The cost of change: Letting go of old enterprise apps

Whether you're a small business feeling locked into QuickBooks or a Fortune 500 with a complex and convoluted portfolio of legacy applications, most companies have felt trapped by their IT application portfolio. The pain is particularly acute as lower-cost, easier-to-use and maintain alternatives appear in the cloud. How does a company, large or small, plan and execute a transition away from old applications?

The devil is in the dependencies

In most cases, the software acquisition costs of a new application are a relatively small portion of the overall cost of a migration, with the costs of migrating data and modifying dependent systems quickly becoming budgetary sinkholes. Merely migrating historical data from an old system to a newer, less expensive alternative might require a project in itself. Similarly, dependent applications can rapidly escalate the cost of a new system. When I ran my own company that did its accounting on QuickBooks, I'd occasionally look longingly at other alternatives. Once I had a shortlist in hand, I'd begin to consider how I would export and migrate my data, deal with incompatible financial institutions, and replace mobile applications that fed time and expense data into QuickBooks, and suddenly the yearly licensing savings looked far less compelling.

In a perfect world, you would avoid extensive data migrations, either by starting with a 'clean slate' or keeping the legacy application active in a read-only 'archive' state.

In a perfect world, you would avoid extensive data migrations, either by starting with a 'clean slate' or keeping the legacy application active in a read-only 'archive' state. You might even select a new portfolio of ancillary applications, reducing integration costs since you're starting fresh, and potentially gaining new features and functionality in the process. In the real world, however, be sure to factor in data migration and integration costs with several different scenarios: full migration of all historical data and integration to current systems, a 'barebones' migration and replacement or reduction of legacy interfaces, and a scenario without migration.

Make sure you're not planning and costing these options in IT-isolation. In nearly all migrations I've seen, the initial position is invariably "we want all the data," a demand that rapidly becomes open to compromise once the costs of migrating 'all' the data are known. Similarly, desire for improved functionality or long-term cost savings might dilute demands for data migrations and integrations. Take advantage of user excitement around a new system, since getting on that shiny new cloud-based tool in 30 days may well be worth losing access to some jumbled legacy data.

The cost of change

Large enterprises are familiar with Change Management efforts (even if they don't always execute them successfully), but smaller companies often forget change management until it's too late. Even the most effective organizations occasionally forget about the 'productivity dip' that accompanies most new systems, where productivity falls for several weeks after a new system goes live, eventually increasing to expected levels. There may be a very real cost associated with an inability to generate invoices as quickly or collect cash as rapidly as before, which should be factored into the new rollout.

Plan the work, work the plan

This article may seem a bit daunting to those considering a migration away from legacy applications, but data, dependencies, and change management are the 'big three' areas where costs and timelines rapidly balloon when installing a new application. By identifying and considering these costs up front, you're likely to accomplish two major objectives. First, you'll reduce surprises further down the road. Second, the costs of some of these areas are so prohibitive that you may be able to streamline the demands on the application migration.

Even the smallest of businesses can benefit from a few days' consideration of these topics and a simple migration and training plan that prevents the cost savings of your new application from rapidly disappearing.

You can find other blogs by Patrick Gray in the Tech Decision Maker blog on TechRepublic.

Patrick Gray works for a global Fortune 500 consulting and IT services company, and is the author of Breakthrough IT: Supercharging Organizational Value through Technology as well as the companion e-book The Breakthrough CIO’s Companion. Patrick has spent over a decade providing strategy consulting services to Fortune 500 and 1000 companies. Patrick can be reached at patrick.gray@prevoyancegroup.com and you can follow his blog at www.itbswatch.com. All opinions are Patrick’s alone, and may not represent those of his employer.