Speed of Change in Business Systems

Business systems are the systems that help an organisation run: software like ERP (Enterprise Resource Management) to do the accounting and CRM (Customer Relationship Management) to support contact with customer.  Like every other technology, they change surprisingly quickly. Most suppliers of these systems launch major updates every 9 to 18 months.

The investment in these systems for smaller organisations is considerable. So, there is resistance to upgrade often.  The changes disrupt normal running of the business while old systems are cleaned up, new systems installed and users get used to the new way of working (hopefully with training).  Not forgetting the cost of professional services to change the processes to make the best use of the new system (labelled BPM or BPR,  Business Process Management or Business Process re-engineering) and the cost of the upgraded hardware and new software to run the whole thing.

Little wonder that some CEOs look for a return on investment of 5 to 10 years on these programmes.

That’s a problem.  A full refresh of business systems (systems from “hello, how can I help you?” through invoices, to company reporting and the annual cheque to the tax man) are programmes which can take many months. The new system can look out of date within a few months of it being first used (if you look at the suppliers’ latest adverts) but to get the return on the investment, the new system needs to stagger on until the next refresh is needed.

Minor upgrades can be almost as disruptive, so there is a tendency not to take these upgrades too often.  There is a risk in this approach that while disruption is avoided in the short-term, cost will be added in the long-term.

It is tempting to consider this in the context of cars.  The old system is a rusty old model but you want to keep it running despite the money it costs because you can’t afford a new one or the time to go to the dealers to look at the options. When you buy a new car, the cost of services looks prohibitive so you avoid them until something really inconvenient or costly happens and you have to get a lot of work done at the garage.

Where the metaphor breaks is when we realise that driving a car is a similar process for a rusted out model or a shiny new one: the roads are similar throughout the years.  With computing, the road is changing too.  Imaging you started driving your car on the road ten years ago but now the road is not there and all modern cars hover a little above the ground.  You are used to a steering wheel but the new car next to you is driven by thought alone. That is the sort of technology leap business computing can face in less time. 

The CRM and ERP you installed 5 years ago is two generations of technology behind the one your account manager talks to his new customers about.

The speed of change in business systems is faster than the return on investment calculation allows.  This means the CEO and CIO needs to find benefits elsewhere to justify the investment in business process improvement and determine how much must be considered the cost of doing business in the way that these systems enable and therefore operational costs. 

There are huge advantages in the scalability and organisational speed offered by well implemented CRM and RP but the business case is not a simple one – no mater what your suppliers tell you.

About 3triangles
Helping organisations make change happen in 3 key areas: strategic change, deliver tactical impacts, efficient and effective processes. All blog content (c) 2009 - 2012 Carol Long and Three Triangles Performance Ltd

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