System Challenges For Organizations in a Recession
These days, scarce is the organization undertaking a major system initiative. On the contrary, many organizations are struggling to survive and carry out basic operations, trying to do more with fewer employees. This article focuses on system considerations for organizations in lean economic times with respect to enterprise systems.
Enterprise Systems, Staff Reductions, and Employee Training
Systems do not exist in a vacuum. A “state of the art” system run by too few or poorly-trained employees poses great risk to organizations. No HRIS or payroll system can possibly catch every kind of mistake. The current economic climate exacerbates this risk. With respect to headcount, layoffs increase the vicious cycle of risk to organizations:
- Organizations have an motive to trim staff and reduce-if not eliminate-formal training and opportunities for end-users to learn.
- This solidifies many end-users’ bad habits and suboptimal processing methods.
- Many end-users’ responsibilities have increased considerably
- In the event of layoffs, more work among fewer employees method already less time for “cross pollination.”
Management should be careful when cutting “non-basic” employees, as they can quickly become basic. For example, an organization has four HR clerks to course of action paperwork. While no one clerk is absolutely basic, reducing that number to two now changes that equation. If staff reductions are truly necessary, organizations must ensure that departing employees’ daily responsibilities are both sufficiently proven and well-understood by others in the organization before they leave.
Organizations need to clarify basic employees via series planning. Which individuals can the organization not provide to lose? It is imperative that they are proactive; they should attempt to anticipate any meaningful employee defections.
On the training front, organizations should strongly consider cross-training end-users in multiple roles. Two super users with substantial skills and a global perspective may be able to do the work of three or four limited end-users, especially if they are skilled in different automation methods. For example, consider Mary, an end-user who is very skilled at Microsoft Excel. Her organization has a Crystal Reports license, but no one really uses it. Sending her to a class would allow the organization to finally realize the benefits of Crystal; no longer would reports have to be cobbled together manually.
Considerations for Existing Systems
Organizations have many options with regard to their current enterprise systems.
continue the position Quo
Many organizations have postponed current system optimization, enhancement, and upgrade initiatives. Projects cut or put on keep up mid-stream almost always lose momentum, increasing total costs if and when they are resumed. While this may save money in the short- and mid-terms, there may well be long-term strategic implications of such a stoppage. A company may save money by canceling its business intelligence (BI) project but will not be able to mine its data for meaningful business trends and drivers.
If the budget exists, organizations should utilize consultants to clarify ways in which currently-deployed systems can be improved. They should focus on known applications and processes with meaningful room for improvement. For example, a recent client of mine manually entered time cards for biweekly payroll for over five hundred employees every two weeks. The payroll manager asked me, “Should we buy and implement Kronos?” Time and cost did not justify this. Instead, I recommended deploying the current application’s automation tools and employee self-service. Those would provide much of the assistance at a fraction of the cost.
Organizations can forgo annual vendor sustain, in the time of action saving thousands in sustain fees. Risks and considerations of this option include the following:
- This is easier if the organization is on a very mature version of an application.
- Organizations should not already think about this if they take out local taxes in states such as Ohio Pennsylvania.
- It requires a very knowledgeable end-user base.
- Organizations need to have a contingency plan by an independent sustain party should a technical issue manifest itself.
Despite the benefits, the squeeze is probably not worth the juice.
Renegotiate sustain Agreements with Vendors
Clients should talk to vendors about renegotiating sustain agreements-or at the minimum locking them down. Senior management may be able to haggle over sustain with vendors over existing agreements. Some vendors will commit to a more palatable annual sustain number if the client agrees to buy additional products or sets in the mid- or long-term.
Vendors decommission older versions of applications, in effect forcing clients to upgrade to “supported” versions. A vendor that has eighty percent of its clients on version 8 probably will not continue to sustain version 6 forever.
If end-users have sufficient capacity, organizations may be able to deploy “add-on” technologies to eliminate redundant processing methods and increase efficiencies. However, if current or planned staffing levels do not sustain the use of add-on technologies, then organizations should postpone purchasing and implementing them. It is better to attempt these projects when end-users will have time to truly use them.
One assistance of increased IT investment stems from the tax code. The current stimulus bill contains increased Section 179 limits and additional depreciation for business capital expenditures. This includes software (source: irs.gov). Consult your tax department to see how these provisions can assistance your organization if it purchases software in 2009. Perhaps tax advantages may consequence in a project essentially paying for itself. Make sure that your organization has enough resources to sustain any new initiatives.
Many factors excursion each organization’s system-related activities. In today’s economy, those activities are viewed under an increasingly powerful microscope. The options discussed in this article should help senior management make the right system-related choices.