Business Strategy: How to Evaluate New Software Systems for Your Organization
Publishing companies of all sizes often spend significant time and money on software service contracts and IT training, assuming that their current systems—whatever they are—will continue to support not only back-office functionality, but editorial, marketing, sales, production, warehousing and e-commerce functionality as well. In the best of all worlds, they will. But at what cost?
Many companies augment their formal systems and databases with home-grown databases, especially lists of various types held in multiple Excel worksheets belonging to multiple staff members. In most cases, these subterranean databases are unknown to other staffers, even though the databases may be posted to a company intranet. In almost every case, these personal databases are not tied into the formal software. (The term “database” is used loosely here to define any collection of data that provides information to a user, however simple or complex.) Typically, home-grown databases are often functionally duplicated across the business. We have had clients, for instance, where the personnel head count has been exceeded by the number of separate databases. The result is usually highly inefficient, often dangerously insecure systems.
How should your company evaluate its current software situation and determine if you need to upgrade or replace it entirely? The first part in this special two-part series provides a step-by-step method to approach this critical task.
The Decision Phase: Recognize the Need to Do Something
How does a company come to the decision that its current software may be outdated or ineffective?
Step 1. Look for triggers.
A trigger is a business event that indicates that the organization is not getting the key information it needs to make both daily and long-term decisions. For example, you may be having trouble tracking your editorial or production flow; or, you may be getting increased volumes of return mail from dated customer addresses.
In short, when your business fails to provide you with quality, efficient management reporting and strategic tools, you may need to look at new solutions that will support your current and future needs.
Therefore, look for triggers that happen continually, and then determine why they are happening. Are they due to poor planning, redundant manual processes, lack of communication or inadequate software? If the answer lies in deficient software, you need to begin taking steps to fix the problem.
Step 2. Determine where the need originates.
The key to getting a project started properly, and ultimately completed, is to employ a mechanism that provides metrics on software performance—not just how it functions on the server, but how well it provides information to its users. Whether a formal corporate-request process is in place or not, it is common for senior management to deny requests from “below” for a variety of reasons—budget limitations, bad timing or protracted periods of review. Yet similar requests from senior management often speed through the approval process. Thus, determining where the need comes from is important and should be an integral part of any software analysis.
• Management: Its buy-in is essential. Senior management is paid to recognize and resolve problems, as well as to think strategically about building the business. Often, however, management is swamped with day-to-day challenges that take it away from these big-picture tasks, and as a result, the business suffers.
Therefore, if management can see the need for change, it will be easier to get its buy-in. Management commitment is key to any software evaluation effort.
• End-Users: They know what works and what doesn’t. The staff who actually use the technology can provide a wealth of information about how effective—or ineffective—it is, and whether or not upgrades or new systems are needed. Many managers don’t have the technical IT knowledge, or day-to-day practical interaction with core operating software, to determine if it is working well or not. Speak in-depth to your staff members on the front lines. They may tell you what you don’t want to hear, but the truth will be essential in making improvements.
In most cases, the needs articulated by the end-users will be excellent representations of the real needs and deficiencies of the company and its technology.
• IT: They can be the catalyst to maximizing your current system as well as providing key input on new or proposed systems. In today’s economic climate, IT departments are reactively stretched. They are almost always expected to solve the staff’s daily technology problems. And while this is fine for the most part, it allows IT staffers little time for systems analysis or forward planning.
One IT position often neglected, but almost always required, is that of the applications manager. An applications manager should have intimate knowledge of what the business does as well as how the business does it. An applications manager usually has responsibility for oversight of all applications running within the business, screening and approving new application-purchase requests, and analyzing current applications for upgrade or replacement. An applications manager is key because he or she can see the whole IT picture across the organization. For example, marketing may request a new survey software package, but the applications manager would know that such a package already exists in another department, eliminating the duplication of software and cost.
The Bottom Line
The bottom line of any software system review and plan is that management must base its decision on metrics that make sense to the company. It is management’s obligation, and in its best interest, to be responsive to a presented need, particularly if that need directly or indirectly relates to net profitability or surplus.
Bottom-line impact is usually clear—it is easy to apply metrics to sales or the number of books shipped and returned. Software can certainly be measured in the number of users, investment cost, modifications or data conversion.
But indirect relationships often are overlooked. The effectiveness or the quality of information available to the organization, or the length of time needed to get to the core information, can’t be directly measured.
Legacy systems, whether home-grown or purchased, tend to become ungovernable for a variety of reasons: training may no longer be formally structured; original documentation may be lost or no longer applicable due to internal modifications to the software; duplicate or conflicting accounts are customary (such as 38 iterations of a single chain-store account); inventory records may be incorrect due to comp copies that haven’t been deducted; and the list goes on.
To benchmark your organization’s metrics, define a perfect system with perfect processes, and measure what you actually have against it. Then you will know if your system is working to your satisfaction or is in need of a major overhaul. The sooner you start the evaluation process, the better.
Part two of this series (in the next issue) will help you with the:
• analysis phase—showing you how to evaluate your business need against the existing environment,
• selection phase—helping you identify those software solutions that are best-suited to address the problems you’ve identified, and
• the final phase—defining what ultimately constitutes success for your company’s needs.
Thomas Woll is president of Cross River Publishing Consultants Inc. (www.PubConsultants.com). Linda Garfinkel is president of Media Consulting Services.