When and how should you go about upgrading your business systems? Control Shift
Wednesday, October 8, 2014/
A couple of weeks ago, I wrote a column that said while business IT systems (such as payroll, accounting, point-of-sales or inventory management) might not be the most interesting thing in the tech universe, it is the most important.
In response to that column, there were a number of interesting comments. I initially intended to write a follow-up last week. That idea was placed on hold, however, when Microsoft announced the next major update to their Windows operating system, Windows 10.
So this week, I want to address a couple of reader responses to my article on how bad IT systems kill companies.
Risks and rewards
First, David Ogilvie pointed out that bad implementations of good systems can also kill companies:
Companies often don’t deploy the resources required to correctly select the most appropriate system to their industry or effectively implement a good system if they have chosen the right one. System replacement is fraught with danger.
I absolutely agree that there can be risks that go with major system upgrades or replacements. So it’s important to do your homework before an upgrade. If you don’t have the IT capabilities in-house, you should find a reputable IT firm, consultant or systems integrator to work with.
However, I’d also point out that just as there are risks and costs associated with upgrading, there can also be risks and costs with not upgrading.
Obsolete software carries security risks to your business from vulnerabilities that are no longer being patched. It also can carry with it costs in terms of lost productivity, limits on growth, inefficiency and missed business opportunities. It is important to keep these costs in mind when you consider an upgrade.
As with any business decision, look at the return on investment – in this case, the savings made by cutting these costs when weighed against the upfront and ongoing costs of an upgrade. Over a period of time, these savings will mean your upgrades can pay for themselves.
Is there a magic box?
Meanwhile, Leigh asked quite an interesting question:
Are you able to advise any particular software that ticks all the boxes? Or perhaps a site that does the comparing for you?
The short answer is that the right software and systems will vary from company to company, and there isn’t one solution that will tick all the boxes for everyone. However, there are a number of things you should consider before deciding on the systems to use in your business.
The first is whether you want to go with an enterprise resource planning (ERP) system or “best-of-breed”.
An ERP system (the best known examples are Oracle, SAP and Microsoft Dynamics) is a single package that covers all aspects of your business, from human resources through to accounting, HR, distribution, production, customer service and even e-commerce.
The alternative is to choose a series of standalone “best-of-breed” packages. This would mean having a separate accounting package, CRM suite, inventory management program, and so on. But the challenge then becomes getting them to all work together.
The second thing to consider is whether you want to host your systems in-house with your own servers and IT team, or whether you want these on the cloud. This is a topic I’ve discussed previously.
The third thing to weigh up is whether you go with a custom solution, or off-the-shelf. My advice here would be — unless you’re a startup pioneering an entirely new industry — the business problem you’re trying to solve has already been solved by someone else, meaning the most off-the-shelf solution will be the best option.
The fourth thing to consider is whether you go for open source or proprietary solutions. Again, this is a topic I’ve discussed in greater depth previously.
When you weigh up these considerations, it’s important to keep in mind your business size and your immediate growth prospects. In some cases, packages and products that work for small businesses won’t be able to scale with you as your business grows, which will lead to some of the problems I discussed earlier. On the other hand, some packages only become cost effective once your business reaches a particular size.
Finally, you need to look at whether your business or industry has any specific needs in terms of software. The right IT setup for a chain of restaurants will look different to the one a wholesale manufacturer would use, for example.
Just remember, every business is unique. However, by taking a close look at your business needs, and looking at a few key considerations, you should be able to determine the right systems for your business.