Your client will no doubt want to develop a business case for their new system. They will want to understand the costs and the benefits to be derived from the implementation. Most business cases fail to accurately represent both the real costs and true benefits of solution. Yet year after year, clients continue to produce these works of art. They are generally flawed in two ways:
- they are unable to correctly quantify how a really good solution will enable their business to evolve and grow
- they are equally unable to state what the plan is to ensure that expected benefits are actually realized. (ie. you increase employee productivity, but what did you do with the time?)
There are really only 2 reasons why your client would invest millions of dollars in a new system.
- they have to
- they want to
When they have to replace a system, the cost benefits analysis (CBA) is mostly meaningless. The decision has already been made, they must replace the system. The only decision now is how much or how little money they are going to spend to do it.
- The system is old, written in assembler and their last assembler programmer retired last year.
- It fails regularly, idling their business.
- It prevents them from being competitive or worse yet prevents them from being market relevant.
When they want to replace a system, the only thing that really matters is the benefits. They are not looking for the lowest cost solution, they are looking for the solution that will drive the maximum benefit:
- to differentiate them
- to make them better than everyone else
Hence the benefits conundrum. One of the fastest growing segments of the IT industry is the premium packaged solution space. These are the SAP’s ,Siebel’s and the PeopleSoft’s of the world. These ultra expensive solution sets let your client invest millions of dollars just to be like everybody else. In fact that seems to be the package vendors’ very selling strategy.
It would seem to me that if they have to replace their system, they should be cost focused, looking at the Great Plains of the world to replace their ERP. Does anybody actually think that the 2 systems actually produce meaningfully different income statements or accounts payable reports? There are many SAP implementations worldwide that have cost hundreds of millions of dollars to implement. Think about the sanity of that for a moment, if it’s not going to drive unique business benefits… at least do it cheaper.
Ancillary to that thought is that if they want to replace their system, why would they want to install application packages? These are the same packages that their competitors run and by definition provides no competitive advantage. At best, it levels the playing field.
Back in the 80’s organizations legitimately used technology for competitive advantage. Today customers often use these words but then install a package that makes everyone using it live with a lowest common denominator solution. True competitive advantage and differentiation only comes through fresh thinking, fresh business strategies, fresh products and systems that help bring those unique business strategies to life.
New systems generate true benefit when they amplify the unique strengths and assets of the organization that uses it. You need to instill confidence in your client that they should never be afraid to build something that is unique to them. More often than not customers with helpful coaching from “experts” will expound a “buy versus build” strategy. However I think the statement is dangerous without better defining the statement.
- Buy Commodities and pay the least possible for them. (ie. Accounts Payable system and go buy it on a cloud somewhere)
- Build systems that build your business. Be different, Be better… Build.
As a consultant I am never afraid of telling a client to build. Today we can build with incredible speed and quality. We can not only build systems that do the job, but we can build systems that can do the job much, much better than a package solution ever could. In fact given the scale of some of the SAP “package” implementations that have been done, I would say we could even build many custom solutions for less. Imagine if you would, the system acquisition as a car. A Honda Accord is your starting point. Now you would like to race it and win in the Montreal Grand prix. You can start with the Accord and modify it to be a Grand Prix car, but it will cost more, take longer and ultimately you will lose the race against a custom built Grand Prix car. The custom solution is always designed from day 1 to win.
If your client has to replace their systems, then by all means buy a package but if they want to replace their system, tell them to not be afraid of building an asset that will differentiate and drive their business forward.