You only have to read headlines to see how many jobs are being cut currently. However, many companies are not looking at their business systems (including ERP) when they are making staffing decisions.
Whether it is because they are panicked into making decisions, or simply being naïve, we are seeing companies getting stuck with too many user licenses and redundant architecture. We are even seeing ERP systems that are now useless because the staff that missed the axe don¹t know how to operate the systems, explains Andre Coetzee, MD of Cubit Accounting and Payroll Software.
After a retrenchment many organisations find that they are left with non-refundable software licenses. This is because many vendors offer evergreen solutions which allow for growth, but not user-shrinkage.
Similarly, companies are often left with excess leased lines, redundant hardware and business overhead costs that do match the amount of workers employed.
However, none are as potentially damaging as companies which embark on a rightsizing exercise only to find that they are suddenly lacking the IP to deliver work-critical functionality on the existing (or downscaled) business systems.
We have experienced at least three instances in the last three months where companies have told us that they laid off staff that were responsible for exporting data with the necessary figures trapped in the system.
Downscaling can be particularly tricky when it comes to payroll functionality, Coetzee adds.
It is imperative for operational managers to conduct forward looking exercises to ensure that they have re-evaluated new requirements against old systems. Some of the quick checks include:
o What is the total annual cost of operating/owning the present system including the underlying software, databases, operating systems etc?
o Can the user licensing be reduced and what is the Rand and Cent effect
of such a reduction?
o Can the underlying software user licensing be reduced? What is the Rand
and Cent effect of such reductions?
o After staff retrenchment would the present ERP and business system be
operable by the remaining staff or is there a business case for bundling of workflow in a simpler/other ERP system?
o What is the Rand and Cent value should the SMME sell the existing ERP
and business system to another company?
o What is the Rand and Cent value should the SMME sell excess computer
servers and reduce network expenditures, how would this affect the existing ERP and business system?
o Does the type of process reductions advance cost saving changes to
electronic documentation systems in other ERP solutions?
If companies want to ensure job security for the remaining staff, they should be assessing all the implications of downsizing before they even begin the process. Sustainability means making sure that productivity isn’t compromised, Coetzee concludes.