When budgeting for their ERP transformations, most companies tend to focus on immediately trying to reduce external costs. They then compare what could be handled in-house, assuming that anything run internally will lower costs.
This is simply a bad assumption. In fact, what we have commonly found is that the more companies try to lower and cut costs from the start, the more they end up spending in the long run to fix problems that should have never occurred in the first place.
Take the example of Bob, a home owner whose basement flooded a year after moving into his new home. With the intention of saving money, Bob rented water vacuums and humidifiers and cleaned up the mess himself. He actually saved over $2,500 from hiring a mitigation company.
The next summer, rains came again, and again his basement flooded. This time, Bob was getting ready for summer vacation with his family and didn’t have time to again clean things up, so he called in a trusted flood mitigation company. Upon inspection, the mitigation company informed Bob that not only was there damage to the baseboards and drywall, but a mold infestation had begun since Bob neglected to replace the baseboards the prior year. Now he was looking at a $22,000 mitigation, repair and rebuild project. All for saving $2,500 the prior year.
We’re not quite done with Bob, but the lesson here is clear. When facing a situation that is outside your expertise, such as a digital transformation or ERP implementation, spend the time and money to make certain you are taking the right approach. There is likely quite a bit you can do internally, but don’t make that call unless you have the necessary experience. There is too much variation and options with technology these days and making ill-informed decisions can have direct impact on a business.
Back to Bob. Upon completing the mitigation and rebuild of his basement, Bob’s neighbor, John came over to take a look at the work. John, who happens to be a building inspector, shook his head and shared with Bob that his flooding horrors were only going to get worse.
Stepping out into Bob’s backyard, John suggested that the correct approach would be to fix the root cause of the flooding rather than have to mitigate every time they got a good rain. John showed Bob how the slope of his back yard angled toward the house rather than away, and the sloping continues to increase every time it rained. With a little landscaping, all of Bob’s flooding nightmares could be done.
A few points to summarize:
