While the US economy has been slowly recovering, many small and midsize companies have been reluctant to invest in upgrading their systems. This reluctance can be based on a number of factors, including limited cash on hand, uncertainty about the current market environment, and others. Conserving limited resources in difficult times may, on the surface, appear to be a prudent course of action, but there may be some “hidden costs” to doing nothing.
For many companies, the last, large effort to modernize their infrastructure and ERP systems may have occurred 5 – 7 years ago. Having survived the (overblown) fear and uncertainty around the dreaded Y2K, these companies did upgrade around 2005 – 2006. However, since then, they may not have had the means, or the desire, to continue to stay current since then. The limited resources available to the company may instead have been focused on expanding their marketing efforts, developing new services and products, or simply trying to remain competitive in a difficult marketplace. Spending additional money an upgrading their systems simply never became a top priority. Doing “nothing” became the default position. This can be a dangerous and costly mistake.
Let’s look at the following “hidden costs” of “doing nothing”.
1. Employee Morale – Every day that passes with the old system, your employees must suffer thru the pains and headaches caused by an inefficient ERP package. Over time this has a corrosive effect on employee performance, efficiency and morale. Over time, your best employees will realize that their talents and efforts might be better served, and better utilized, working for another company.
2. Competitive Position – You cannot count on your competitors respecting your desire to “Do Nothing”. It is far more likely that they are investing in new systems, empowering their employees to be more effective and more efficient, taking full advantage of the enhanced capabilities of their new system. Can you really afford to be falling further behind?
3. Recruiting new employees – most new hires want to be working with modern systems, as this will keep their own skill set up to date. They have worked hard to develop their skills and want to certain that they can use those skills to the best advantage. Telling a new hire that they will be working on a 10-year old system risks losing their desire in working with your company. Can you afford to be see the best and brightest of your potential new applicants walk away?
4. Falling behind means losing software support – calling your software provider for support with a new problem, and being told that your version of the software is no longer supported, means that you are now in a very precarious position. Sure, you can troll thru Craig’s List, and hope you can find someone with the skill set and the desire to offer you support on your system may work, but this is hardly a strategy to use in building your business.
Far from being a cost effective and rational plan, doing nothing about your aging and deteriorating ERP system will actually expose you to a great deal of hidden costs. As each day passes, the pains caused by the old system will slowly and inexorably increase. While the new pain each day may be very small, over time it will build and build, and eventually, you may be so far behind that your business begins to really suffer.
