CAN YOU TAKE THE PAIN OUT OF SYSTEM UPGRADES? //1 THE TRUE COST OF ERP SYSTEM UPGRADES. Power Your People
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1 CAN YOU TAKE THE PAIN OUT OF SYSTEM UPGRADES? //1 THE TRUE COST OF ERP SYSTEM UPGRADES Power Your People
2 CAN YOU TAKE THE PAIN OUT OF SYSTEM UPGRADES? //2 Things to Consider Before Opting for a New ERP System
3 CAN YOU TAKE THE PAIN OUT OF SYSTEM UPGRADES? //3 THE TRUE COST OF NEW ERP SOFTWARE IMPLEMENTATION The year 2015 is gone and analysts have hailed the top business trends for the year There is a growing sense among organizations of FOMO (fear of missing out) on one of the biggest trends: cloud-based enterprise resource planning software (ERP). One of the main benefits of a cloud-based system is mobility, acquiescing to millennial generation s demands and allowing you to access analytical insights from anywhere, anytime. According to Sierra Cedar s annual survey, more than 60% of top-performing organizations 2016 IT road maps include plans to create or improve their enterprise system strategies. These IT projects usually involve ripping out and replacing their old ERP systems, frequently with a combination of hosted SaaS applications based in the cloud or in a hybrid cloud/on-premise solution. Investments in enterprise software are strategic. If not done timely, your business can miss out on growth opportunities or fall behind in compliance issues. But if not done right, upgrading to new enterprise systems can prove very costly. Implementation mistakes can add up to major costs: HP lost $160 million in 2004 when their software upgrade to SAP resulted in them losing track of 20% of their orders. Target s data syncing issues left their demand forecasting and inventory tracking amiss, causing their shelves to sit empty; the resulting losses eventually forced them out of the Canadian market. These examples of expensive, failed investments highlight the importance of having clear IT goals and choosing the right solutions to fit your organization.
4 CAN YOU TAKE THE PAIN OUT OF SYSTEM UPGRADES? //4 SIMPLE ERP SOLUTIONS CAN GET COMPLICATED AND COSTLY While new IT software being brought in to organizations always creates hope for the employees and executives, the real question is whether a new ERP can REALLY help solve the problems that organizations face and make a positive impact on their endof-year bottom line. Implementing a more efficient ERP should yield a cost savings right? With the proliferation of SaaS applications, people perceive that licensing fees are the main cost associated with implementation. In fact, these fees are only part of the TRUE COST of an upgrade. The software selection and implementation process has multiple stages, as shown in Figure 1. Further analysis of each of these elements details the nature and impact of each of those elements, which add up to the true cost of a new ERP software implementation. Figure 1 Organizational software selection process prevalent today
5 CAN YOU TAKE THE PAIN OUT OF SYSTEM UPGRADES? //5 Initial Acquisition Costs Vendors of cloud-based applications usually point to the removal of data centers and hardware as the main cost-saving benefit of their services. While this may ultimately be true, organizations usually overlook evaluation costs, which involves researching the many options available in the market to find one that is a suitable fit for your company and budget. Most organizations assign an entire committee of people to the task. To truly assess the costs involved in the acquisition of new software for your company, you must account for the many hours your employees spend in research, meetings, and demos rather than performing their own productive work.
6 CAN YOU TAKE THE PAIN OUT OF SYSTEM UPGRADES? //6 Set-up Costs Set-up costs are some of the biggest expenses involved in successfully implementing a new SaaS-based application, regardless of the size of your organization. Organizations are frequently stuck with using consulting services recommended by the software vendors, and these expenses quickly add up. In addition to their fees, consulting services are associated with a high number of unavoidable but invisible costs. A few of these invisible costs are due to: Delays resulting from loss of key resources, as important personnel are forced to operate outside your company during implementation A steep learning curve while personnel independently gain knowledge about the new system after implementation (as well as the costs of lost expertise on previous systems) Diminished technical documentation and troubleshooting abilities associated with an outsourced engagement versus an internally-led installation Ongoing dependency on the consulting partners for common troubleshooting, adding time and cost to resolution of future issues and becoming a drain on resources If the administrative part of the implementation process was more user-friendly, intuitive, and adaptive, more organizations could use internal resources and save the expenses of consulting services. Most of the large ERPs, however, are not designed with a focus on easy implementation, so consultants are necessary.
