R2ISC Associates

 

Unique Process Standard System

 

Many companies have processes that are unique to their business.  When these companies look for a computer system, they feel that there is no software package that will meet their needs.  Yet, there are times when a package designed for a different industry can meet these needs.  Sometimes a requirement is so unique that no package has that capability. But, a slight modification to a package may be all that is required.  By thinking out of the box, companies can find a software package that meets their needs, with little modification, instead of spending hundreds of thousands or even millions of extra dollars on a custom developed system.

 

Here is a perfect example. An insurance division of a bank insured that a company would receive payment for its sales.  Its competitors looked for insurance packages that could automate its process.  The competitors could not find an insurance package that came close to meeting their needs.  Therefore the Bank felt they had no choice but to spent millions of dollars to develop a custom system.  When the I looked at the insurance divisionís process (reviewing the credit worthiness of the buyers and then creating policy) it resembles a loan system (determining the credit worthiness of the borrower and then creating a loan document.) The bank then turn its focus to looking at loan systems.

 

The first loan software packages we reviewed were commercial loan packages, but they could not keep track of the insured and their customers.  Modifying a commercial loan software package would have taken considerable effort.  The bank when looked at Trade Finance packages.  We found that they where an almost perfect fit! 

 

Instead of spending millions of dollars developing custom computer systems like its competitors, the bank was able to spend a few hundred thousand dollars implementing a package in less than half the time.

 

Here is another example.  A utility company was looking for a new software package to replace its aging homegrown Fixed Asset system.  It did not feel that any package would meet its unique requirements because of the way it is required to deprecate assets.  (Utilities are required to depreciate an asset for as long as it is in use even if it is depreciated for more than its cost.  This is unlawful for most other companies because it usually means those companies are over stating their cost, and it does not conform to General Accepted Accounting Principles (GAAP).   On an aggregate level the assets were not over depreciated.  And, for the accountants out there, the assets  were pooled and depreciated a percentage determined by the regulatory agency.  Since some assets were taken out of service before they where fully depreciated with no write-down taken, the pool balanced .)

 

One software vendor refused to bid on the project because that vendor did not want its software package to be involved with an accounting process that did not conform to GAAP; they felt was illegal.  Evan after it was explained that the government regulating body required it. 

 

The other vendors did not feel their packages could meet this highly unusual requirement and would require extensive modifications.  When the vendors performed their scripted demonstration the problem became apparent their packages stopped depreciating an asset once the asset had been fully depreciated.  As part of the discussion during the scripted demonstration it was determined that they system stopped depreciating an asset once its accumulated depreciation reached the cost of the asset.  However, if a simple program was written to set the accumulated depreciation to zero, the package would work.  (The only problem would be to remember to run the program every five years.)

 

If you are looking for a software package and have major processes that are not met by any of the packages you reviewed,  first, determine if simple modifications can be made the package to meet those requirements.  Then look for other industries that need the same type of functionality and see if their packages will meet your needs.  And, if those two fail then you will need to determine if modifying a package or custom development is the best alternative.

 

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