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Missed opportunities with major system upgrades

Several years ago, mid-sized organization implemented a very large custom configuration when they implemented their ERP system. At implementation time, they felt a large number of their customers would take advantage of the change. This was a multi-million dollar custom component. The need for the custom component was driven by the IT organization and was never really understood by the business. Once implemented, they learned only 2% of their customers would be able to use the custom component, yet the custom component negatively impacted 98% of the customers as well as the entire support staff. In addition, each system upgrade would cost the organization over a million dollars to retrofit the custom component.

As this example shows, many times major system upgrades are viewed as a technology project, and organizations miss the opportunity to improve the associated processes and improve business results. Even with the best implementations of major systems, organizations quickly learn that they could have taken better advantage of the system if they would have made some different decisions during the implementation.

Projects that were driven as technology implementations usually missed providing many of the break-through transformations of business processes that deliver real business benefits. Often the upgrades are a result of a technical decision to stay current with software versions to ensure the vendor continues to provide support. Upgrading for support reasons provides business benefits to the vendor, but does the organization receive benefits? As the upgrade project begins, questions that should be asked are:

  • What was the result of the last implementation/upgrade?  We there open issues or problems with the implementation?  Did the organization achieve the expected business benefits?
  • Are there particular processes that are not performing well? Potentially highly manual processes, high error rates, or too slow?
  • Were there requested enhancements that are included in the release?
  • Many times organizations or people within the organization will have a negative opinion of the software package. Is there a negative opinion? Has anyone done a root cause analysis to determine the cause of the discontent? Many times perceived problems are based on the implementation or business processes, and not based on the software itself. Upgrading the software will not eliminate these issues. Are there project or business process changes that should be addressed before implementing the upgraded system?

Based on an assessment that asked these questions, the organization listed above decided to remove the custom component as part of their first upgrade. Some of the benefits they received were:

  • Reduced the cost and time of future system upgrades.
  • Improved the business processes for 98% of their customers and all of their support staff.
  • Improved and streamlined business processes for internal staff.
  • Improved the perception of the system within the business.

In extreme cases, organizations have made decisions to abandon systems that have not generated the expected business value without understanding the root cause of the system failure. In one case, another mid-sized organization asked us to help them select a new imaging system. The implementation of their current system was late and well over budget. The project extended so long, the business and IT staff made decisions to just complete the implementation.

The first part of our project was an assessment of the current system to determine what went wrong and what was needed in the new system. During the review, it became obvious that the original implementation project only installed the technology and never addressed the associated business processes. The business was still using their manual processes that were in place before the implementation of the technology. The manual processes caused long backlogs in processing as business users would continually resend the same information until it was finally available in the system. As a result of the assessment, the recommendation was to upgrade the current technology and improve the business processes supported by the technology. The organization took this approach and the benefits they received were:

  • Stopped the project to evaluate new technology options and avoided a project and cost to implement yet another technology.
  • Reduced the cost to obtain the desired business benefits by leveraging the original investment.
  • Reduced manual processing and errors.
  • Reduced the amount of imaging due to elimination of delays in getting documents into the system.
  • Improved the perception of the system within the business.

Performing a major system upgrade is a very good opportunity to drive additional improvements in the organization. Regardless if it is business policies, business processes, software configuration, or software limitation issues, identifying clear goals for business improvement will unlock value in the upgrade. Driving the project from purely a technology refresh may not achieve business benefits. There is a cost to upgrading systems, take the time to find the additional business value in the upgrade.