Ilo you really need a new computer system?

By Dick Friedman

ll /IAKING the critical decision about replacing a comlVlputer system has always been difficult because it involves subjective, intangible factors as well as dollars.

And now it can be more confusing because the decision should consider a new kind of "system": Application Service (AS), also known as Software-as-a-Service (SaaS). With AS/SaaS, a distributor does not pay a large sum upfront for a license to use ERP business management software. Nor is it necessary to purchase a new, larger server. PCs are used, via the web, to access software and data on a computer residing at the company that provides the service. The distributor pays only for the resources used (e.g., the amount of processing done), which can be less expensive than owning a system.

Based on experience, here are the steps to take to make a non-emotional. unbiased, cost-effective decision.

l. Create a list of the reasons why replacement of the current system is being considered. Call them "goals." It may be possible to achieve these goals without getting a new system.

2. O"fin" the planned and expected growth and change at the company.

3. por the current system, identify where improvemenrs or changes in user job-functions and/or procedures/controls could achieve some goals listed in step l. Also determine if enhancements to the current system could achieve some goals.

4. Based on steps I and 2, define all the features that are desired in a new system. Then determine the availability of suitable new software and the availability of an AS.

5. Identify savings, benefits and efficiencies that only a new system or AS/SaaS would yield.

6. tdentiiy where improvements or changes in userjob-functions and/or procedures and controls could produce some benefits of a new system.

7. Pot the currenr sysremJ determine which enhancements would be needed to provide the same financial savines and intan- gible benefits that a new system or AS/SaaS would provide. f 6. Repeat step I 5 for AS/SaaS.

8. po. each software enhancement identified in steps 3 and 7, estimate the direct cost, the value of internal time involved, and the resulting savings and benefits. Also estimate the level of risk of success.

9. tuag" whether the system environment is structurally suitable for all the enhancements being considered, whether the current system is user friendly and easy to use, and the adequacy of software support.

10. p"t".-ine if the current server could handle enhanced current software. If not, estimate costs for any hardware expansion or replacement hardware, taking step 2 into account.

I 1. po. each enhancement, do a cost-benefit analysis, and classify it as immediate, mid-term, or not worth doing.

12. n"t".*ine if the cuffent server could handle new software. If not, estimate costs for any hardware expansion or replacement hardware, taking step 2 into account.

13. eaO up the cost of all the enhancements classified as immediate or mid-term.

14. pstimate the true future cost of using the current system, as enhanced/ expanded, the savings and benefits from enhancements, and the net cost (savings).

15. po. a new ERP system, estimate the true cost, the savings and benefits it would produce, and the net cost (savings).

17. Ur" steps 9, 15 and 16 to make the big decision-including whether to license software or use an AS/SaaS.

- Dick Friedman is a recognized expert on inJormation technology (lT) Jbr LBM distributors, with 30+ years o.f experience heLping distributors select a new system. Call (847) 2563260 fur a free consultation or visit www.genbuscon.com.