Any change in business has the potential to impact your business system and your business requirements. For example, products and services have a direct impact on your business system. Some applications are great at handling inventory such as distribution or manufacturing ERP applications but may not have a module to handle your service requirements if you start to expand to offer more services to customers. Likewise, a system designed for job shop and make to order manufacturers will quickly fall down if the company starts to manufacturer standard products where there is a strong requirement for demand forecasting and tighter supply chain integration with suppliers.
Likewise, your requirements may change if you discontinue products or services or even the source of those products or services. For example, years ago we had a customer in the rental industry. They manufactured the products they rented so they had a major need for manufacturing software. A few years later they decided to discontinue manufacturing and instead purchased their rental products from another company. Their business requirements changed drastically. They no longer needed the manufacturing modules which opened them up to evaluate much stronger rental business applications that were a better fit for their needs.
Expansion of any kind is also a tell-tale sign that your existing software may be coming to an end. Some systems don’t handle multiple companies well and others aren’t available in different languages or support multiple currencies or international accounting laws which will be a major limitation if you expand internationally through internal efforts or through acquisition.
Every business changes – it grows, it shrinks, it morphs over time into new markets, new products, and new services. It’s unreasonable to expect that your business system will automatically adapt to those changes over time. Conduct an annual review of your business to understand recent changes and planned changes and how they affect your existing business software. You should conduct a major audit of your business requirements and systems every 3-5 years to ensure that you are running the best possible systems to meet your current and future needs.
Identify the costs associated with adjusting your systems to meet these needs. You may need to buy additional modules, integrate additional third party systems, or pay for customizations to support your needs. You may not be in a position to win business from a major new account given your current system’s lack of functionality so there is also a cost of lost opportunity that should be factored into any ROI analysis that you conduct. And
business application can’t support their needs as they switch to competitors who have everything they need supported by a system to improve their customer experience.
Cost justification for business changes can be quantified or in most cases estimated. You should have a good idea if it’s realistic to grow sales by 10% or 20% (or more) if your business system had additional features and you probably have a good idea how much revenue you’re losing through customer attrition due to limitations in your business software. They key is to spend the time to understand what’s changed (or what’s going to change) in your business and how that could adversely affect your ability to service your customers and grow your business.