The Impact of the Recession: Accelerated Change

Beginning in 2008, the economic downturn and great recession have had significant impact on enterprise system implementations:

1. Acceleration of consolidated and shared services. The move to consolidated and shared services was overdue and is now being driven by cost savings through position reductions. Organizational opponents to these initiatives were left defenseless, as their disparate units can no longer support the cost of doing things themselves.

2. Outsourcing is continuing and growing. Buying more services at lower rates is compelling. Once again, internal opponents are left defenseless as they can no longer compete with cheap labor.

3. Software as a Service (SaaS) is definitely becoming a more attractive option. Proven business vendors and feature-rich software from companies such as and Workday are driving traditional vendors to offer their products as a service. Most large vendors, such as Oracle and SAP, have offerings for products traditionally run in-house and reserved for mid-market customers. Although SaaS makes sense and is gaining traction, it remains to be seen as to the extent that SaaS will have on large-scale, core ERP apps.

4. The need to upgrade. As the economy remains in uncertainty, spending on enterprise applications and IT has not changed. Technology moves forward and drives change in the form of upgrades. Most organizations have halted spending on enterprise business applications, because for the most part, the business can get by with what is in place.

The combination of advances in technology and the economy creates inflection points for technology projects and implementations. The inflection point occurs when organizations are financially ready to reinvest in enterprise systems and realizing that upgrading the application will cost as much as implementing the software in the first place.

The inflection point raises these questions:

  1. Should we upgrade or find a new system?
  2. Is this a business we want to be in or should we outsource the business process, our infrastructure or evaluate software as a service?
  3. Do we need to change how we do business and consider a business transformation project by evaluating systems as part of a business process?

Given the improvements in the economy and the need for an enterprise technology refresh, most organizations will be addressing the questions raised by the inflection point in the near future.

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