Reasons for system replacement and the problem of cost performance


Problem-solving orientation to resolve inconveniences in existing systems

There are two reasons why Japanese companies in Indonesia are replacing their business systems: one is to solve the problems of the current system and the other is to use the system strategically in order to expand the scope of use of the system for business purposes.

  • The head office in Japan is taking the lead in replacing all overseas offices, so we have no choice but to do it

Of course there is such backwardness, but there has to be some kind of cause when the system is implemented.

No company can afford to make investments that don’t create any new added value and are simply about refreshing the current system.

  • We have been using a cheap business system produced locally in Indonesia, but as the company expands, various inconveniences arise, so we want to replace it with a tightly packaged software that can cope with big business.

This is the most common reason why we receive inquiries from customers who are considering introducing the system.

Older systems

Now that Indonesia is getting more attention and IT investment budgets are being spent more and more.

I can’t even begin to list all the examples of how they endured to this day, starting with the manual operation in Excel, then introducing a shady local system developed by a local vendor, or using a system developed by an IT geek who just happened to be in the company.

  1. I’m using Access for my database, so the load of simultaneous connections is getting to the limit.
  2. The developer went bankrupt, or the developer disappeared and no support was available.
  3. The latest version of Windows (or Excel) is not supported.

In both cases, there is a high risk that X-Day will suddenly arrive one day, unless you consider replacing the system with a new one immediately.

Of course, depending on the size of your business, you should also consider reverting to manual processing in Excel

Functional constraints of the system

This is a disadvantage caused by functional limitations based on the specifications of the current system, but this is a case where operations can be performed as they are, but management efficiency will increase if improvements can be made.

  1. It is not possible to work with multiple people at the same time in a standalone type.
  2. Sales purchase data is not linked with receivables and payables information and inventory information, so double entry occurs and the operational load is high.

On the other hand, the advantages of the current system are that the stand-alone system provides security, and the lack of linkage between modules means that each department can be held accountable for data entry.

In addition, there are many cases where a problem that the Information System Department in Japan feels is an inconvenience is not an inconvenience to the Indonesian staff operating the system in the field, and it takes a lot of energy to convince them that replacing the system will put a burden on the field.

And the way to improve the “inconvenience” does not necessarily have to be to replace it with a new system, but there is a possibility to take the method of adding functions by attaching subsystems externally, without resetting the accustomed operation and understanding of the standard business flow that you have accumulated so far.

Strategic utilization orientation to make more use of the system

If we were to replace the system with one that is more functional and more expensive than the current system, we would consider the system to be the core of our business, not just a management tool, but also a goal that would provide KPIs (Key Performance Indicators) that are important for creating business plans.

  • In addition to being a management system, we want to create production and procurement plans from sales forecasts and use them for business planning and other management purposes.

However, in order to make full use of a highly functional system, a high level of awareness and skill is required in the field where it is operated, and if this is not met, only some of the functions implemented in the system will be used.

  • A cheap system with low functionality would have been enough

As a result, you may not be able to get a sufficient return on your investment.

The Problem of Cost Performance

A system investment is made in order to get the benefits of Balik modal in the end, even if the cost is ignored in the short term, and the annual maintenance cost of 10% to 20% of the license fee is a running cost every year, regardless of the size of the investment.

In Indonesia, there are many cases where intangible assets such as hardware such as PCs and packaged software are amortized over four years (Category 1)In order to know whether or not the effect is commensurate with the amount of money spent, numerical data will be reported to the head office.

The more expensive the system investment, the more multifunctional it becomes, the more difficult it is to operate and the less expensive it is, but the absolute value of the effect will increase.

  • The expensive system is different after all

If you are going to install a high-priced system that costs in the 10 million yen class, you want to get at least this level of evaluation from the field after the operation starts.