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Software hindering companies due to wrong buying decisions
Agresso provides missing total cost-of-change (TCC) link in business application purchasing checklist Sliedrecht, the Netherlands – February 8, 2008 – Business software that’s supposed to help organisations more than often proves to be a hindrance instead. While applications such as ERP and CRM manage to perform their core tasks satisfactory, their rigid nature prevents organizations from adequately adapting to crises, emergencies and future-changing scenarios. According to ERP vendor Agresso, the software industry has been focusing for too long on delivering new and custom-built functionality, while neglecting aspects such as post-implementation agility. At the same time, end user organisations have continued to base purchasing decisions largely on up-front costs. As a result they typically get a solution that fits perfectly today, but is very costly and frustrating to modify after it has been implemented. “By now, companies are beginning to feel the pain of purchasing decisions made three to four years ago”, said Ton Dobbe, VP Product Marketing at Agresso. “Whether by mergers, acquisitions, new products, new management, reorganisations, outsourcing, or anything else, they are being forced to change – but their software won’t allow them to. So they get caught up in a continuous need-spend-need-spend cycle - struggling with multiple sets of non-reliable, out-of-date information and legacy business processes. At the same time, they are unwilling or unable to pay for another complete overhaul of their business application infrastructure.” "The frustration companies feel with their rigid business applications is fueling the popularity of the total cost of change (TCC) as a purchasing criterion", said Brian Sommer, CEO of analyst firm TechVentive, Inc. "Instead of measuring up-front costs, TCC looks at the costs involved with modifying an existing software installation. As it turns out, TCC is a far superior measure of an ERP solution's true cost of ownership than TCO." By the time an organisation discovers its business software is hampering progress, there’s usually no time or budget to make the necessary changes on the spot. To prevent this from happening, Agresso has put together a checklist with crucial cost-of-change related questions that most purchasers nowadays forget to ask – the missing link of software purchasing. This list is based on feedback from fast-changing organisations across several industries and covers the most common drivers for change in today's business environment. Total cost-of-change checklist 1. Reorganization & restructuring Our organisation will likely change in structure in the future to accommodate market demands/drivers. What effort is required to change the existing management structure; for instance, from management by office (London, Paris, …) to management by job type (geotechnics, steel, seismic…) or by vertical (banking, insurance, …)? How much effort does it take to implement a reorganisation whereby one department splits into two departments - with different responsibilities, different management structures and different service delivery processes? What effort is required to review organisational changes within the Finance system - thereby comparing results historically of the existing structure compared with the potential structure? What effort is required to allow project managers to track debtors, creditors, commitments, budgets, actual, forecast and margins by individual projects in a situation whereby it's decided to outsource part of the service delivery to subcontractors? What effort is required to track a project (cradle to grave) in a situation whereby the organisational structure changes, thereby changing ownership of the different phases of the project? What effort is required to change your approval flow of, let’s say, invoice, time or expense-related workflow processes to reflect either changes in organisational structure or changes in staff?
2. Organisational evolution How much effort does it take to provide people evolving in their job (growing responsibilities, changing roles in the company, changing divisions, etc.) with the right reports and level of access to information (less or more)? What effort is required to support the business when rolling out new products or services, or when changing the service delivery methodology (e.g. fixed price to hourly rate)? What effort is required to add a new metric by which to slice and dice results or performance? What effort is required to start analyzing pay costs to a lower level of detail than just overtime? How quickly is it possible to change from a multi-site implementation to a shared services implementation without disrupting the business?
3. Mergers & acquisitions What effort is required to migrate the merged/acquired organization(s) together on the corporate business system, thereby ensuring one version of the truth? What effort is required to enable employees from the newly acquired organization to operate cross division/project to leverage synergies skills and cost wise? What effort is required to introduce a common reporting structure across multiple legal entities and regions while continuing to meet local reporting requirements? What effort is required to move to operating one Credit Control department for the entire group?
4. Government reform & compliancy A new regulation (IFRS alike) is introduced by the government. What effort is required to comply? What effort is required to ensure new and old reporting standards compare? What effort is required to report financial data alongside non-financial data (e.g. related to corporate social responsibility), potentially for a retrospective period of time?
“Any business living in change should think twice before making a purchasing decision and check if it provides satisfactory answers to the criteria specified in this checklist; for mission-critical systems such as ERP in particular”, Dobbe continued. “Every requirement that is not met means a direct and tangible risk to an organization’s ability to achieve its mid- and long-term objectives. Organizations that find their software is too inflexible would do well to start evaluating alternative options. Only then will they be able to ride the wave of change when it hits them, instead of being drowned by it.” (824 words)
About Agresso Agresso (www.agresso.com) is a $225 million enterprise resource planning (ERP) subsidiary of Netherlands-based Unit 4 Agresso (Dutch Stock Exchange EURONEXT-U4AGR) and one of the top five providers of ERP solutions for professional services and public sector organizations. Agresso offers a uniquely integrated data/process/delivery architecture designed specifically for Businesses Living IN Change (BLINC) ™. Agresso is known as "The ERP Market's Definition of Agility" as it allows an unlimited amount of ongoing, post-implementation changes without the typical external IT costs and intervention that nets billions of dollars in revenue to the market leaders. Over 2,700 companies and organizations in 100 countries deploy Agresso Business World for both operational support and strategic management. The company’s role-based, Web Services and Services-Oriented Architecture (SOA) enabled solutions include: Financial Management, Human Resources and Payroll, Procurement Management, Project Costing and Billing, Reporting and Analytics and Business Process Automation.
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