7 CAN YOU TAKE THE PAIN OUT OF SYSTEM UPGRADES? //7 Data Integration and Migration Costs A subset of set-up costs, usually overlooked by organizations, is the cost to integrate and migrate your existing data into a new platform or system-wide software upgrade. While people understand that data migration and mapping will be necessary for a successful system upgrade or change, companies seldom make accurate estimates about the scope and cost of that component. An as-is assessment is essential before embarking on a migration from a legacy system to a new solution. This is necessary to understand the data quality of the current systems and evaluate what actually needs to migrate to the new system in order to support users and provide the desired views and analysis. A recent study by Bloor Research put the failure rate for data migration projects at 38%; software installs or platform migration is a subset of this failed projects category. Depending on the size of an organization, the impact of a failed data migration or integration project can vary immensely. Failed data integration projects lead to cost over runs and missed go live dates. While an organization's employees are usually creators and consumers of data, they are seldom good at data migration, management and governance practices. It is vital to know and accurately account for the real scope of an organization s data resources and the impact that migrating that data from a legacy application will have. People tend to think they can just copy and paste data from one source to another, but this is really wishful thinking. The reality is that successful data migration is a large mapping exercise in their database that needs careful consideration and dedicated,
8 CAN YOU TAKE THE PAIN OUT OF SYSTEM UPGRADES? //8 skillful resources. Capgemini s research on data management asserts that the quality of an organization s information management infrastructure, supporting systems, and practices can materially affect the overall performance of the firm. Cutting corners during the data migration phase can result in costly errors, delays, and mistakes. Change Management Costs Everyone agrees that effective change management practices are necessary, but the budgets allocated by organizations in software implementations to it are evidence that is not really taken seriously. Many organizations either have no change management practices or have sporadic practices implemented only for important projects. By not investing in any kind of change management, organizations stand to increase the overall costs of their implementation even further as miscommunications, errors, and slow adaptation drive up the intangible costs.
9 CAN YOU TAKE THE PAIN OUT OF SYSTEM UPGRADES? //9 Training and Transitioning Cost In addition to investing in a proactive, effective change management strategy, one thing that helps ensure a smoother transition to new software is advance training. Training personnel to use the new systems prior to rolling them out reduces the slowdowns to your day-to-day business when they go live. The cost of hours spent training people on-the-job for a new system adds up, both in hard costs and in lost productivity. Additionally, very few organizations account for the overlapping period where they are not using the new system to its fullest capacity and continue to operate and maintain the old system, spending money on both.
10 CAN YOU TAKE THE PAIN OUT OF SYSTEM UPGRADES? //10 THE SUM OF THE COSTS The analysis of the costs so far highlights a different perspective to a total overhaul and implementation, providing additional points to consider when weighing whether it would be beneficial to implement a SaaS ERP upgrade. The simple truth is that the costs to switch from one system to another are just too high to effectively solve the issues businesses actually want to solve. There is a reason why people are adamant about not changing technologies too often. Even if there is complete transparency about the true costs incurred, organizations are aware of the disruption change causes to business. But the reality is that organizations face many real challenges, as demonstrated by the concerns shared on peer-reviewed software sites like G2crowd. Technical and business people alike express the following major problems a the ones they face on a day-to-day basis: 1. Standardization of practices across the organization to prevent claims of discrimination (for instance, in recruitment, performance evaluations, and succession planning) 2. Untimeliness of report generation, due to the drawn-out process of performing analytics (especially if information is widely scattered, with some still residing in manual Excel-type spreadsheets) 3. Lack of data syncing between existing systems and financial decision makers, which prevents them from efficiently analyzing the impact of their decisions and evaluating new prospective initiatives 4. Need for shared services to easily track pending requests to help desks or call centers and automate paper-based workflows 5. Compliance with regulations, as well as ever-increasing requirements for audits of historical events to supply reports to governing and administrative bodies
11 CAN YOU TAKE THE PAIN OUT OF SYSTEM UPGRADES? //11 In view of the above concerns shared by many middle managers and administrators, most organizations have outlined some kind of strategic initiatives to solve these common problems frequently involving an upgrade of legacy systems to SaaS/ cloud-based ERP solutions. But due to the aforementioned true cost of software implementation, many organizations will not be able to see any economic benefit for a long time and may suffer significant losses in the meanwhile. So what can be done to resolve the problems above if a complete overhaul of your legacy software systems isn t the way to go?
