Sweating the asset or flogging the dead donkey?
From boom to bust: how a broken software can drag you down.
Nowadays, it is an undeniable fact that software is a part of just about every business. In some, it is the whole essence of the company – think of Twitter, Facebook or any of the number of SASS products you likely use – while in others, it is an integral cog in the wheels that turn to produce a service or product. But it is everywhere. It is endemic.
Software, however, is not eternal. It has a beginning, a middle and an end, just like everything else under the sun. How long it is from the beginning to the end is a variable, but it does exist. At some point, the software used in our business must be updated, changed or replaced. These are just facts of life. The issue I want to address here is when the right time is to do this.
As this is just a short blog piece, it will in no way be a complete answer to that question but more a thinking point. So as you weigh up your struggle with software and what value you place on it, I want to give you a few hooks to hang your thoughts on.
If the software you have at present was to stop working, could your business keep functioning? This would apply to all software you have in your business – your finance package, ordering system, production management software, or even your HR and payroll software. If any of these were to break down, what would happen?
If your software was to break, and the function for which it exists was no longer functioning, how much time would pass before you lose the money that would have paid for a replacement?
How stable is your current software? Does it run on up–to–date hardware and software libraries? Does it use modern security protocols? Is it currently under a support contract?
Let me tie these together with a fictitious but plausible example.
Imagine you are a manufacturing company with a turnover of £6m per annum or £500k per month. Within your company, you have software that holds all the information, specification, order and delivery dates and production schedules. On a Monday morning, you arrive at the office, and the software has broken. Let’s imagine you cannot get the software to run, and the data is lost – the worst-case scenario. How much money is lost if you can’t get it running again for a week? For two weeks? What is the value of this software?
All companies sweat assets. We all seek to get the total value out of what we have. First, however, we must make sure we are not just making something that is already on its last legs work one step too far. No one wants a dead donkey.