Greek philosopher Heraclitus said, “Everything changes and nothing remains still.” He definitely could have been talking about technology with that statement. Consider that businesses used paper and manual processes before computers were introduced in the 1960s. Businesses adopted mainframe computers in the 1970s and we witnessed the birth of the personal computer (or microcomputer) in the 1980s. We’ve seen operating systems change from Unix to Windows and databases from proprietary platforms to SQL. And we’re currently in the transition from the desktop to the cloud. Yes, technology changes and it changes dramatically about every ten years. Consider how the Internet changed business needs and how cell phones and mobility continue to change the needs of our businesses today.
If you purchased your business software more than ten years ago it is very likely that you are on older technology. The advantage is that older technology is much more stable and likely has a lot more features. The downside to older technology is that it can become costlier to maintain and more difficult to integrate with some of the newer technologies available on the market today.
In a worst-case scenario – you could be using software that runs on unsupported technology that can, and eventually will, cease to function properly. This can pose serious risk to your business if you are unable to access historical data for analysis or compliance or if you cannot conduct business if your system goes down and no one knows how to fix the problem. Some very old applications are also reliant on specific hardware platforms that may be discontinued. Consider some of the popular applications used in the 1980s and 1990s that ran exclusively on the HP3000 platform which HP discontinued a few years ago. Granted, another company stepped up to continue making parts for the hardware platform but do you really want to run your business on a platform that is one step away from becoming extinct?
Technology is vital not just for the inside of your organization but also for everything your business touches – your customers, your vendors, investors, and your partners. It can make it easier to communicate and collaborate with the outside world or it can severely hinder your ability to meet the needs of people outside your four walls. Customers are demanding more and more visibility into projects, jobs, orders, and inventory availability than ever before. Vendors are demanding more access to your data to improve their internal forecasting and planning. And everyone involved in the supply chain expects that they can use technology to collaborate better and to self-serve without human interaction.
Fail to keep up with technology and you will eventually lose to competitors who can provide a better experience for customers and vendors alike. Stay at the front of technology and you can use that as a competitive weapon to win more business, retain customers, and lower your costs.
Technology can be very difficult to evaluate. Sometimes (often) it’s a matter of personal preference and experience. If you have an IT staff that is proficient on a database or operating system then it’s unlikely that they will want to move to something else. People are naturally resistant to change. Further, moving to a new technology platform could jeopardize their job – they may not have the skillset to learn something new or a move to a hosted platform may make their job obsolete as the vendor may provide the hosting, maintenance, and support that they were hired to perform for you.
There’s an old saying – There’s more than one way to skin a cat. And there certainly are more than one technology platforms and technology approaches that will provide the same results. If you’re not technically inclined then you should consult with a technology firm to do an assessment of your current system. Make sure that you find a firm that has a great reputation and stays at the forefront of technology with as little bias as possible to technology platforms. A good place to start is by asking your accounting firm for references. They work across a lot of different companies and will probably know which IT companies are best to perform an unbiased assessment and some of the larger accounting firms provide IT assessments themselves.
Some larger software publishers like Sage, Microsoft, Epicor, and others do invest considerable research and development to move their products to new technologies. Sage 100cloud has moved from a proprietary database to Microsoft SQL. Microsoft recently introduced Microsoft Dynamics 365 moving its core ERP platforms to the cloud. And Epicor completely re-wrote Epicor ERP on Microsoft technologies to replace decades-old Progress code. Conversely, most smaller software vendors lack the customer base and revenue to cost-justify major investments in the core technology and will likely never make the leap to newer platforms. Others may make the move from one platform to another but at a cost as they port or adapt their applications to work with the newer technologies without rewriting them to optimize the new features available inside of them.
When’s the right time to replace your software to take advantage of the next technology shift? Never. It’s never a good time or the right time to base your decision to move on what’s available or what’s coming in the next few years as technology constantly changes and there’s no way to know for sure what’s coming next. With that said, companies on older technology platforms (10+ years old) should understand what they’re missing in today’s technologies and how that could impact their business.
It’s very difficult to identify technology costs but you may start by documenting the costs for your current technology licenses – operating systems, databases, servers, etc. and getting a quote for newer technologies in these areas. Consider that in a SaaS environment these costs are often eliminated completely as they are rolled into the overall cost of the hosted cloud application. Also consider how much you spend today on employee salaries or third-party technology services to maintain, upgrade, and support your existing technologies. In some cases these costs can be eliminated if you move to the cloud as the vendor takes on the responsibility for maintaining servers and most SaaS systems are updated automatically or at least by request with no additional cost to your organization.