12 CAN YOU TAKE THE PAIN OUT OF SYSTEM UPGRADES? //12 An Integrated Solution Incorporates and Improves Your Legacy Systems
13 CAN YOU TAKE THE PAIN OUT OF SYSTEM UPGRADES? //13 THE SOLUTION LIES IN KEEPING YOUR LEGACY SYSTEM INTACT AND UPGRADING TO AN INTEGRATED, FLEXIBLE ENTERPRISE MANAGEMENT SOLUTION. There are solutions on the market like StarGarden HCM 5.0 that integrate and improve the systems you already have, allowing them to work together better and increasing their functionality. These enterprise solutions have features that: 1. Do NOT need data migration from existing systems and databases 2. Have an adaptive interface that is easy to configure by your internal resources, rather than requiring outside consultant teams 3. Come with in-built rules engine, allowing you to define business processes for standardization 4. Easily connect with multiple systems in an organization, allowing global workforces to easily exchange data and interoperate 5. Create a unified view in dashboards to provide insights from data across multitudes of siloed systems in an organization 6. Provide a way for change control in an organization 7. Have security features allowing for role-based access security, giving you better control over who is able to view what in an organization 8. Allow creation of competency- and constraint-based automated workflows 9. Enable you to generate reports for auditing purposes and remain in compliance 10. Remove the hassles of looking for additional products that work with your core product, due to its integrated platform-as-a-service capabilities that allow connection with existing systems -- saving you even more money in acquisition costs and efforts
14 CAN YOU TAKE THE PAIN OUT OF SYSTEM UPGRADES? //14 Figure 2: Before StarGarden: Siloed systems without true intelligence Figure 2 gives a picture of how organizations today operate within their own siloes, with data from each of the standalone systems kept locked away within their own databases. This system prevents an organization from getting an overall view of what is happening, stunting the ability of decision makers to draw strategic insights for growth. Figure 3 illustrates how StarGarden s central technology, SGFS, unifies the data residing in the multiple systems across an organization and removes the cumbersome requirement for individual logins through its ability to have centralized HR records. The centralized data in turn allows it to provide role based access control, further enhancing security in an organization.
15 CAN YOU TAKE THE PAIN OUT OF SYSTEM UPGRADES? //15 The unified data also allows StarGarden to provide an interoperable user interface, in the form of workflows that can be leveraged for automation of business processes. The flexible platform even allows it to connect with third-party systems like those used by benefits providers, airlines, or insurance carriers in a workflow format, which allows users to define rules and ensure standardization across your organization. C-suite executives can utilize centralized data records to get a unified picture of organizational changes from HR to Finance. Users can access reports for auditing easily and quickly to ensure compliance requirements are met. Figure 3: StarGarden s integrated system turns data into strategic insights through its interoperable platform
16 CAN YOU TAKE THE PAIN OUT OF SYSTEM UPGRADES? //16 CONCLUSION Enterprises today are faced with explosive growth in the volume and complexity of information as increasing amounts of content, data, and systems become part of every organization. Additionally, the legal and regulatory environment for enterprises has become more rigorous, imposing significant obligations on many organizations systems. There is an increasing urgency for organizations to address these needs if they hope to effectively manage risk and harness the true value of the information within their systems. One of the biggest arguments made by organizations seeking to switch systems is that the maintenance of old ERPs and legacy systems detracts from their ability to invest in innovations that can help them meet new business requirements. But these same goals can be more effectively reached by moving away from big brand providers and utilizing an integrated software like StarGarden HCM 5.0. This platform not only provides all the capabilities needed to solve the business problems facing organizations, it costs a fraction of the price tag quoted by branded solutions. Plus, utilizing your existing legacy systems reduces the true cost of upgrading. If you re thinking about upgrading your existing system, it s time to talk to StarGarden. Power Your People
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