Crisis mode? Should you cancel your IT Project?
In the wake of the Covid-19 crisis many companies are scrapping capital investment projects and maybe the expensive IT overhaul is the first on your list to go. Here’s some of our thoughts on the subject:
One of the primary reasons for cancelling IT projects is the cash impact on your business whilst you’re desperately trying to reserve all the cash you can to see you through some months of lower sales. If your project requires a large capital investment it might be seriously dangerous to continue and risk running the business dry of much needed liquidity. However we’ve found that remarkable improvements can be achieved even with a relatively small investment. A good ERP consultant will prepare you a month by month cash impact report including when legacy system license costs will be reduced so you can see the total impact on your monthly cash-flow.
There are various things you can consider to reduce the cash impact:
- SAAS licensing – if you’re investing in a server or some upfront licensing costs the obvious choice is to review SAAS based option. Our experience is that typically this does work out cheaper when you take all the hidden costs into account. We’ve also found that stronger ERP products have mostly moved to this as their preferred option.
- Provider Payment terms – with many companies putting projects on hold, ERP providers will be far more open to negotiated payment terms pushing as much of the cash impact as possible to end of the project and beyond.
- Value Engineering – not many people will tell you this, and no ERP provider ever will, but you can nearly always value engineer an ERP Project. Our process alignment sessions often strip thousands of pounds of development costs out of projects by fully understanding the way a system handles any given process “out-of-the-box” and then mapping it to your current processes, with some creative thinking and if staff are prepared to be flexible about new processes there are often cheaper ways to achieve the same results.
- Look outside the ERP solution – again this isn’t something many ERP Providers like to shout about but it’s often a mistake to try to make the ERP system literally handle every part of the process. If you feel like you’re bending the system too far, or making a very large development think about whether a bespoke or existing alternative application integrated with the system might handle it, its something we’ve seen take months and thousands from project budgets.
Can you afford not to?
The “if it ain’t broke don’t fix it” is a mentality that we often see in businesses with under-performing IT infrastructure and some will extend this to their ERP system. This is dangerous, if your current system is leaving you exposed to serious security flaws then you need to face the reality, the project is already way overdue. Take advantage of the extra available time and move the project forward at speed.
Some ERP Projects will result in direct cost savings with a single application taking the place of many disparate applications each with their own costs. Study your ROI calculations carefully, in the Post-Covid world can you afford to not have your new ERP?
With the furlough scheme now extended to October you may well have a number of staff on Furlough, this is a unique opportunity to get them further training. Training is allowable under the terms of the furlough scheme.
This does have to be a form of self improvement rather than mandatory training for them to do their current job. However course preparing staff to work in other roles, to train other staff members on using the new system or use parts of the system unrelated to their role would all be allowable training under the furlough scheme. Some of our clients have also selected more IT literate staff to become trained ERP admins gaining skills in report writing, layout changes and simple customisation’s as well as the administration around users, security and access control.
This is a completely unique opportunity to leverage your furloughed staff to propel your change project forward as you move into the Post-Covid world.
All over the world economists are speculating on the impact, possible recessions and so on. We’ve all seen a rapid transfer to working at home and it seems like the social distancing is here for a while. How is the Post-Covid world going to treat you?
One thing I can assure you is that you’ll be more reliant on good technology with a world of businesses moving to fix the challenges they faced when they were forced to work remote in a hurry. If your new system and it’s state of the art website is a part of your strategic plan. Now is the time to push that project forward.
For many businesses the right decision is to put the project on hold, but definitely not all, if you can afford it, if your business needs it, now might be the best chance you ever had to change…