MORE BANG FOR YOUR SOFTWARE BUCK
by Eileen Strider

Many business executives are questioning if they are getting as much
value as possible out of the major software packages they have
implemented over the past several years. Software packages such as
PeopleSoft, Oracle, SAP, Siebel, J.D. Edwards, etc. were implemented
with an expectation of significant business value. The business value
comes from how you use the software in your organization, not from the
software itself. For example, the value may come from lower cost, faster
cycle time, better service, higher quality products or services, less
duplication of work, better data and so on. Let's take a look at two
scenarios for how organizations use their software packages and see how
more value can be realized from these major investments.

SCENARIO ONE: VANILLA IMPLEMENTATION
Your organization did a "vanilla" implementation of the software,
installing the software as it was delivered and changing your business
processes to match the way the software worked everywhere possible. This
allowed you to improve your business processes by taking advantage of
the business processes designed into the software as much as you could.
You only customized the software where absolutely necessary. This caused
significant changes in your work processes, your organizational
structure, and roles and responsibilities. Although this may have caused
significant pain and upheaval in the organization at the initial
"go-live", hopefully your organization is now realizing benefits from
these improved business processes.

Is there more value to be gained in this scenario? Yes. One of the major
reasons companies buy packaged software is the vendor's on-going
improvements and enhancements to the software's functionality and
capability. These improvements often include new and improved ways to
process business using the software. They may include support for
business functions not previously included or enhancements to existing
business functions. They may include improved workflow and improved
reporting capability. You pay for the vendor's investment in these
software improvements through your maintenance fees. You receive these
new and enhanced capabilities when you install an upgraded version of
the software. As you install an upgrade, you will need to study each
improvement and enhancement. You will decide which ones offer added
value for your organization, which ones don't (so you will not implement
these), and which ones will need to be customized to fit your
organization. The more you take advantage of these improved and enhanced
capabilities, the more value your organization can realize from its
software investment. Each time you go through this upgrade process, you
have the opportunity to realize more business value in terms of lower
cost, faster cycle time, better service, higher quality products or
services, less duplication of work, better data, and so on.

SCENARIO TWO: CUSTOMIZED IMPLEMENTATION
Your organization decided a "vanilla" software implementation would not
work in your organization. So, the software was heavily customized to
match your current work processes. Implementation did not cause major
changes in your work processes, organization structure and roles and
responsibilities. Now you are not seeing much value added.

Is there more you can do to increase the value realized on this
investment? Yes. Revisit each customization to the software. Look again
at how the "vanilla" software handles this business function versus how
the customization handles the same function. Decide again if you really
need this customization or if you can use the "vanilla" version of the
software. By this time, your organization hopefully has gotten over the
initial shock of implementing a new system and has adapted to using the
software. Staff members may be more open to considering changes to work
processes. Perhaps there are new factors driving the need for change at
this time. Maybe your competitor has increased his market share or the
recession is driving cost containment. Perhaps funding sources or
reserves are drying up and you must look for new ways to improve your
balance sheet. These reasons to change may be compelling enough to
motivate process changes now that were impossible at initial "go-live".
Remove customizations and use "vanilla" software wherever it will add
value by lowering cost, increasing cycle time, improving service,
raising the quality of products or services, reducing duplication of
work, providing better data and so on. And yes, this means that your
organization will likely undergo significant changes in work processes,
organizational structure, and roles and responsibilities that the
organization avoided at initial "go-live".

Realize that customizations of the vendor's software cost you not just
once for the initial software changes, but each time you install an
upgraded version of the software. Each time you upgrade, at a minimum,
you must revisit each individual customization and determine if the
customization will still work with the new version of the software. If
the customization will not work, you will have to make revisions to
enable the customization to continue working. So, you can decrease your
cost of installing an upgrade by removing customizations and using the
upgraded version as delivered ("vanilla"). The fewer customizations you
must maintain, the lower your on-going support costs and the better
return on your investment.

These two scenarios are not mutually exclusive. In fact, most
organizations have some combination of "vanilla" software and
customizations. This means that your organization should take advantage
of software improvements and enhancements each time you install an
upgrade and also consciously look for customizations that can be
removed. The combination of these two activities will ensure that your
organization is continually minimizing your on-going software support
costs and is realizing value from your software investment.

Whether your situation is like scenario 1 or scenario 2 when you modify
a business process or add a new business process, your organization will
have to deal with change. Here is a checklist of questions to help you
determine if your organization is ready to change a specific business
process.

THE "READY FOR CHANGE" CHECKLIST
- Does your organization have the resources and motivation to run and
maintain this enhanced or new business process?

- Can you name the senior executive willing to sponsor this change? Do
you have strong and active support from this executive? Is this person
willing to make difficult decisions?

- Are there a sufficient number of skilled functional and technical
resources available to implement this business process change?

- Will this business process change drive an organizational structure
change?

- Will this business process change impact staffing levels (more people,
less people, different skills)?  Consider both the time period
immediately following "go-live" as well as the long term. You may
temporarily need more staff following "go-live" than you will need in
the long run.

- Will the business process change require modifications in roles and
responsibilities?

- What additional business processes will be affected by changing this
business process?

- Do your business partners have the ability to support the changed
business process?

- How much resistance to this change will you encounter and how will you
deal with it?

- When is the best time to implement the change? (We recommend you not
change over to a new process during a critical business period requiring
heavy use of this process).

- How will this business process change impact your bottom line in the
long term? Will it reduce cost, improve customer service, reduce cycle
time, raise the quality of your product or service, reduce duplication,
etc.?

- How much value do you expect to gain for the additional investment you
will make?

- When can you expect to realize this added value?

- How will this business process change impact your business results
during the change over from the current process?

- What kind of support will you need to succeed with this change from
people inside the organization and outside?

Answering these questions can lead to realistic expectations of the
business process impact with a solid chance of successfully changing
over to this process. Not only should your business benefit from
improved processes but you will also increase the value of your software
investment.

Strider & Cline, Inc. Maximum Value Newsletter Vol. 2003 No. 1