This article has kindly been sponsored by Celoxis and is written by Sanket Pai.
Enterprise software has traditionally been related to its ability to solve a specific purpose or a business problem. Be it ERP, CRM or Accounting, enterprises have typically chosen specific ‘best-in-class’ solutions to address specific organizational processes. Businesses end up with several ‘best-in-class’ solutions, each tailored to address a particular business challenge in the best possible way.
Time and again this has only proven to also bring in a number of problems that impact productivity, quality and subsequently the ROI and business top lines.
According to the 2013-14 Key Trends in Software Pricing & Licensing Report, almost all organizations are wasting money on software that isn’t being used. This is known as ‘shelfware’. Ninety-six percent say that at least some of the software they’ve purchased is shelfware. A significant percentage (39%) reports that 21% or more of their enterprise software spend is wasted on shelfware.
At the same time that so much waste is being reported, funds are growing scarcer. Almost two-thirds of enterprises (63%) say their software budgets will either stay the same or shrink over the next two years.
Software decision makers often substitute ‘best-fit’ with ‘best-in-class’ which often leads to this deluge of spending.
Are you spending money on enterprise systems that you don’t fully use? Let’s look at some of the factors that contribute to the above scenario.
Learning curve and adoption
Enterprise projects today demand multiple skills and multiple work assignments across multiple location teams and time zones. When teams are expected to use multiple tools for various aspects of work, their proficiency with the tools becomes a crucial factor. Best-in-class tools pack in a lot of features to ensure they address the specific need in every way. They wouldn’t be best-in-class otherwise, would they?
This leads to a complex user experience. Learning curves get a lot steeper and adoption rates start going southwards. Not an ideal scenario for an organization that has spent significant amounts on software procurement, implementation and training.
Just think about the time spent by employees completing information in multiple tools on a daily basis. Add it up over a period and what you get is a significant productivity leak.
In most cases, there are overlaps and employees end up filling in the same information in more than one tool. It is ironic that the very tools that are supposed to automate processes and save time end up being productivity killers.
Speed of information
This is the age of information. Teams, managers, stakeholders and customers rely on real time information and insights to make crucial business decisions. To enable this, there has to be a seamless exchange of real time information between the various systems in use.
The reality however is far from ideal. Most best-in-class systems don’t come with plug and play integration or need a fair bit of customization. That only means more time, effort and investment.
Non-availability of real time information can have a huge impact on visibility into health of projects, processes, resources and financials.
Procuring multiple best-in-class solutions comes with its own vendor management challenges. Depending on their scale of operations, companies could end up managing anywhere between a 10 to hundreds of vendors across the board.
Irrespective of the number of vendors, multi-vendor management is often complex, time consuming and obviously very expensive. Apart from the procurement cost, companies need to spend a significant amount on overheads and infrastructure to support the different contract types. Add to that the time and energy spent on managing service levels and support across all vendors. A multi-vendor scenario often leads to creation of new inefficiencies, proliferation of which will lead to incremental costs and negative impact on ROI.
The alternative: ‘All in One’, comprehensive and hybrid tools
The shift from ‘best-in-class’ multiple tools to comprehensive ‘all-in-one’ tools is gaining momentum.
However, once you have decided to go for a comprehensive tool, it is important to put some thought into picking the right one.
Here are the seven criteria that highly improve your probability for a successful comprehensive software deployment.
- The business need: Defining the business need or problem accurately is half the battle won. Conducting a detailed requirement analysis should be the first step in software procurement exercise. The selected tool should be able to address the exact business need and adapt to the environment.
- User Experience: Purchase is an executive decision, but the ROI depends on adoption across the organization. User experience is critical to driving and sustaining adoption. Organizations should therefore consider feedback from users on user experience of potential tools before taking the decision.
- Service Levels: Organizations should get a grip on post purchase scenarios such as uptime, technical support and training. Online user forums could be valuable when it comes to understanding community grievances.
- Data security: Most of the comprehensive software tools come with a free test drive. Be sure to demand for one, if not readily available. Conduct a data security audit in this trial period to ensure that the tool complies with organizational guidelines. This is absolutely critical, especially with your customer and/or financial data.
- Vendor credibility: To ensure that the long term objectives of the investment are safeguarded, it is important to verify the credibility of the vendor. Organizations can accomplish this by conducting reference checks and getting insights into their reliability and customer satisfaction.
- Integration: It is important that the tool integrates well with your existing business applications and that it provides the architecture to integrate with other tools in future. These aspects need to thoroughly tested in the trial phase so that there are no surprises post purchase.
- ROI measurement: To justify the investment, executives will need to figure out the ROI measurement beforehand. They will need to keep a close eye on factors such as productivity, impact on quality and immediate & long term cost savings among others.
To stay competitive in this ever evolving and tough business environment, enterprises are constantly looking to be more efficient and effective. The shift from ‘best-in-class’ multiple tools to comprehensive ‘all-in-one’ tools is gaining momentum and it is time enterprises and software vendors geared up for this big shift.
About the Author: Sanket Pai is currently heading the Customer & Product Experience team at Celoxis, an enterprise-class comprehensive project management software, available on-premise or via the cloud. His interests lie in Product Management, Business Analysis, Innovation Management, Customer Insights, Research and Experience through Design Thinking pedagogy and application of Business Design. You can also follow him on Twitter or LinkedIn.