EOS = ROI vs. ERP
To solve this problem do you divert precious resources away from projects with strong ROI and dedicate them to a project that offers little or no ROI; or do you pay exorbitant maintenance fees to continue support on their outdated system; or do you take the risk of losing support altogether?
When it comes to dealing with the "rock-and-hard-place" reality of the end-of-support (EOS) deadlines, it's easy to point fingers at the ERP vendors who are often accused of trying to replace lost software revenues by pressuring customers to upgrade.
In fact, according to an AMR Research survey, 38% of respondents were so angered by the deadlines that they planned to train their internal staffs to handle technical support, while 12% planned to stop paying maintenance fees entirely.
The problem for most companies, however, is that bringing support in-house or taking a stand against maintenance fees simply aren't viable options. Very few have the capability to fully support the software, and most can't afford the risk of an unsupported ERP system.
Besides, it's unrealistic to expect ERP vendors to continue providing support for systems installed up to six years ago.
Since then, multiple versions of core products have been released, yet few companies have taken advantage of them -- even though it's been nearly two years since the first critical EOS deadlines were issued.
Outsourcing the Solution?
While some IT managers are finding ways to complete upgrades with existing resources, many are turning to outsourcing or staff augmentation, which allow the internal staff to remain focused on core responsibilities while still meeting EOS deadlines.The best option for a company depends largely on their comfort level with outsourcing and available resources. The following questions can aid IT decision-makers in determining if outside help is appropriate and, if so, which direction to go:
What projects are currently pending and do they offer a higher ROI than the ERP upgrade? Re-assigning resources to an upgrade at the expense of ROI should be avoided, even if it means bringing in outside consultants.
But the decision to use outside resources should not be viewed as purely a cost issue. Rather, it should be viewed as a way to realize ROI from other projects in a timely manner. If that justification doesn't hold up, you're probably going to be handling the upgrade internally.
Have you used outside IT resources in the past and, if so, how were they utilized? While some companies prefer to turn projects over completely to an outsourcing partner, others would rather augment their staff while retaining project management responsibilities.
The latter is a great way to lower the cost, yet still maintain control, and is a good compromise between totally outsourcing the project and handling it entirely in-house.
Do you typically outsource to the software vendor, or do you utilize another resource such as a staffing company? While vendors do have the most expertise with their applications, they can also carry a price tag that is three times more than an IT staffing company.
Plus, many of the consultants who were laid off by vendors in the lean years are now with staffing companies, or they contract with the vendors to handle upgrade projects, which means that consultants with recent upgrade experience are readily available without having to pay vendor prices.
Choose Your Partner
If the decision is made to outsource some or all of an ERP upgrade, the next critical step is to select the right partner. There are a number of key things to look for, including:
Experience with the software: Whether it's PeopleSoft, Oracle or SAP, you want a firm with a solid track record of handling projects involving the same software you'll be asking them to upgrade.
Experience with projects of a similar size and scope: Make sure the firm you ultimately select can show you not only consultants who are very experienced, but who also have successfully (and recently) completed projects similar to yours.
A sufficient pool of qualified IT talent from which to draw: Select a firm that has the appropriate level(s) of talent for your particular project and can dedicate those consultants for the duration of the project (and sometimes longer).
When possible, request local candidates to save travel costs, but understand that finding candidates with specific experience levels can require a regional or national search.
References: Make sure that the staffing firm can provide references for the consultants that are specific to the upgrade in question, and check them carefully.
Very soon, most major ERP vendors will have succeeded in their mission to get clients upgraded to the newest supported level of their product, or they will be charging them significantly higher maintenance fees to continue supporting older versions. For the companies that are lagging behind, time is running out.
The good news for IT managers is that whether the issue is financial, personnel or both, those upgrades can still be completed on time and within budget if the time is taken to identify the best mix of internal and external resources for the project at hand.
Chris Egizi is vice president, Technology Consulting Services, with Kforce Technology, a full service professional staffing firm.