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Unlocking Efficiency: A Guide to Replacing Legacy Tools
Legacy processes and tools are killing productivity and wasting valuable resources
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Legacy processes and tools are the silent killer to productivity. There is nothing I hate more than the response “This is how we have always done it” when I ask why we are doing something a certain way. Companies should regularly review both their processes and tools to ensure their valuable time and resources aren’t being wasted.
It is budget season for most software companies so now is a perfect time to really dig into these questions. Not only will companies save money, but they will unlock productivity on things that actually matter.
Even before reviewing all of your software spend, companies should be auditing all of their processes. All companies have processes that are unnecessary that cause them to be unproductive or waste valuable resources:
Overbuilt processes for company stage
Company changed but processes haven’t
Bad leaders set up bad processes
Technology has changed but processes haven’t
After processes are reviewed, you should then review your tool spend — existing tools and net new tool needs. Today’s topic is on evaluating existing tools.
The decisions behind replacing legacy software tools is different than purchasing a net new tool. Having the right people and tools in place at the right time can unlock a ton of efficiency. Companies are not static so tools (similar to people) need to change as a company’s needs and technology changes.
To Renew or Replace or Cut?
CFOs will be trying hard to increase efficiency and profitability in 2024. After evaluating processes it should be pretty clear if you can completely cut or reduce spend of a software tool, but the decision to replace with another tool is often harder (and not done right).
Reasons for Replacing:
There are lots of potential reasons why an existing software tool should be replaced:
Lack of innovation
Company requirements/processes have changed
Increased company complexity as it scales
Less efficiencies gained than from other tools
Cost is much higher than other tools
User experience is bad
Technical support no longer meets needs
Integrations with your other tools
And this list goes on, but some reasons are better than others.
Types of Needs:
The types of needs that I usually think about when replacing legacy software are:
Actual need comes from a change in expectations or requirements
Thinking a new tool is needed because of false indicators
Buyers of software should make sure there is an actual need before trying to replace a legacy tool. Replacing one tool that does 80% of what you need with another tool that does a slightly different 80% of what you need probably doesn’t pass the test.
Salespeople can use these need types to their advantage. Often times it’s easier to sell to the “perceived need”, but the best sales reps can start there and turn it into an “actual need”.
Actual Need: Brex vs Concur
Expense management is one of those areas that's come a long way. Many folks don't know what good expense management software looks like because the market has been dominated by clunky legacy tools like Concur.
Concur is a legacy software tool that was founded 30 years ago. It was one of the first solutions to really pioneer this space and has onboarded a ton of customers in the past three decades. People bought Concur to manage corporate and employee expenses and it still does exactly that. Concur and the processes companies were using continue to work as originally intended.
So why would anyone go through the hassle of switching?
It takes a lot of time and hassle to replace a tool like Concur. All employees would have to learn a new tool, integrations be updated, historical data archived, implementation, etc.
This decision framework happens a lot — too much work to switch and the tool still works for why it was purchased.
What many folks don’t properly consider is the potential impact a different tool could have. It wasn’t necessarily what the tool was doing that was the problem…. It’s what it wasn’t doing compared to new tools on the market. Decision makers have failed to realize how much has changed and their tool needs should have changed as well.
A Better Solution
Meet Brex: a company founded 6 years ago and ranked #2 on CNBC’s disruptor’s list this year. The fact that a spend management platform ranked right below the AI company (OpenAI) that has completely changed the world is kinda crazy.
Concur was great for what it was originally purchased for, but is it still what the company needs based on what tools are currently available?
Brex’s platform does a lot that Concur doesn’t…
What Concur lacked should have given finance teams the courage to rip it out and replace it with a more modern expense management solution. They keep renewing because it is the easy, low-friction decision. For many companies though this decision is coming at the expense of a tool that can enable companies to be more productive while also unlocking valuable insights that can help the business.
Don’t just renew because it’s the low friction decision, but also don’t replace if the ROI isn’t there. Salespeople’s job is to help buyers navigate this decision and their job is significantly harder in a world of cost-cutting and increased ROI skepticism.
Perceived Need: Replacing Quickbooks with NetSuite
Quickbooks and NetSuite are tools to manage accounting and reporting. NetSuite also does a ton more though. NetSuite is considered by many as the gold standard for software companies who want to IPO — they power the accounting of more tech IPOs than any other tool.
Because of the brand/reputation behind NetSuite, there is a perceived need to have it once a company reaches some arbitrary size/valuation.
We are a rocket ship so we want to get the best tool in place now to support our growth!
Software tools like Quickbooks typically break at a certain scale as the accounting needs become more complex — like complicated revenue recognition, needs for controls for an audit, etc.
But what many people feel in the earlier stages is a perceived need to move to NetSuite rather than an actual need. Eventually you probably do need to move off of Quickbooks, but the actual need might not come later. Quickbooks is probably fine for another 18+ months. In fact, not only does NetSuite cost a lot more (especially with their annual 20%+ price increases…), but it is likely overkill for what certain companies need so everything takes longer — productivity declines.
Don’t just keep the same processes and software tools because it is easier. Similarly, don’t replace software for the wrong reasons because that can be even more destructive to productivity.
Right now is a great time to re-evaluate processes and tool needs. As a company’s needs change, processes and tools need to change as well. Companies can unlock huge productivity gains and reduce spend when this is done right.