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Exclusive Q&A
When is the right time to migrate from a legacy performance management system?
Performance Management software, which includes applications for financial consolidation, budgeting, and planning, doesn’t rust or wear out, so you have to look at how it affects your business. The right time to migrate is the point at which the software becomes functionally obsolete for your organization. Rather than being a source of productivity, it becomes a barrier to improving performance.
One indicator is when the finance department must repeatedly ask IT to update the software. Another indicator is a lack of flexibility, especially if years of quick fixes have made it difficult to adapt to changes in the business caused by acquisitions and divestitures, reorganizations or changes in regulations. Yet another is if your organization would like to do more in-depth planning and forecasting and do it more frequently but it’s too hard or too expensive with your existing application. Software, especially if it’s more than a few years old, may not have the flexibility to keep up with changes in how your business operates or provide your finance organization with the agility it needs to deliver timely and accurate analysis. And it may not have the tools your company needs for rapid analysis or the ability to work with data at a highly granular level.
To make up for a lack of flexibility, departments resort to spreadsheets or simple database programs. These gap-fillers create data quality and consistency issues that use up valuable time. In many cases, this happens long before a vendor stops supporting an application. And of course, replacement is warranted when the vendor is only providing limited bug fixes and has stopped future development. This legacy vendor may only offer a cloud application option. In this case, it’s important to confirm that the cloud software has like-for-like functionality with your existing on-premises software.
What’s the best way to make the business case for migrating?
First, the key decision makers must understand there’s a problem. Second, you must secure executive sponsorship. Third, do your homework. Your business case should state the important business issues that exist because of the current software as well as how replacing it addresses those needs. It should also detail the other business benefits the company will get from migrating. As much as possible, state the benefits to the entire company, not just the finance and accounting department.
How do you select the right executive sponsor?
It’s clear that the more senior or influential the individual, the better.
However, it’s also true that if your project is relatively low in his or her order of priorities, he or she is unlikely to be all that helpful. To feel out someone for sponsorship, begin by having informal but constructive discussions about the issues that a newer system would help address. In any case, make sure that the CFO, the CIO and relevant business executives in the leadership team are at least aware of your initiative and understand how they view the project.
What tips would you offer for “doing your homework?”
First, research the business problem or business function so you can make an authoritative case for achieving what’s possible. Almost certainly, there are articles, case studies and white papers—many on vendors’ websites—covering the topic on the internet. Second, understand the total cost of ownership and how that compares with what you are doing today, including time spent on heavy maintenance required for the legacy system. Quantify productivity enhancements such as the value of time savings from reducing workloads by automating manual tasks or improving accuracy, which also can reduce the time needed for internal and external audits. Include the flexibility and productivity benefits of not having to rely on an IT department to make changes. These may result in reduced FTEs in Finance, IT or both. Identify improvements in the breadth of analysis and depth and speed of reporting. For a cloud solution, there are potentially lower costs for the IT department since it won’t have to manage an on-premises deployment. These may be due to increased automation that frees up the time available for higher-value tasks. Third, don’t be afraid to include benefits that may be harder to quantify but that are nonetheless easy for senior executives to understand -- for example: What’s the value of having financial and managerial reports available one or two days earlier?
What are the key points to make in presenting a business case?
At a minimum I suggest including the following six topics:
- How does the new software support the broader goals of the department or the organization?
- Does the new software perform in ways that the old software cannot?
- What are the key business challenges for the department and how does the new software address them?
- What are all the costs of the existing software, including the opportunity costs from not having the capabilities of a newer system?
- What are the costs and incremental benefits — both quantifiable and non- quantifiable — of the new software?
- If you are evaluating cloud versus on-premises platforms, be prepared to point out the economic and security benefits of cloud deployment.
You should also include any other issues that came up in your informal discussions and be prepared to address specific concerns of the decision makers.
Exclusive Q&A
When is the right time to migrate from a legacy performance management system?
