external systems which add complexity and which reduce efficiency," Laxton adds.
Once it is established that a shiny new ERP solution is the way forward, he says a new set of challenges is presented. "Evaluating alternatives is a difficult, high-stakes responsibility. It starts with clarifying requirements; experience has proven that those companies which know what they want, with a well-defined and clearly prioritised list of requirements, tend to have higher satisfaction from their deployment than those that figure things out as they go."
He says a proven approach is to identify what he calls `the CBIs`. "That`s the critical business issues, and by that, we mean `what makes a company tick? How does it create value? What are the key measures that need to be monitored or controlled?`"
If a system under evaluation doesn`t clearly address the CBIs, the action to take is quite simple. "It should not be investigated further," Laxton states; it`s a useful filter because he says it is quickly applied and narrows down the number of systems to be considered.
Of importance too, he continues, is the necessity to clarify the decision-making criteria. "Making decisions is easier with a structured approach." While there are many others, Laxton says Computer Initiatives uses the Kepner-Tregoe Decision Analysis methodology, which advocates identification of the criteria for success, and ranking these before considering options. It also provides a structured way of evaluating alternatives using these criteria, and a risk assessment tool.
Narrow it down to potential choices
As the process narrows down, Laxton says the time will come to select several likely-looking systems for evaluation. "Since evaluation itself is a time-consuming process, this should be substantially narrowed down to systems which are definitely viable, and then choosing from those," he notes.
While some systems are high-profile and will generally be included in any initial list, he stresses that there are many that do not enjoy the same level of marketing, but which may be a better fit for particular companies. "Newer Web-based solutions, for example, don`t enjoy the level of marketing that established players do. It is well worth exploring these, especially in terms of examining international presence and performance. They may enable a level of transformation in your business that more established vendors cannot provide," Laxton says.
Online research provides extensive information and opportunities to identify, explore and evaluate potential systems. "Don`t limit the options to what you see on billboards; look beyond the obvious choices, as therein may lie the opportunity to introduce changes that could deliver competitive advantage," he adds.
And finally, Laxton says that thorough research may also expand horizons beyond those that existed when setting out on this journey. "The ability to conceptualise new solutions is too often hindered by prior experiences. Our knowledge of current and prior solutions creates blinkers that may prevent us from perceiving solutions that lie outside of our sphere of experience. It may therefore be wise to revise the decision-making criteria based on research findings."