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Application Erosion: Eating Away at Your Hard Earned Value

Written By: Olin Thompson
Published On: March 25 2005

Do You Have Application Erosion?

At a recent meeting of CIOs, all talked about the same phenomena. Eventually, they came up with the term "application erosion" to describe their common problem. These CIOs each had the same ERP system installed from four to nine years. Each observed that through time, the system value had become less and less. The system had not changed; but the users were using less and less of the system for no apparent reason.

In another conversation, a friend who works for an ERP vendor told me he was working with a company who wanted to replace their existing ERP system. By coincidence, eight years ago, my friend had been the consultant who worked with that company to install the existing ERP system. When he reviewed their requirements list for the replacement system, he reported some amazing facts:

  • 30 percent of the requirements for the new system were functions that he had helped the company install eight years ago.

  • Another 20 percent were functions that they had available in the existing system but had never implemented.

  • An additional 20 percent were available from the supplier of the existing ERP system.

What had happened? For the first 30 percent, the answer is application erosion. For the next 50 percent, it means they might be taking the more expensive and difficult path of replacement over working with their existing relationship.

Why Does Application Erosion Happen?

Many factors lead to application erosion, and in most cases, most of the factors play a role.

  1. The old saying "use it or lose it" applies to existing users. Functions not frequently used tend to be forgotten. These users did not decide to stop using these functions, but since users are human, they just forgot. The CIO group reported that many user requests for enhancements end up with a "look under option 7" reply with the requesting user saying, "Oh yea, I forgot about that."

  2. Staff turnover also impacts value. Unless a company decides to have a formal training program for incoming users, the existing users train new users. Even with the best intent, the existing users teach only 70 to 80 percent of what they know. That means the first generation's 100 percent of knowledge goes to 70 to 80 percent for the second generation and 49 to 64 percent for the third generation. When people do not know how to fully use the system, they cannot generate the full value of that system.

  3. Of course the business changes. But in most companies, it changes so slowly that there is no plan to insure that systems support reflects those changes. We begin to see more and more functions being done on spreadsheets or manually with less and less being part of the formal system. The impact on value—it declines as the system drifts away from the needs of the business.

Do all these forces mean that the erosion takes years? No, it starts the day you turn on any new system. It continues constantly. While you were reading this article, you lost some value.

Preventing or Reversing Application Erosion

If you do nothing, application erosion will happen. To prevent it, you need a plan. If you suffer from it today, you need a plan to regain the value you once had.

The biggest cause of application erosion is people. We can be 100 percent certain that people will continue to be people. Someone has to do something to prevent the people from allowing the applications to erode.

The most obvious effort is in training. If you can afford a formal training program for new users, much of the erosion can be avoided. If you retrain existing users, some of the erosion can be reversed. However, getting the backing of management to retrain users or have an ongoing training program is never easy. It is hard to see the value of training when the system is already running. No event happens that forces management to see the need for training—the system loses value everyday, but never at the rate that it is obvious.

When you first installed, you had "superusers" who knew the system very well and were advocates for its use. Other users knew they could go to the superusers to get answers. Where are your superusers today? Most have moved on. To halt or reverse erosion, you need to create a new generation of superusers. You need to identify people who have the enthusiasm (or who can get the enthusiasm) for the system. You need to excite them and bring up their level of knowledge. How? Training, attendance to user group activities, or putting them with superusers from other companies are all examples of how to recreate superusers. Maybe you need formal recognition of the superusers, make them proud of their knowledge and role.

One CIO has had results in reversing the erosion of value in his company by having a staff member who is their "seeker of value." The person is more an internal sales person than a consultant. The seeker of value's job is to understand the software and get others to use more of it or design more ways to get value out of what they are already doing. In this example, the seeker of value is actually someone who was with the vendor as a presales consultant. If you cannot afford your own full-time seeker of value, maybe an external person with the right experience, business skills and communications skills on a part-time basis is your answer.

As your business slowly evolves, recognize that the systems will not automatically evolve with the needs or the business. The users and how they use the system will evolve, but without the assistance of superusers or a seeker of value, they will evolve away from the system. You fix this problem by recognizing the problem and accepting the fact that it takes resources to avoid it.

Summary

The day any new system goes live, you have created value. You paid for that value in money, time, disruption, frustration, and many other currencies. But you will lose the value you already paid for if you do not do something to avoid application erosion. If you have already suffered some erosion, how do you regain what you lost? It takes recognition of the problem and the willingness to fix it. No one will ever come into your office complaining, "Today we lost some value". Therefore, the problem is not easy to see and it is not easy to motivate the company to combat what is a slow but unyielding problem.

About the Author

Olin Thompson, a principal of Process ERP Partners, has over 25 years experience as an executive in the software industry with the last 17 in process industry related ERP, SCP, and e-business related segments. Olin has been called "the Father of Process ERP." He is a frequent author and an award-winning speaker on topics of gaining value from ERP, SCP, e-commerce, and the impact of technology on industry.

He can be reached at Olin@ProcessERP.com.

 
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