Update Your Enterprise Apps or Invest More in What You Own?

With consumer spending up for the fifth month in a row, modest growth could be in our future. Large company spending on enterprise solutions is significantly up in 2010 and it’s expected that small to mid-size businesses will follow later this year. If you’ve been waiting for the trigger to consider your own strategy, this could be it. How do you decide whether your money is better spent on systems you already own or whether it’s time to bite the bullet and update your enterprise apps? Here are some considerations:

1.  Why do you want to update your enterprise apps? Far and away the most frequent reason is because there is some critical business need that can’t currently be met. For instance, you’ve expanded into the international market and your financial system doesn’t currently handle foreign exchange. Or tracking leads and prospects has become more complex than your current system can handle. Or you have no infrastructure to support a new market you’re about to enter.

2.  Will an upgrade to your current system provide the features you need? According to Gartner, companies on average utilize only 30% of the features in their enterprise apps. So before you decide your current solution can’t do what you need, speak with your vendor, especially if you are operating several software revisions behind the most current. It could be that the features you need are available to you and just need to be enabled.

On the other hand, reconsider if your vendor tells you he can deliver the features you need through the interface of a recent acquisition or through an expensive integration with a newly minted vendor partner. Dig deep to be sure you fully understand what you would be signing up for, as both of these situations could be wrought with challenges.

3.  What is the business objective the new enterprise app must achieve? Deploying new enterprise apps is expensive, disruptive and time-consuming. What very compelling business benefit must this solution deliver that you cannot otherwise achieve today?

4.  How will you measure success? Business benefit is more than performing an activity that you couldn’t previously. Take the time to define specific, quantitative objectives, whether you measure them in increased sales, increased efficiency, higher quality, improved brand reputation, better employee morale, etc.

5.  Be clear that technology is an enabler, not a solution. New technology is not going to fix your process problems. In fact, it will most likely make them worse. Technology, process and people all must work together to deliver enduring value to your business.

If in the end you decide to stay with the solution you have currently, consider whether you are using it optimally. For instance, well-focused end user can teach your workforce about underutilized features. Ditto for sys admin training and overall system performance. And if your solution is not already integrated into your delivery chain in a manner that eliminates all manual intervention, this is an investment worth every penny. Last, consider aligning your business processes to your solution to increase synergy.

Last year, I posted the following triggers to engage a different kind of thinking about the impact enterprise apps have on a business. Consider the following:

1. The greater the number of people who use the software application, the greater the productivity loss if it’s inefficient.
2. The more the company depends on application data to make business decisions, the greater the potential for lost opportunity if that information isn’t reliable or readily retrievable.
3. The higher the employee turnover rate during ownership, the more likely the software application isn’t used optimally.
4. The more complex the software application, the more cumbersome the manual workarounds.
5. The more the company culture is focused on the newest and coolest technology, the greater the likelihood that an older enterprise app isn’t used optimally.
6. The less integrated the entire delivery chain, the greater the opportunity to increase overall delivery performance without replacing any component application.
7. The more an organization values formal training, the more likely the software application is utilized optimally.
8. The higher the number of client-facing interactions, the greater the impact poor supporting technology will have on your brand reputation.