Repeating History?

Every 24 – 48 months businesses around the world with a premise-based enterprise application face the question of whether to upgrade to their chosen vendor’s most recent version of their software or evaluate other options, whatever those options might be.  It’s a tricky question to answer and the implications of which can be somewhat substantial. 

The cost to upgrade enterprise software is a significant investment for even the smallest of organizations and the return on this investment is often difficult to realize.  What is the modern CIO, COO, or CFO to do?  

The options generally available to a customer are:

  • Upgrade
  • Refrain from upgrading and go unsupported
  • Refrain from upgrading and pay for additional support (3rd party or extended vendor support if available)
  • Evaluate alternative solutions

An upgrade point is the most opportune time to evaluate your options and be sure that the decision to upgrade is what’s right for your business, as in some cases it might not be.  Consider the following three simple questions:

1.  Has your business stayed the same since you made the decision to purchase your current solution?

Many organizations selected and implemented their enterprise solution ten or more years ago when their businesses were in a different environment than we are now.  Business is now more global, more integrated, and operating more lean than a decade ago.  Decisions you made regarding the technology you use to run your business years ago might not necessarily be the same decisions you would make today.

2.  Is running a data center a core competency of your business?

Ten or fifteen years ago the options for deploying an enterprise solution on hardware located somewhere else wasn’t commonplace.  The industry has realized two waves of transformation along with the commercial availability of the internet.  The first wave involved application hosting (ASP), the second is Software-as-a-Service (SaaS).  As a result, ten years ago premise-based installations were not only the norm but the only likely option for most. 

Fast forward to today….  With organizations looking to run more lean, focus more on their core business, and become more agile, building and maintaining data centers becomes less attractive.  3rd party vendors can pool demand from multiple sources and justify the investment in true world-class facilities which are designed to withstand disaster scenarios.  Few companies can replicate this same capability cost effectively for private use.

3.  Can your business needs wait until the next release of software is available and you upgrade to it?

It used to be commonplace in the software industry that if the product didn’t meet your needs due to limited or missing functionality, the vendor would show you powerpoint slides of “future functionality” which would address the missing functionality.  All too often that functionality either didn’t materialize or required a very expensive upgrade at some point in the future.  With major upgrades often spaced 36-48 months out, you could be waiting four years or more until you can take advantage of new functionality.  Can your business needs wait that long?

Odd are that you can’t honestly answer yes to at least two of the three questions above.  As a result of the questions above and the dramatic shift in the enterprise technology market, any organization facing a mandatory upgrade of their enterprise solution (HRIS, ERP, etc) would be best served by evaluating the options in the market.  You may end up continuing down the path you’re on, but unless you survey the market and make an educated decision, you might miss opportunities to enhance the business. 

You owe it to your stakeholders and yourself to ensure the decisions made today aren’t simply repeating history.

One thought on “Repeating History?

  1. Fantastic post. For #2 it might be a core competency of a company to run their own data center for revenue generating applications but they should still take a hard look at whether running ERP applications in-house is a core competency. I have worked for many companies with world class data centers but the amount of administrative overhead time spent by the application team to install, certify, run and maintain an ERP application in the world class datacenter (think Failover configuration and testing, Disaster Recovery configuration and testing, change tickets, scheduling data center resources to migrate your application changes into production – the list goes on and on) may not be cost effective.

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