While most hardware and software vendors will argue that core, business-critical systems should undergo regular replacement and upgrades, organisations across the housing sector should be considering exactly what outcomes are achieved by such an approach. Does core system renewal improve overall business performance, add extra return on investment or improve business processes?
All too often, the answer is quite simply no. For example, replacing your core financial system will not improve how it is used or the way in which it interfaces with other systems. So in the current economy, can financial investments of these magnitudes and the inherent disruption be justified?
Housing providers need to audit their existing IT systems and identify how to optimise what is already in place. Investments in peripheral IT additions can add substantial value to the overall system by increasing efficiencies, creating improved workflows and having a direct impact on service improvement and cost reductions.
Last resort
After the capex freeze of the past 24 months, as organisations across the housing sector face up to the implications of a reduction in public sector funding, many are beginning to consider the options for overhauling core business systems. But why is this the first consideration? When an upgrade or replacement can cost between £200,000 and £1 million, where does any organisation expect to reap the rewards and generate a return on investment?
There is no doubt that organisations need to cut costs. Nor that they need to achieve far more effective and efficient ways of meeting targets for the quality and timeliness of front-line service delivery. But a major systems overhaul should be the last resort, and one that can perhaps only be justified by organisations looking to realise the economies of scale and efficiencies of merger or acquisition.
For the rest, there are many options that could and should be considered first; options that will deliver quantifiable RoI through both cost reductions and improvements in service delivery.
Peripheral improvement
The options range from overhauling the communications and network infrastructure to deliver effective remote and home working and facilitate the rapid creation of new local offices, to consolidating call centres to reduce costs. They also include the adoption of electronic document management to provide a single source of information which can be easily searched by client name or property, and the use of workflow to automate invoice matching and reduce administrative headcount.
Business focus
By now, it should be fundamental that no technology investment is made without a clear business driver and robust RoI calculation. Yet for many organisations, departmental silos combine with a lack of IT skills and understanding to undermine this key concept. But with cash still tight, there is simply no justification for any IT investment without a proven business case. This can only be achieved with senior management commitment and clear lines of communication between business leaders and the IT team, whether internal or external.
It is only with a consensus about operational strategy and future direction that the IT team can then undertake an audit of existing technologies and perform gap analysis to determine what is required to meet the business need. And this may not necessarily even require additional software or communications. In many cases, organisations are under-utilising existing systems: staff are not aware of the functionality on offer and need additional training; and poor processes are contributing to a lack of data quality that undermines the quality of service delivery.
Right skills
In addition, there are often significant improvements to be gained from integrating existing systems to streamline processes, improve data accuracy and support the delivery of better front-line customer service. For example, automated invoice matching, through the integration of finance and purchasing systems, enables organisations to move towards management by exception, fundamentally reducing the administrative overhead and enabling significant cost savings.
And if additional systems are required, from document management to CRM, the key to minimising disruption, achieving goals and maximising RoI is to get the right skills involved. Few organisations will have the skills internally to manage a significant systems investment, and why should they? These are not the skills required to successfully run an internal IT department on a day-to-day basis.
But turning to the incumbent software supplier may simply keep the organisation in the repetitive upgrade cycle. And with the growing availability of new SaaS solutions, organisations now have a vast number of options.
To ensure IT investment matches true business requirements, organisations need to match independent, trusted advice with clear thinking and, critically, recognised business direction.
Conclusion
Implementing a new corporate system is never going to be easy. Organisations risk months of disruption, a mass of hidden costs that jeopardise the realisation of any potential RoI and a real risk that the key business objectives will never be realised as the multi-phase project runs out of steam. With limited internal expertise the risks are huge, creating massive problems for organisations delivering critical front-line services in an environment that couples ever-tighter financial control with escalating public demand.
This route should always be the last, not first resort. It should be embarked on only if the investment can be justified on the basis of major business or operational change, such as the need to consolidate merged organisations. In contrast, there is a myriad of opportunities for driving up performance and reducing costs that are far quicker and less expensive to achieve.
It is by exploring and exploiting a raft of peripheral systems, new communications networks for flexible working, options for integration and better end-user training, that organisations can achieve quantifiable returns on IT investment while actually meeting defined business needs.
Joanna Sedley-Burke is business development director for Sovereign Business Integration.
