The pain points that drive a company towards purchasing a software upgrade are all too visible. But if that drive moves too fast, the pain points left after the implementation might be just as bad.
CIO contributer Chris Doig examines this unfortunate trade-off, exposing the hidden costs that come from rushing through the software purchasing process. He likens impatient companies to under-prepared sports teams. Without thorough preparation, a team is going to take loss after loss against opponents who have done better ‘due diligence.’ Similarly, small or mid-sized businesses that hurry through software evaluation often end up taking heavy, recurring hits against their bottom line.
Doig provides a balanced view on the issue, also noting the attractive benefits that a company can expect from improved software. He explains that even though a software package has a certain price tag associated with it, that isn’t the actual value of the solution. An accounting, CRM, ERP, or other software system’s true value arises from the ROI it brings to your organization. The various types of ROI can be grouped into four categories: increased benefits, reduced liabilities, enhanced activities, and new value-adds. When a company starts to consider the possibilities for improving operations, it can easily be captivated by the greener grass on the other side of the purchase order. If those advantages are available, then why delay?
The reason why, Doig explains, is because gaps between what your company needs and what the software provides typically result in squandered time and funds. The mismatch might occur in three ways. You might need more functionality than the software offers, so the deployment leaves you still struggling to get things done. Vice versa, the software might offer more than you actually need, slowing your staff down because there’s so much to learn and navigate each day. Or the mismatch could be because functionality offered by the software is different from what you actually need. All three of these scenarios would require you to rearrange your business around the new tool — and that’s the last thing you want.
Going one step further, Doig analyzes where exactly the ROI evaporates in situations of poorly matched software. He categorizes the losses into three types of costs. First, unexpected implementation costs arise when you discover “new” requirements after the implementation has begun. These expensive insights can cause the schedule to slip and the project budget to expand. Second are delayed ROI costs: reduced value brought on by the schedule slips. The advantages that were so apparent and convincing before the start of the deployment might not be realized until after the dust settles, which means ongoing inefficiencies and missed opportunities. And third, there can be ongoing unmet expectations. Only rarely do the problems that cropped up during implementation end up being 100% resolved. Instead it’s more common for those issues to exert a continuing drag on your business. Doig points out that these last two types of cost may be completely invisible on your income statements. But the pain-points will be just as apparent as those you were trying to correct.
The antidote to these problems is thorough requirements analysis, Doig says. Before looking to what various software solutions CAN do, you need to understand the details of what you NEED a software tool to do. When it comes to investing in your business in such important ways, you definitely don’t want to just try and wing it.
“Working with aACE Software has been a pleasure, and the results of this project have been better than I ever imagined they could be when we first started down this path.” ~ Jasmine Crandall, Midwest Custom Bottling LLC
