Many companies today are drowning in tech debt, and they don’t even know it. A few simple tips will help you manage your tech debt and determine your next steps in enterprise upkeep.
Technology debt is a term that originated in programming. Originally, it explained the programming debt developers would incur while writing code. A quick and easy solution in programming might incur a future “tech debt” – when that quick solution would require significant modification or hinder future progress. Another solution might require more development resources to implement, but will drastically reduce or eliminate the need for modification and better support future development.
In manufacturing, the Technology Debt is the total cost of replacing outdated technologies or systems as they begin to degrade the overall functionality of the company. In general, manufacturing is reluctant to add new technology, and so as systems age the overall effectiveness of the operation degrades. Companies struggle to determine when they finally have to pay their technology debt. When is it the right time to make a change or add a new system? What risk will they take with a technology purchase or implementation? In the end, many manufacturing companies fool themselves into continually delaying a project – their technology debt becoming a massive expense. This will hinder production, increase errors and decrease efficiency, but as long as production limps along, these companies continue to wait.
Evaluate Your Manufacturing Technology Debt
Are you curious to know how large your tech debts might be? Use the following questions to analyze your current systems and better understand the benefits of your software and technology systems:
What is the cost of the current software or system?
Most enterprise software and systems have a licensing cost, which is only one part of the cost of the system, but it is a good place to start. You also need to study the hidden costs of the system. Look at the amount of time and resources necessary to maintain the system. If IT spends an average of 20 – 30 hours a week maintaining, or repairing, the system, this is a significant expense that must be added to the analysis. Lost production during times when the system is down will also add to the cost. Finally, look at the expense you may be incurring by using a less than optimal system. For example, if you can’t integrate a legacy system with your current ERP, then there will be a cost for manually moving data from one system to another.
Is the current system upgradeable?
Look at the current system, and determine if it can be upgraded. What is the cost of the upgrade? If you have a custom software system, the cost of any upgrade will be significant. Over time, this cost will only grow as you continue to upgrade to pay off that tech debt, increasing the TCO (Total Cost of Ownership) of the software. In addition, systems that are difficult to upgrade, or don’t have a clear upgrade path, will degrade your overall productivity exponentially. The system you have isn’t going to get any better, and you risk the eventual cost of the tech debt becoming prohibitive. Keep this in mind as you consider a new system versus an upgrade of your current system.
How much will the new system increase shop floor productivity?
Too often, as companies begin to evaluate their systems, they don’t consider manufacturing and operations. They will look at the front office and IT compatibility, but not the potential dramatic benefit the new system will have to shop floor productivity. For example, eliminating paper from the shop floor with a paperless manufacturing system will save on the cost of paper and ink travelers and build books. Scrap and errors can be eliminated. The need to input the same data multiple times is removed. Redline edits and change orders are improved. Even so, some companies are satisfied meeting the need with a lesser, forms-based system that leaves paper on the shop floor. Understand your current processes and evaluate the benefits to the process with the new system. Many times, the benefit to productivity will more than pay for the entire new system.
What is the overall cost of the replacement or new system?
Many companies today still believe a new manufacturing software system will cost millions of dollars, and require several years to full develop and implement. With new software technology, that’s no longer the case. A new system can be implemented in as little as a few months, and may cost much less than the licensing costs of your current, outdated system. As you evaluate your tech debt, work with a vendor you trust to understand your current shop floor and find a solution that meets your needs, then determine the true cost. As you study the cost, look at the licensing fees, the cost of product support, and the internal resources necessary to maintain the system. Before selecting a course of action, make sure you are comparing the true costs of both your current system and a potential replacement system.
What does an “integrated” system really mean?
Often, and with good reason, IT resources in manufacturing will be reluctant to add a “new” system to their enterprise. They are reluctant to tackle new software without an idea of potential benefit and an understanding of the internal resources necessary to maintain the software. Anything new is immediately seen as “system bloat” no matter the manufacturing benefit. Because of this, many companies look at “modules” or extensions of a currently implemented system, and end up creating the problem they hoped to avoid. The truth is, many companies offer “modules” they purchased from another software vendor. The module isn’t really linked to their product, and may not even be compatible to past versions of their software. Integration, implementation and installation becomes a massive project more complex than adding an entirely new system. For an honest analysis, study the benefit of competing systems, and identify the support needs of each individually. Don’t be fooled by a system having the same name.
The Enterprise Cost of Increased Tech Debt
As companies delay paying off their tech debt or upgrading their current systems, the problems faced by their operations team will only grow. The problems – shop floor errors, scrap, the inability to meet customer needs and lost production – will explode. Technology and modern manufacturing has reached the point when companies that haven’t upgraded, and haven’t addressed their tech debt, will no longer be able to compete or operate in the global marketplace.
Many times, tech debt grows because of the separation between operations and IT. Both operate in enterprise silos, and overcoming challenges without understanding the perspective of other departments create problems. It’s in these cracks the tech debt grows. Operations have a growing production need which IT doesn’t understand, so the company waits to fill that need because operations can’t adequately communicate the value of the system. IT is only added to the implementation team late in the process, and their needs are never factored into the decision. Miscommunication leads to projects being shelved and the tech debt growing – the problem being put off for another year.
That old paradigm will no longer work in the new world. New technology and processes, increased customer demands, government regulations and the need to operate on a global scale are pushing many companies to finally eliminate enterprise silos and pay their tech debt. Companies can no longer wait – they have to adapt, update and embrace technology and new systems and software.
What are your greatest technology challenges? How are you managing your tech debt? Let us help you eliminate your tech debt and overcome operational challenges. Contact CIMx for a free evaluation of your shop floor today.