Not so long ago, our CFO was looking at changing our financial system and it reminded me of a similar situation that happened when I worked at National Australia Bank many years ago. We changed our entire ERP because the organization needed to slice and dice their data differently. What they could have done instead was use analytics differently to extend the life of the products they had, so that’s what we’ve done.
Reassess your data strategy
This is something I see happen a lot in organizations - they replace fundamental core systems without understanding the problem they're solving. If you're solving a process problem, then by all means replace your financial system or your order system or your supply chain system. But if you’re looking to upgrade software because you don’t have the flexibility to analyze your business, then you actually have a data problem and should really look at your analytics strategy. You may be able to extend the life of your systems by managing your data better.
When an organization grows quickly it can outgrow the systems that it has and there may be a compelling reason to change. For example, if there’s a complete breakdown in process and systems or the business becomes too complicated that the existing system can’t handle it. But unless your fundamental processes are at risk, you shouldn’t replace a system because it lacks analytics.
Fix instead of replace for better insights
We use Xero and it works perfectly well for invoicing and counting our money, but where it falls down is in the analytics it gives us around our business. It doesn't give us much detail about the customers we sell to and where they come from. So instead of replacing Xero, we’ve extracted the data out of it and extracted data out of our CRM, Salesforce, and merged them together in a data warehouse. This gives us the ability to slice and dice our data and really understand our business.
By investing in an analytics strategy, we now understand who's buying our product, why they buy, why they churn, where they came from and what size they are. All of those things help us understand our business strategy and focus on who we sell to and how we sell to them.
Organizations often jump very quickly to changing a system because they honestly believe that they’ll get better analytics out of the box but that's not what happens. While every software vendor will sell you analytics as part of their product, the reality is that you will still need to extract and manage your data well and merge it with your other data regardless of the systems you have in place. So if you can find another way to get the data and analytics you need, it’s much more cost-effective than putting your organization through the pain and distraction of a system change.
Ask yourself this...
So if you’re thinking of replacing your existing legacy systems, ask yourself a few questions first. Why do you need to change? If it's because you want better data then look at your analytics strategy instead of a high-cost system replacement. By looking at your analytics strategy you could extend the life of your legacy systems and save your organization hundreds of millions of dollars.
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