System Challenges for Organizations in a Recession

These days, rare is the organization undertaking a major system initiative. On the contrary, many organizations are struggling to survive and carry out basic operations, trying to do more with fewer employees. This article focuses on system considerations for organizations in lean economic times with respect to enterprise systems.

Enterprise Systems, Staff Reductions, and Employee Training
Systems do not exist in a vacuum. A “state of the art” system run by too few or poorly-trained employees poses great risk to organizations. No HRIS or payroll system can possibly catch every type of mistake. The current economic climate exacerbates this risk. With respect to headcount, layoffs increase the vicious cycle of risk to organizations:


• Organizations have an incentive to trim staff and reduce—if not eliminate—formal training and opportunities for end-users to learn.
• This solidifies many end-users’ bad habits and suboptimal processing methods.
• Many end-users’ responsibilities have increased significantly
• In the event of layoffs, more work among fewer employees means even less time for “cross pollination.”


Management should be careful when cutting “non-essential” employees, as they can quickly become essential. For example, an organization has four HR clerks to process paperwork. While no one clerk is absolutely essential, reducing that number to two now changes that equation. If staff reductions are truly necessary, organizations must ensure that departing employees’ daily responsibilities are both sufficiently documented and well-understood by others in the organization before they leave.

Organizations need to identify essential employees via succession planning. Which individuals can the organization not afford to lose? It is imperative that they are proactive; they should attempt to anticipate any key employee defections.

On the training front, organizations should strongly consider cross-training end-users in multiple functions. Two super users with substantial skills and a global perspective may be able to do the work of three or four limited end-users, especially if they are skilled in different automation methods. For example, consider Mary, an end-user who is very skilled at Microsoft Excel. Her organization has a Crystal Reports license, but no one really uses it. Sending her to a class would allow the organization to finally realize the benefits of Crystal; no longer would reports have to be cobbled together manually.

Considerations for Existing Systems
Organizations have many options with regard to their current enterprise systems.


Maintain the Status Quo
Many organizations have postponed current system optimization, enhancement, and upgrade initiatives. Projects cut or put on hold mid-stream almost always lose momentum, increasing total costs if and when they are resumed. While this may save money in the short- and mid-terms, there may well be long-term strategic implications of such a stoppage. A company may save money by cancelling its business intelligence (BI) project but will not be able to mine its data for key business trends and drivers. 

If the budget exists, organizations should utilize consultants to identify ways in which currently-deployed systems can be improved. They should focus on known applications and processes with significant room for improvement. For example, a recent client of mine manually entered time cards for biweekly payroll for over five hundred employees every two weeks. The payroll manager asked me, “Should we purchase and implement Kronos?” Time and cost did not justify this. Instead, I recommended deploying the current application’s automation tools and employee self-service. Those would provide much of the benefit at a fraction of the cost.

“Go Naked”
Organizations can forgo annual vendor support, in the process saving thousands in support fees. Risks and considerations of this option include the following:
• This is easier if the organization is on a very mature version of an application.
• Organizations should not even think about this if they take out local taxes in states such as Ohio Pennsylvania.
• It requires a very knowledgeable end-user base.
• Organizations need to have a contingency plan through an independent support party should a technical issue manifest itself.


Despite the benefits, the squeeze is probably not worth the juice.

Renegotiate Support Agreements with Vendors
Clients should talk to vendors about renegotiating support agreements—or at least locking them down. Senior management may be able to haggle over support with vendors over existing agreements. Some vendors will commit to a more palatable annual support number if the client agrees to purchase additional products or services in the mid- or long-term.
Vendors decommission older versions of applications, in effect forcing clients to upgrade to “supported” versions. A vendor that has eighty percent of its clients on version 8 probably will not continue to support version 6 forever.

System Expansion
If end-users have sufficient capacity, organizations may be able to deploy “add-on” technologies to eliminate redundant processing methods and increase efficiencies. However, if current or planned staffing levels do not support the use of add-on technologies, then organizations should postpone purchasing and implementing them. It is better to undertake these projects when end-users will have time to actually use them.

One benefit of increased IT investment stems from the tax code. The current stimulus bill contains increased Section 179 limits and extra depreciation for business capital expenditures. This includes software (source: Consult your tax department to see how these provisions can benefit your organization if it purchases software in 2009. Perhaps tax advantages may result in a project essentially paying for itself. Make sure that your organization has enough resources to support any new initiatives.

Many factors drive each organization’s system-related activities. In today’s economy, those activities are viewed under an increasingly powerful microscope. The options discussed in this article should help senior management make the right system-related choices.


About the Author

With more than a decade of experience, Phil Simon assists organizations in all phases of systems implementations, including vendor selection, project management, business needs analysis, system design, training, system testing, interface and custom report development, and documentation. The result: providing his clients with superior systems, increased ROI, and a healthier bottom line.

Phil is the author of the book "Why New Systems Fail" and a seasoned independent systems consultant. He started his company in 2002 after a number of years of related corporate experience. With his extensive knowledge of both well-known and homegrown applications, he has cultivated over twenty clients from a wide variety of industries, including healthcare, manufacturing, retail, and the public sector.


Read Chapter One of Phil's book: chapter1.pdf

Phil is a graduate of the School of Industrial and Labor Relations at Cornell University (MILR) and Carnegie Mellon (B.S., Policy and Management). He lives in Northern, NJ, USA.