Performance Management software, which includes applications for financial consolidation, budgeting, and planning, doesn’t rust or wear out, so you have to look at how it affects your business. The right time to migrate is the point at which the software becomes functionally obsolete for your organization. Rather than being a source of productivity, it becomes a barrier to improving performance.
One indicator is when the finance department must repeatedly ask IT to update the software. Another indicator is a lack of flexibility, especially if years of quick fixes have made it difficult to adapt to changes in the business caused by acquisitions and divestitures, reorganizations or changes in regulations. Yet another is if your organization would like to do more in-depth planning and forecasting and do it more frequently but it’s too hard or too expensive with your existing application. Software, especially if it’s more than a few years old, may not have the flexibility to keep up with changes in how your business operates or provide your finance organization with the agility it needs to deliver timely and accurate analysis. And it may not have the tools your company needs for rapid analysis or the ability to work with data at a highly granular level.
To make up for a lack of flexibility, departments resort to spreadsheets or simple database programs. These gap-fillers create data quality and consistency issues that use up valuable time. In many cases, this happens long before a vendor stops supporting an application. And of course, replacement is warranted when the vendor is only providing limited bug fixes and has stopped future development. This legacy vendor may only offer a cloud application option. In this case, it’s important to confirm that the cloud software has like-for-like functionality with your existing on-premises software.
What’s the best way to make the business case for migrating?
First, the key decision makers must understand there’s a problem. Second, you must secure executive sponsorship. Third, do your homework. Your business case should state the important business issues that exist because of the current software as well as how replacing it addresses those needs. It should also detail the other business benefits the company will get from migrating. As much as possible, state the benefits to the entire company, not just the finance and accounting department.
How do you select the right executive sponsor?
It’s clear that the more senior or influential the individual, the better.
However, it’s also true that if your project is relatively low in his or her order of priorities, he or she is unlikely to be all that helpful. To feel out someone for sponsorship, begin by having informal but constructive discussions about the issues that a newer system would help address. In any case, make sure that the CFO, the CIO and relevant business executives in the leadership team are at least aware of your initiative and understand how they view the project.
What tips would you offer for “doing your homework?”
First, research the business problem or business function so you can make an authoritative case for achieving what’s possible. Almost certainly, there are articles, case studies and white papers—many on vendors’ websites—covering the topic on the internet. Second, understand the total cost of ownership and how that compares with what you are doing today, including time spent on heavy maintenance required for the legacy system. Quantify productivity enhancements such as the value of time savings from reducing workloads by automating manual tasks or improving accuracy, which also can reduce the time needed for internal and external audits. Include the flexibility and productivity benefits of not having to rely on an IT department to make changes. These may result in reduced FTEs in Finance, IT or both. Identify improvements in the breadth of analysis and depth and speed of reporting. For a cloud solution, there are potentially lower costs for the IT department since it won’t have to manage an on-premises deployment. These may be due to increased automation that frees up the time available for higher-value tasks. Third, don’t be afraid to include benefits that may be harder to quantify but that are nonetheless easy for senior executives to understand -- for example: What’s the value of having financial and managerial reports available one or two days earlier?
What are the key points to make in presenting a business case?
At a minimum I suggest including the following six topics:
- How does the new software support the broader goals of the department or the organization?
- Does the new software perform in ways that the old software cannot?
- What are the key business challenges for the department and how does the new software address them?
- What are all the costs of the existing software, including the opportunity costs from not having the capabilities of a newer system?
- What are the costs and incremental benefits — both quantifiable and non- quantifiable — of the new software?
- If you are evaluating cloud versus on-premises platforms, be prepared to point out the economic and security benefits of cloud deployment.
You should also include any other issues that came up in your informal discussions and be prepared to address specific concerns of the decision makers.
Robert Kugel
Executive Director, Business Research
Robert Kugel leads business software research for ISG Software Research. His team covers technology and applications spanning front- and back-office enterprise functions, and he runs the Office of Finance area of expertise. Rob is a CFA charter holder and a published author and thought leader on integrated business planning (IBP).