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Are You Running with the Big Dogs?

By: Graeme Nichol

In the past few months a few of our clients have been companies who thought they were the biggest and best performers. Then like our crumbling economy they realized they had outlived their dreams.

These are companies that grew very rapidly in the past few years and seeing such stellar growth believed it would continue indefinitely. They made the wisest choice they could have at that time and invested heavily in systems. They then grew even more. They were comfortable with the growth and their systems were actually under stressed. So systems were not a problem. Or were they?

This is where it really gets interesting as they had selected what current market wisdom told them were the best choices possible. They implemented ERP and CRM systems from the top tier companies. In order to implement you need a strong stomach and a powerful balance sheet, or a good venture capital sponsor! These companies generally have a few dozen highly specialized consultants keeping the systems going, staff training never stops, hardware and database maintenance people are constantly on call. It never lets up. The expense is intense to say the least.

So as our economy slowly unwinds and the management reports start highlighting areas of concern, it becomes a question of; what now? The ultimate Catch 22. The business cannot run without the systems but the systems are now too expensive for the business!
So what to do? Outsource? Downsize? Close up shop?

This is when the powers that be went back to the drawing board and discovered that a solution they had originally rejected may be their savior. Yes, they discovered that instead of spending USD50k per month on their on-premise solutions they could operate at a 70 percent saving using an on-demand solution. Developing and running complex sensitivity analysis and being conservative in their business estimates they could continue operating as they are now, with substantially reduced costs. They may even be capable of modest growth. Food for thought?

The CEO said they had considered all possible alternatives initially and soundly rejected an on-demand solution as too risky, untried, and any combination of negative connotations they could think of. What changed? Market forces, obviously, as well as the growing acceptance of on-demand software solutions. Software as a Service (SaaS) has become widely accepted and according to the researchers like Gartner is going to grow even bigger in the future. You really do not have to wait to start saving money on IT. Reap the rewards by going on demand.

Which leads us to wonder who is using software solutions that really are overkill and will ultimately lead to an untimely demise of an organization? We know there are businesses who have bespoke systems designed and built by the smartest brains in Bangalore, India sitting on the best databases of Redwood, CA. There are others that buy the best systems from Redwood or Waldorf, Germany and pay the best and brightest to configure and maintain. All this costs money to create and maintain. It does not stop just because you have it in your own data center. The expense is on going and unfortunately only as good as the resources your company can afford to pay. An on demand solution has the resources of many to ensure the best systems and security measures are in place.

Now it is fine if you are a multi-hundred million dollar revenue organization, who is growing in spite of these added costs. If you have not reached that platform, start thinking carefully. On-demand is making sense. Cloud computing is rolling along, software as a service is getting huge converts weekly.

Not yet daily. Soon.

Article Source: http://bytepowered.org/articles

By President of Arcturus Advisors. Please visit their website at www.arcturusadvisors.com. Arcturus Advisors works with business leaders to implement NetSuite Systems which close the gap between great strategies and mediocre results.

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