We've all been there. An aggressive salesperson pitches the latest system upgrade, promoting the newest features and benefits, and why you need to buy now. But your company is more than happy to maintain the current system, as there is nothing wrong with it. The salesperson however, has people in your company wondering what they could be missing by not jumping to the latest version. How can you assess the worthiness of the upgrade and prove that it will deliver real business value?
Instead of focusing on the cool features and functions of the upgrade, the stakeholders need to prove if there are any quantifiable benefits relative to upgrading and whether there are enough benefits to offset the migration and upgrade costs. The team should force the sales representative to move past the feature, functions and price of the upgrade pitch, and work on calculating the true costs and value of the migration.
Show me the money
Here are some items that you and your team may want to quantify to determine the value of a system upgrade:
Can the new system provide lower total cost of ownership (TCO)? Often the latest upgrades are easier to maintain than prior versions -- they have tools for improved manageability, they are faster and require less hardware. They could be licensed differently, too, which leads to lower support and administrative costs. For TCO to be lower, look for the following savings:
- Less server hardware required to host the application.
- Smaller database size.
- Fewer development/test staff members needed for application customization/integration.
- Lower application software annual maintenance and support fees.
- Lower application/database administration and support costs.
- Lower IT operations and fewer support staff members managing the infrastructure.
- Avoidance of consulting and professional services/mission critical support fees.
- Lower bandwidth consumption.
Can the new system provide streamlined business processes? New capabilities are provided with a system upgrade, helping to streamline and automate additional business processes or share data to optimize the process. Additional improvements in business processes may yield the following benefits:
- Task avoidance.
- Lower process fees and expenses.
- Fewer errors.
- Improved transaction speed and volume handling capability.
Can the new system provide improved availability and service levels? System upgrades can often provide higher availability and service levels as applications mature. Benefits include less downtime, less performance tuning, improved user productivity via higher performance and improved transactions via higher performance.
Can the new system provide higher agility? With some system upgrades, the development and deployment team can do more with fewer resources -- and do so faster. The potential value here is deploying new applications and business-process improvements sooner.
Understanding and proving the value of upgrading through tangible cost savings and potential revenue improvements is the only way to know whether a system upgrade is worthy of investment. Forcing the vendor to work with the team and show you the money is the only way to not get burned.
Tom Pisello is CEO and founder of Orlando-based Alinean Inc., and a former managing vice president at Gartner Inc. For the past 16 years, he has been dedicated to using business value measurements to prove and improve the return on IT. Contact him at email@example.com.