Companies should adopt atotal cost of change (TCC) buying formulainstead of the traditional
total cost of
ownership (TCO) calculation when buying business software such
asERPandCRM.
According to ERP supplier
Agresso,
organisations continue to base their purchasing decisions largely
on up-front costs. As a result they typically end up with a
solution that fits perfectly at the time of purchase, but is very
costly and frustrating to modify after implementation. The company
has now published a TCC checklist.
"The frustration companies feel with their rigid business
applications is fuelling the popularity of TCC as a purchasing
criterion," said Brian Sommer, an analyst at TechVentive.
"Instead of measuring up-front costs, TCC looks at the costs
involved with modifying an existing software installation. As it
turns out, TCC is a far superior measure of an ERP solution's true
cost of ownership than TCO," he said.
Agresso's TCC checklist
1. Reorganisation and restructuring
- Our organisation will likely change in structure in the future
to accommodate market demands/drivers. What effort is required to
change the existing management structure?
- How much effort does it take to implement a reorganisation
whereby one department splits into two?
- What effort is required to review organisational changes within
the finance system?
- What effort is required to allow project managers to track
debtors, creditors, commitments, budgets and margins by individual
projects when a decision to outsource has been made?
- What effort is required to track a project when the
organisational structure changes?
2. Organisational evolution
- How much effort does it take to provide people evolving in
their job?
- What effort is required to support the business when rolling
out new products or services?
- What effort is required to add a new metric by which to slice
and dice results or performance?
- What effort is required to start analysing pay costs to a lower
level of detail than just overtime?
- How quickly is it possible to change from a multi-site
implementation to a shared services implementation without
disrupting the business?
3. Mergers and acquisitions
- What effort is required to migrate the merged/acquired
organisation to the corporate business system?
- What effort is required to introduce a common reporting
structure across multiple legal entities and regions?
- What effort is required to move to operating a single credit
control department for the entire group?
4. Government reform and compliance
- If a new regulation is introduced, what effort is required to
comply?
- What effort is required to ensure new and old reporting
standards compare?
- What effort is required to report financial data alongside
non-financial data?
Total cost of change for government >>
How to map the IT estate of an acquisition target >>